Grassroots community finance: 15 minutes with Mick Brown

Robert Owen Community Banking is a responsible finance provider lending to schemes supporting Wales’ poorest communities. It recently won the Citi Microentrepreneurship Impact Award. Chief executive Mick Brown spoke to New Start on being ‘skin in the game’ for community organisations.


On winning the Citi Microentrepreneurship Impact award
We’re a tiny tiddler trying to show there are different ways of doing finance. Our model is very much about revolving capital. We’ve got local authorities and town councils that are beginning to invest and put their reserve funds with us which helps capitalise us, so we can re-lend and cut the middlemen out of the loop. It’s basic. The whole market economy is about creating profit and generating growth but there’s more and more recognition of the social benefits, and that’s so often exploited in order to maximise the profit drivers. The environmental benefits are always the fluffy stuff on the end. Our primary objective is driven by our belief in climate change and we have to address that as an imperative.

On ‘bottom-up’ grassroots finance
The 2008 crash showed that the problem is monopolisation and eventually you end up with huge monopolies and central cartels that control each sector. What we are advocating is a bottom-up grassroots approach. We need more diversification. In Wales, we could have a much more interesting financial ecosystem if people became more understanding of the role and nature of social finance alongside co-operative capital or equity. The old dichotomy between public and private ownership has consistently failed to acknowledge that there’s a third sector model of ownership for capitalising enterprise.

On being ‘skin in the game’ with community organisations
Members of Community Energy Wales would all say that without our form of risk finance it wouldn’t have unlocked other finance which enabled their schemes to be built. This mezzanine, short-term finance has a very specific unlocking role. The approach we take is really about the relationship. We go on the journey, we’ll share their risk with them, if it goes down we’ll take the hit. We have an invested interest in making it happen. For a community group that’s a powerful message that they have an ally and a skin in the game.

On the litany of failure between the public and private sectors
We could solve fuel poverty tomorrow. Poverty is about the inequitable distribution of income. There’s enough money, were the sixth richest country on earth but we choose not to distribute it fairly. There’s a massive poverty problem which goes hand in glove with the poverty industry. It’s not necessarily a popular position but we’re all spending so much time trying to alleviate the symptoms without collectively getting together to address the underlying causes. There’s a lot of best intentions but it just maintains the problems. Local authorities have been really poor at using their potential powers in this space, in terms of creating energy assets, so it’s left to the private sector. The community sector is doing its best but on a very small scale. The public sector has significant powers which they don’t use in terms of ownership of potential assets, land or roof space. Every school should have solar across the top of it but when you work with the local authority they can’t do it because they don’t have the capital. Also, if they can’t to do it on one they won’t do it on any otherwise it’s selective. There’s a litany of failure between local authorities and the private sector around financing. What we’re providing is a good trusted relationship between local authority and a third sector body which can be highly successful. We need to see more of that. The private sector is appropriate in some sectors but sometimes it’s not. Social care is very poorly provided by the private sector but Italy and other European countries show how, through the social sector, it can be done at scale.

On the largest Welsh transfer of land to the community
Access to affordable capital is at the core of any enterprise. Ownership of land is another issue. Our civic spaces are being eroded as the public sector has to sell off assets, and that’s a concern. In Mid Wales and Newtown, we are just completing the transfer of 130 acres of land owned by the Welsh government and the local authority. It’s being transferred into community ownership and it’s possibly the largest land transfer in the UK, certainly in Wales. Our company, Going Green For a Living, is taking ownership and we have lottery funding to start developing that with new enterprise activities. It’s in the heart of Newtown but it’s not previously been exploited because it’s been owned by the local authority. Now that it’s been transferred to community ownership the community can start driving it and saying what they really want to see happening there.

On joining the dots
We’ve all been working in silos but how do we start joining up? By changing the paradigm in terms of how we fund our activities, more and more people are recognising and adopting social business type models to develop more sustainable income streams. There’s a shift going on. We’re not going to change anything until we understand the nature of capital and who owns it, and who controls it.


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