Supporting community ownership of leisure and sports assets

While devolving power to communities and community ownership is not a new idea, it has firmly been on the Government’s agenda for the past 10 years, firstly with the Localism Act (2012), which established the Right to Bid among other community rights.

More recently, the Government has launched several policy initiatives to support communities to take back control. These include:

• levelling up, which speaks of the need to ‘empower communities’
• the £150 million Community Ownership Fund, which seeks to support communities to take ownership of local assets at risk of closure
• the Government’s fan-led review of football governance, which makes recommendations for greater ‘voice and influence’ for supporter communities at their respective clubs, such as giving protective rights over actions such as the sale of their stadium.

The national policy direction has been set. But what does this mean for communities and councils and how can the benefits be maximised for all?

As councils look to 'secure the future of public sport and leisure services' and to re-evaluate and redesign the way in which these services are funded and delivered, this guide considers the powerful benefits of community-owned leisure and sport assets offers to communities and councils. It takes a practical look at how councils can support community ownership of leisure and sports assets and shares learning from councils who are making progress in this area. It builds upon other guides in the series, including ‘Identifying additional financing options for public leisure services’.

Community assets

My community describes community assets or space as “buildings or land which are used for the well-being or social interest of the local community. These may include parks and open green spaces, libraries, cinemas and other cultural spaces, swimming pools and other leisure facilities, community centres, youth centres, nurseries or pubs.”

Community ownership

Assets can be brought into community ownership through several routes, giving local people control to use these assets in ways that meet the priorities and needs of the local community. These include direct ownership without shares, direct ownership through community shares and indirect ownership.

Community ownership is a powerful tool. It harnesses the collective capacity, skills and innovation in communities and directs these towards achieving outcomes that are beneficial to the local community and can also help meet councils’ wider priorities. Social value is created through the retention of public spaces and services.

It can help build more resilient communities, establish the real needs of communities, empower, and upskill local people. These benefits have become more relevant in the wake of COVID-19 as councils help communities to bounce back from the pandemic and support them through the current cost of living crisis.

Community ownership can support councils to meet a range of priorities particularly around improving the uptake of discretionary services by rooting them deeper in the community. In the case of sport and leisure assets, this can lead to increases in participation rates and improved physical activity levels and mental wellbeing. It can also reach groups who might experience barriers to accessing these services when delivered in more traditional formats.

Services tend to be more responsive to need and demand the closer they are to the users who require them. This means community-managed or -owned facilities can sometimes develop new and more effective ways of delivering the service. They can also secure a more diverse set of funding streams than a council, both through local fundraising and through larger philanthropic funders.

As a byproduct, it may help to alleviate financial pressures on the service. While this may act as a prompt to consider transferring assets, the case for community asset ownership should be determined by the economic, social, and environmental benefits and not simply on a commercial basis. It is also prudent to diversify the business models used across the portfolio to minimise the risk of failure. For example, community ownership could be one of the models utilised alongside facilities that are run by more traditional means.

Empowering local communities through asset ownership is an increasingly relevant option, as is aligning community needs and council priorities with the comprehensive network of asset owning community sports organisations.

Councils have a key role to play in helping communities to take ownership of local assets and creating a local network capable of delivering services, whilst protecting the local sport and leisure landscape.

If existing community pools are to continue operating, it is important that councils and representatives of community pools work together and identify if they are at risk of closure or service restrictions and to submit one application on behalf of all publicly accessible swimming pools in their area to the Swimming Pool Support Fund.

Community ownership has the potential to provide solutions to some of the issues currently facing sport and leisure services. However, it is not a one size fits all approach and nor can it resolve all the issues. However, it can be another tool to consider as you think about the future of the service.

