There has been a growing interest in ‘civic crowdfunding’ for local authorities. This project sought to work through the options available to councils to raise additional funds for climate work whilst engaging with and involving the community, and potentially increasing community wealth. Through a series of workshops, issues and barriers were investigated in order to produce a tool to aid decision making and prepare the council for delivering alternative finance mechanisms.
What was your challenge?
Councils have a need to support our communities with a range of projects such as nature-based carbon capture, increasing active travel and community energy generation to meet multiple sustainability goals. We typically borrow from the Public Works Loan Board to fund our projects, yet we have a commitment to increase and generate community wealth. Traditional borrowing does not meet these aims, and so the council was looking to innovative funding models that could be available. They were also seeking a way of clearly understanding how our investments can provide more social value. The council’s senior staff are time-limited and lacked the contacts within this new and emerging arena to confidently provide recommendations on how to proceed. The councils were looking for a solution to support the broadening of financial horizons and a way to quickly provide concise expert advice to senior staff and project managers.
What was your solution?
It was proposed that we would be able to leverage the extensive research that had been carried out by Dr. Donal Brown and colleagues at the University of Sussex and Leeds, their contacts and experience regarding the challenges facing the councils, to develop viable and appropriate business models and tools. This would enable the council to continue to progress the implementation of alternative finance mechanisms across a range of different projects.
To meet this aim, two workshops were convened on investment and donation based crowdfunding. These workshops were to provide senior staff within the councils an opportunity to hear first-hand from local authority peers, their experiences of working with and implementing crowdfunding finance models and working with community energy companies and industry experts. Senior staff discussed with the workshop speakers each topic to reflect on the problem they were trying to solve and to bottom out issues and the details of going down these routes at Lewes District and Eastbourne Borough councils.
The ‘Citizens and climate’ summary document and decision-making tool was produced as a record of these workshops, to document the process and provide easy to access case studies. Staff can easily go back to this document as an aide memoir and refer to the crowdfunding decision-making tool that was specifically adapted for the councils’ purposes from previous work by Davis and Cartwright 2019.
Staff are then able to produce portfolios of projects suitable for each funding model.
What are your top 3 lessons learned?
- COVID-19 necessitated the need to carry out the workshops virtually at a time when we were only just getting to grips with the technology. This type of work would have been much better carried out face-to-face, and at times discussion was difficult to manage and keep track of. Collaborative working virtually is improving and it enabled officers and University staff to engage easily and regularly, but engagement with senior staff at the workshops would have been better if we could have held these sessions in person.
- It is never too early to begin engagement with senior staff to ensure appropriate time is set aside to complete the project, but also to ensure that workshop scenarios are pitched at the right level.
- Enabling peer to peer conversations at a senior level to occur was possibly the single most important driver to getting senior buy in for these novel finance models.
What have the outcomes of the project been so far?
The process of working through the workshops enabled the council’s senior management staff to realise the scope of possibilities from raising community finance. It's enabled the council to confidently begin the process of completing the legal due diligence around launching a community ‘climate bond’ in 2022.
Lewes District Council and Eastbourne Borough Council both committed to Abundance Investments and the Green Finance Institute’s campaign to encourage local councils to release their own bonds, agreeing to investigate the possibility of a launch within 18 months of COP26.
How will these outcomes be sustained?
Project managers are now aware of how to access the citizens and climate decision-making tool and a project pipeline is being developed. It is hoped that this could become a regular occurrence but is dependent on project needs and suitability.
Legal expertise has been procured to finalise the documents required to launch a climate bond.
By linking this project with existing work on community wealth building we have linked this intrinsically with the climate change and sustainability work stream and embedded it within our processes when considering financing options.
By developing a bond launch with understood and deliverable schemes ready to be funded we hope to have a successful project reach conclusion in late 2022.
The councils have a clear idea of how they will use donation-based crowdfunding, including making the most of existing services to maximise fund raising capability. We are working with our regional partners in East Sussex in further developing this model.
What is the anticipated longer-term impact on progress towards net zero?
The council anticipates being able to complete projects beating the Public Works Loan Board (PWLB) loan rate whilst providing interest payments back to the community. It is possible that some of these projects (for example, sustainability ‘extras’ on housing projects, like PV panels, that may otherwise be costed out) will only go ahead because this financial saving has been made.
One of the next steps identified because of the workshops was that land was identified to be a key limiting factor for nature-based projects. In order to overcome this barrier, the council has been working with the University of Brighton, using students to help generate new open-source Geographic Information System (GIS) maps for land identification.
How has this project evolved your approach to net zero?
Primarily this project has opened an entirely new mechanism of project funding. Many council projects operate on a very tight budget and small financial savings can make a huge difference. Enabling financing that can beat the PWLB loan rate will open up the opportunities for carbon savings particularly on new build housing but also for any project that the council would consider borrowing money to fund. By using community financing the council is opening a new dialogue with residents enabling them to feel more connected to their area and the projects being carried out within it.
Who will benefit from your project?
The organisation has benefited through gaining peer-to-peer support in developing knowledge on alternative financing mechanisms. This has provided confidence internally to delivering these novel approaches.
The project pipeline is still being developed but we anticipate funding carbon and energy saving equipment to social housing developments that would directly benefit our tenants providing energy efficient cheaper to run homes. The wider community should also benefit through a sense of shared purposed and ownership of the climate emergency and local projects developed to directly tackle this problem. Also, some projects would otherwise not occur due to funding constraints.
Describe how your partnership developed over the course of the project?
The Net Zero Innovation project provided an opportunity to make links with specific researchers who had both subject matter expertise as well as wider links that officers would have been unable to determine on their own. These links went beyond just the University of Sussex, and officers were linked to the University of Leeds as well as experts within industry and other local authorities. The University of Sussex were very proactive in assisting the council determining their staff resource requirements for the project, resulting in an effective project team that was respected by senior management staff at the council. A consequence of COVID-19 was that virtual working had been enabled at the council and this facilitated the collaboration between the institutions and organisations spread across the country.
I think we all struggled with the technology of virtual workshops and both the University, and the council learnt a lot through the process of delivering these.
The council was impressed with the ability of the academics to translate their work into something understandable to council staff and the final document that was produced successfully blends both practical and academic purposes.
How will the partnership be sustained in the medium and longer term?
The councils are now confident contacting the University and have the links developed to request specialist help from researchers across a broad spectrum of subjects, as well as the ability to make use of the student resource. The council has an expert panel that is convened from time to time, on which academics now sit. This provides a useful sounding board for strategic policy decision-making and intervention development providing an academic perspective, that was previously not easily available to the council.
New projects are evolving including the ‘decarbonising our housing stock’ project and the council is utilising skills within educational establishments a lot more now for proactive research and partnership work than it used to.