By Pauline Hinchion, Director of Scottish Communities Finance Ltd
Sometimes going forward is about looking back and learning; remembering the legacy from our past. When it comes to the history of money and making it work for ordinary people, Scotland has often been at the forefront of many financial innovations. The world’s first Savings Banks for workers began in Scotland in 1810 by the Rev Henry Duncan; the Pensions Industry started when two Scottish church ministers wanted to relieve the poverty afflicting the families of deceased clergymen and the Fenwick Weavers Society, formed for the benefit of its members, is recognised as the world’s first consumer cooperative. So ordinary people coming together to meet their own social and financial needs is nothing new to Scotland.
Back in the 21st Century and Scotland is emerging as a nation of ‘Citizen Investors’ based on those same principles- ordinary people investing in their local economies with the expectation of receiving a financial return, in addition to a social return for their neighbourhoods. It is a socially productive form of investing, that is rooted in a ‘community of shared interest’ which in many instances is very local in nature.
As COVID recedes – or we develop ways of living with it – it is obvious that capital will be required to underpin the various transitions and adaptations needed in the medium to long term. Against a difficult economic outlook for the next few years where will this crucial ‘transition finance’ come from? Our suggestion – and it is only likely to be a piece of the answer – is by offering local people the opportunity to re-purpose and re-direct a small percentage of their savings into community bonds. Re-purposing them from a passive state, where they sit accumulating little or no value in an individual’s current or deposit account, to more active deployment in specific ventures of clear economic and social benefit. Re-directing them into supporting local economies with their associated employment, retention and circulation of money within communities, local service provision and social capital benefits.
Citizen investing is not an abstract idea but an evolving reality. Organisations such as my own Scottish Community Finance Ltd are tapping into an appetite for positive community and social engagement by allowing people to invest in ‘community bonds’ to raise capital for local economic projects.
The capital raised from these citizen investors can be used for a variety of local purposes including investment for solar projects: high street regeneration: theatre expansion & redevelopment: new
build whisky distilleries and buildings purchase. However, it can also be used to capitalise ‘bespoke’ loan funds that can lend to SMEs within distinct geographical areas.
Ultimately, citizen investment is about making sure that our money brings maximum mutual benefit to our communities and towns by bolstering the real economy where most of us live and work.
It is an approach that reflects the increasing focus on communities themselves as ‘Agents of Change’ and by extension a willingness by communities to invest in their own future development.
It is an approach that reflects the growing Community Wealth Building agenda, that prioritises local people and local businesses; ensures that they are the beneficiaries from economic activity and therefore that communities become more vibrant and resilient.
Further information about Scottish Communities Finance can be found here.
Pauline Hinchion is the Director of Scottish Communities Finance Ltd (SCF Ltd). She has over 20 years’ experience in community development, social enterprise and social investment. Pauline did a Masters in Community Economy Development and has a HNC in Socially Responsible Finance. She is very interested in green sustainable politics that allows people to live with dignity within the resources available to us on the planet.