Having ownership of a sport and leisure asset in your community can help support your services’/councils’ priorities in the following ways:

1. Protects key local sport and leisure services used by communities and by the NHS. Protects facilities that may otherwise be lost and fall into disrepair and attract expensive maintenance and security costs.
2. Provides a physical base for the provision of affordable and accessible local sport and leisure services.
3. Allows generation of income that can be re-invested locally.
4. Protects jobs that are at risk from facility closures. Provides training and business opportunities.
5. Can reverse economic decline of an area and attract investment. Can act as leverage, enabling further investment to be negotiated.
6. Enables more intensive use of assets and services when control is closer to the community. Encourages groups who may not have used traditionally run assets to participate.
7. Can increase participation - membership, volunteering, drive up participation rates and physical activity levels and increase equality and diversity.
8. Instils a renewed sense of pride and confidence in the community. Provides local people with a meaningful stake in the future development of the place in which they live and / or work and builds long-term support from the community.
9. Creates an incentive to invest in the building to reduce running costs - e.g. energy efficiency.
10. Skills and capacity are developed locally because of taking on and managing a building. Attracts new people with additional skills.

The following sections explore the wider benefits of community ownership in more detail.

Social value

"Social value is a broader understanding of value. It moves beyond using money as the main indicator of value, instead putting the emphasis on engaging people to understand the impact of decisions on their lives. The people’s perspective is critical." (Social Value UK)

The community ownership model and its governance arrangements incorporate various characteristics that generate social value. These include:

• social objectives are embedded in governing rules
• the board should be representative of the communities it represents
• transparency and accountability provides ‘check and balance’ mechanisms to help ensure they work for wider benefit
• people’s involvement is often to meet a local need.

The focus is on being sustainable through the provision of activities and services for local people that underpins the business model, capturing social value as a result.

Supporter ownership of spectator sports clubs and social value

The enhanced social value created from community ownership of spectator sports clubs has been discussed and evidenced to great extent including in Supporters Direct The Social and Community Value of Football report (2010). Supporter ownership creates greater local control, transparency and confidence to local stakeholders not least to supporters and councils that the club is being run for benefit beyond a small and often unrepresentative group of shareholders.

Councils’ recognition of a club’s local value and support for community ownership is often activated when a club is in financial trouble with key assets, such as if the stadium is at risk. Many councils are taking a more progressive approach to community ownership, supporting the club before it is at risk to create a partnership that helps the club and council to deliver their objectives. A great example is Chesterfield FC where Chesterfield Borough Council and Derbyshire County Council lent money to the club’s charitable trust for it to take majority control of the club.

Not for profit – retaining value locally

The rules governing many community owned / Voluntary Community Sector (VCS) structures ensure profits are reinvested to deliver community benefit such as employing local people and supporting local businesses.

Profits can be re-invested to benefit local communities in various ways. Whether that be a ‘non for profit’ leisure provider re-investing in infrastructure, sports clubs applying surpluses for concessionary user rates or a community owned football club ensuring it has reserves for a rainy day (or a relegation) to ensure its long-term survival. A long-term outcome of this is the generation of local economic value and reassurance for councils investing in community ownership that it will deliver local benefits.

Procurement practices can help to retain local value. For example, the Public Services (Social Value) Act (2013) requires all public sector organisations and their suppliers to look beyond the financial cost of a contract to consider how the services they commission and procure can improve the economic, social and environmental wellbeing of an area. This can include improving wellbeing of individuals, communities and the environment by making social value a decision-making criterion when awarding contracts. This helps to keep money being contained/spent within the local economy, creating a multiplier effect as more money circulates within a local economy, generating income for local people. You can find out more in LOOP’s Introduction to Social Value. The LGA has produced a number of support tools to develop their social value commissioning practices.

Generating economic value

Giving communities an ownership stake in an organisation’s success can generate various financial benefits. It encourages local usage and patronage, can reduce operational costs and if they have charitable status it will create benefits such as tax relief. A stronger local economy can also be a legacy of localism and ‘levelling up’ agendas.

There are various scales of resources needed. For example, at the smaller end of the scale voluntary management and community ownership models can reduce operating costs and can increase the skills and capability of local people and the organisation. Enlisting volunteers to support local assets that have low to no revenue stream but are nevertheless valued locally can help create a sustainable business model. Key to this is to ensure the community organisation has the capability and local communities have sufficient ‘buy in’ to help make it work.

But, as the scale of the proposition increases, an employee-based model is required, however other benefits of community ownership remain. If the potential social and economic benefits are to be taken advantage of, the model needs to be run effectively with a ‘business orientated’ culture.

Enterprising and progressive culture with greater flexibility

‘Not for profit’ status does not mean a ‘non-business’ orientated culture. If a community organisation has the right structure, attracts the right people and is satisfying a need, it can create an enterprising culture reaping benefits of community ownership. 

An enterprising culture can deliver both economic and social value, and cross-subsidies activities to reach groups that may otherwise be excluded because of unaffordable charges.

Not all community organisations and enterprises will have an enterprising culture, but it is important to recognise they can. Councils can help by identifying those with potential and supporting them to realise it.

Potential to reduce costs

Despite the financial challenges facing councils, they spend around £1.1 billion per year on sport, leisure, parks, green spaces, pitches, playgrounds and community halls. As already highlighted, council provided sport and leisure facilities and pools are facing the very real possibility of closures. Councils need to look for different ways to sustain the service. By encouraging and involving greater community ownership, costs can be reduced, whilst safeguarding local sports provision and infrastructure for future generations.

Community ownership does not mean transferring liabilities to the community without due care and attention. It is about understanding how some of the benefits identified can transform a liability into a community asset, owned by an organisation that has alignment with the council.

If a strong business model can be generated from transferring an asset to the community, as long as the community entity has the capability, it can produce a sustainable future under local stewardship. Capital investment may often be required to produce a viable on-going business model.

Access to alternative sources of funding and finance

The traditional sports club is a major part of the sport and leisure delivery system. With about 70,000 clubs in England, it has always offered an alternative financial approach. Club membership offers the means of offering participation in a sustainable way with fees and secondary spend covering running costs. It will continue to be central to local sport and leisure delivery systems, offering value to councils and local communities.

The community asset ownership model offers alternative methods of financing sport and leisure provision beyond traditional club structures. The eligibility for additional sources of grant aid is an obvious method. As is their greater ability to secure donations, which also provides ‘gift aid’ benefits. Crowdfunding platforms offer quick and easy methods of raising funds.

The Sport England Active Together crowdfunding initiative can match fund, up to £10,000 to successful Crowd funder campaigns from a total pot of £7.5 million. It provides expert advice and guidance to support local clubs, organisations, town and parish councils to run their own crowdfunding campaign to raise funds to help recover from the COVID-19 pandemic.

Challenging community organisations to raise money from their local communities, by donation or investment, is a useful method of gauging their capability along with the level of local support for the asset or service. However, this may be less reliable considering the cost-of-living crisis and diminishing levels of disposable income.

As covered in Identifying additional financing options for public sport and leisure services, community owned entities can secure social investment from individuals (community based) and from social investment funds and lenders (institutional). The social investment seeks to produce a social return as well as financial, helping to steer local sport VCSs towards delivering social outcomes aligned to council policy objectives.

The growth of the social investment market presents opportunities for VCSs accessing finance not available for councils. It also helps address a structural issue for community ownership because they cannot secure finance from equity investment and traditional high street lenders may be reluctant.

VCSs that secure social impact investment from social investment funds and institutions will need to demonstrate they are ‘investment ready’. It can provide the required confidence to the council regarding their capability. The various forms of funding and finance available to VCSs and other community owned social enterprises can create the initial investment and ongoing revenues required to form viable and sustainable business models.

Community shares have been regularly used by community benefit societies to help communities to save and/or takeover local shops and pubs. Its application in sport and leisure has been less prevalent. Social investment secured from individuals, such as from community shares or loans, can provide tax relief opportunities to the investors. Creating significant incentives for investment to support local community sports assets. However, it is a complex area requiring specialist and costly advice, therefore creating a barrier for many community groups.

Partnership opportunities

The growth of local sports VCS providers delivering social outcomes creates various partnership opportunities. It offers councils a ready-made local delivery system, with providers who already share the council’s wider objectives.

If a council can support growth of community ownership it can establish a sympathetic local sports and leisure delivery system. One that is driven to deliver sports and physical participation plus uses sport as a tool to deliver wider social outcomes.

Community ownership of sport and leisure assets is not the only solution to the challenges facing council provided sport and leisure services. However, it offers an alternative approach that is locally committed. It can also create a ‘safety net’ when a local asset is at risk by working with local communities to create a new, community orientated business model that is underpinned by local ‘buy in’. However, while communities are at the heart of the approach and the reason for so many of the benefits we have already discussed, the success of the approach is only as strong as the skills and capacity within communities.  A challenge for councils can be identifying where community asset ownership is a viable option.

Councils therefore have a role to play in supporting communities to develop the skills and knowledge to enable them to flourish.

The main challenges preventing communities to undertake community ownership includes:

Finance

• One of the challenges facing most community groups is lack of financial resources. This could include not having or being able to obtain the initial capital to carry out an assessment of the project’s feasibility and develop a business plan or they may not have an established track record to support their case.
• Having to commit to development costs with the risk of substantial losses as there is no certainty that it will be successful in acquiring the business.
• The difficulty of agreeing a fair valuation for the business, especially when the principal assets are worth more as non-business assets.
• More recently, the rise in energy prices and increasing living costs presents a real threat to the future of many community owned assets, particularly as they are reliant on community support at a time when people have less disposable income to spend. 

Councils can help by:

• providing support ‘in kind’ such as access to property management and accounting expertise within the council
• making small grants for initial pre-feasibility and feasibility work
• offering short licenses and leases in the early stages of a transfer, while its viability is being tested
• providing high quality information on the maintenance requirements and costs of the building in question
• recognising the longer timescales that community organisations need to work to, if they are to have the support and involvement of their communities
• offering sale or lease terms that are appropriate and proportionate to the social nature of the organisation, rather than what would suit a profit-making business
• recognising the value of investing initial capital, as this could be the reassurance needed for the project to attract further capital finance from social and private investors
• retaining responsibility for infrequent but core maintenance costs, such as boiler repairs, while transferring day to day running costs.

Skills

• communities may lack the breadth of key skills needed to undertake ownership of a local asset
• may not be familiar with local authority commissioning processes or how to respond to them.

Councils can help by:

• provide free or subsidised training in key skills such as finance, volunteer recruitment and management, communications, grant/funding application writing, fundraising skills, procurement, community engagement, evaluation and measuring impact to support applications for future funding
• developing a support network for groups to share ideas, resources and good practice
• ensuring there is an ongoing link between the transferred asset and the council-delivered service, allowing shared actions to tackle inequalities or health issues.

Capacity

• many individuals in community groups will have other work and commitments that may mean they have less capacity
• communities face extra challenges of having to act quickly, especially if there is competition to buy the business or its principal assets.

Councils can help by:

• being flexible and arranging meetings and training at times when individuals who work or have caring or other commitments can attend
• building in longer deadlines into tender processes to enable community, supporter groups and sports clubs to apply and ensuring they have the skills and capacity to respond to tenders and to deliver them.

A small but growing number of councils are looking at community ownership and community assets in different areas.

As a result of the inspirational work by a group of park volunteers who pushed for the protection of Liverpool’s park and green spaces. Liverpool City Council is working with the Fields in Trust to become the first local authority in the UK to legally protect all of its parks and green spaces for good, ensuring they can never be sold off or built on, ensuring they remain as assets to the local community forever.

We’ve already explored some of the ways in which councils can support community ownership of sports and leisure assets, this section will look at this in more detail.

Community asset transfer

When local assets with community value are at risk, it is an obvious time to consider if community ownership is the right option, and if investment can be applied to help make it a realistic option.

A community asset transfer is the transfer of an asset from a public authority to a VCS. It is generally considered to include long term tenure, such as over 25 years or a freehold. The challenge is to ensure it happens in appropriate circumstances. Other issues to consider include whether or not community ownership offers a viable solution and if the VCS taking ownership has the required capability.

However, it presents an opportunity for the council to drive improvements in the VCS’s capability e.g. in its governance, financial management and operations. Enhancing the VCS’ organisational capability will help to reduce the risk of failure from the asset transfer. 

A community bid to take ownership may not be as ‘oven ready’ as other options. It is important, subject to regulations, that the procurement process recognises that fact. A preferred approach can be working with a community organisation over time to help develop the business case and their capability.

It can provide councils with proof of concept before entering into a long lease for the site. A procurement process can often be a daunting task for many community groups and in many cases the scope and specification can often restrict tenders from community groups.

Capital investment and financing  

Councils can support community ownership by providing investment and access to capital such as Public Works Loans Board (PWLB) and Section 106 credits. This can be for the provision of new assets or modernising existing assets which may already be in community ownership.

Research by the District Councils Network demonstrates that the leisure estate is not energy efficient and currently accounts for between 10 to 40 per cent of a council’s direct carbon emissions. A key issue will be to refurbish or replace the ageing infrastructure to ensure it meets demand and reduces carbon emissions, helping it to protect the service from future energy prices and to support community owned assets to be successful and sustainable.

Sport England will be administering both funds. The headline timescales for the £20 million revenue fund is expected to be:

• applications submitted by end of July
• application assessment in August
• decisions announced in September
• payments will follow on receipt of a signed funding agreement.

Community Ownership Fund

The Government’s Community Ownership Fund runs until 2024/25, and it exists to help local communities across the UK to take control of assets including sports facilities that are at risk of closure. It offers grants of up to £250,000 (£1 million in exceptional cases for sport and leisure assets) to match with other funding to save local assets by transferring into community ownership. The fund offers development support to help the community organisation grow capability and develop the business case. It can also provide up to £50,000 or up to 20 per cent of the grant in revenue support.

The Community Ownership Fund can support community asset transfers but it should be noted that there are exclusions such as where it involves the delivery of a council service. The criteria is detailed in the fund prospectus.

Any capital investment should be applied to produce long term sustainability of the facility and ‘lock in’ good practices to help ensure profitability and management capability.

Capacity building

Even where a situation exists where there are clear benefits from community ownership of sport and leisure assets, the risks of failure are tangible if the community vehicle does not have the capacity and capability to manage and operate appropriately. They need to be ‘fit for purpose’.

The successful transfer to community asset ownership may require developing skills and resources i.e. capacity and capability. The task for councils is to help their local VCS’ to get the required support when needed.

There are often local sources of free support, such as training for trustees and managing budgets. Additionally, there are some national programmes to support VCS’ to co-create business plans and budgets plus develop the organisational capability, often related to being ‘investment ready’ for social investment rather than securing asset ownership.

It may be the council can lend capacity at key points by providing time and skills. It may be able to support the design and procurement processes.

Generating revenue: social value procurement

A method of supporting community ownership of sport and leisure assets is from social value procurement. The social value criteria in procurement can recognise the value of community ownership. It is a tangible method of generating revenue to ensure sustainability, whilst delivering social value.

Commissioning provides a direct mechanism for generating revenue for community sports assets. A council can also help more indirectly by using its local profile and influence.

Sweating the asset: increasing utilisation of sport and leisure assets

The more a facility is used, the more revenue it can generate and therefore becomes a more feasible proposition. Councils can play a role in creating demand and usage.

Linking up groups where needs complement, such as one with a facility and the other requiring space is one method. Signposting and promoting local community assets another. A community asset register is a method where a central depository of available space can be promoted, enabling groups to find the space they require and community asset owners to generate revenue.

Councils hosting networking events can help link VCS to create mutual benefits. Bringing in local businesses to the network provides additional opportunities for revenue generation and creating local value.

These activities and services offer councils a low cost method of indirectly supporting community owned assets, along with establishing a local network of mutual support.

Reducing costs for community assets

Supporting revenue generation of community owned assets directly by commissioning and by indirect means is one method a council can help. As with any business, reducing costs is another way of improving profitability. Councils can play a role here too.

Charities and community amateur sports clubs (CSACs) can claim mandatory rate relief of up to 80 per cent. Some councils may offer an additional 20 per cent discretionary rate relief and offer ‘not for profit’ sports clubs discretionary rate relief.

Rate relief offers a tool to influence as well as to provide direct financial assistance. Offering additional discretionary rate relief to those delivering social outcomes is a method to encourage greater alignment with council policy objectives. Initial periods of rate relief when communities take over local community assets is another way to provide support. A council’s ability to offer peppercorn rent for communities with tenure at council owned sites offers another means of providing support.

A council needs to consider when community sport and leisure asset ownership is a realistic option and what are the potential benefits.

Two questions can be used for a council to review the case for community ownership:

• Is there a social and economic case?
• Can it provide or lever support to improve the social and economic outcomes to generate the business case?

• understand your local community network and which organisations have greatest potential
• support the capacity building of local community organisations
• offer skills support and resources at key points
• create a hub of community owned assets to share resources, knowledge and generate revenue
• use financial incentives such as rate relief to encourage social outcome delivery
• use capital investment to create sustainable business models that deliver social and economic outcomes.

Community asset ownership is an option requiring a detailed, evidence-based review on a ‘case by case’ basis, that needs to consider both the business case, the communities needs and the VCSs development needs. It cannot be assumed that a liability under public ownership becomes an asset under community ownership, even with capital investment.

Whilst it is not a panacea for local sport and leisure ownership. Community sports and leisure asset ownership can offer a ‘natural’ partner for councils, the challenge is to turn the potential into sustainable and impactful solutions that takes the learnings from successful examples elsewhere.

Community Amateur Sports Club (CASC): Is a sports club that meets eligibility requirements and are recognised by HMRC. It provides similar tax benefits to a charity but without the same level of reporting requirements

Community Asset Transfer: Is the transfer of an asset from a public authority to a VCS group. It is generally considered to include long term tenure, such as over 25 years, for the asset.

Community Benefit Society: Community Benefit Societies are a type of cooperative, owned by their members, where the primary beneficiary is the community. Similarly, to other cooperatives they are driven by values and principles such as a democratic and open membership and member participation.

Community Shares: Is a form of raising investment unique to cooperatives, raised by its members to deliver benefits to their community. The shares cannot be traded but can be repaid to the members by the cooperative.

Crowdfunding: Raising money from a large group of people, generally by internet platforms, that can be used for financially supporting organisations and projects.

Gift aid: Is a means for an eligible recipient organisation to claim an extra 25p for every pound donated. To be eligible the organisation needs to be a charity or a registered Community Amateur Sports Club (CASC).

Investment ready: The organisation seeking investment has addressed risks such as capability with a tested business and financial case demonstrated.

Public Work Loans Board (PWLB): Is statutory body of the UK government that can provide long term lending to public bodies

Social Impact Bonds (SIBs): SIBs are outcome focused contracts that use social investment to provide funding for delivering a service. They are a ‘payment by result contract with performance measured and valued in terms of defined outcomes rather than purely the delivery.

Social Impact Investment: Is investment intended to deliver social impact alongside financial returns to the investors.

Social investment: Is investment that seeks to deliver a social as well as financial return.