3D: Securing finance

Accessing different types of finance to support the development of your project is vital

Section 3 progress

It is unlikely that you will be able to complete an Asset Transfer project without finance.

You may be planning to fund it from your own savings or reserves. Great. Otherwise, you will be looking for funding for either the planning & preparation process or for the costs of purchase and/or refurbishment. You could be looking to raise anything from £30,000 to £3m or even more.

Whatever the amount, successful fundraising happens through good planning and investing time and energy in the process. Generally speaking, prospective funders (including your own members) will be looking for some or all of these:

  • Trustworthiness & credibility of key people
  • A compelling vision
  • A proven track record
  • An appropriate structure
  • A thorough feasibility study
  • A business plan
  • Support of partner organisations, which themselves have credibility
  • Community support.

The finance you can access depends on the legal structure of the organisation, the project being financed and when and how much funding is required. Many funders will only invest in community organisations or charities, which is one of the main advantages of Community Asset Transfer for local authorities.

Written assurance

You may be faced with the challenge of securing finance before you are willing to take on the lease of a site, while a funder won’t commit to an investment without knowing you have security on the site.

Successful fundraising happens through good planning and investing time and energy into the process

In this situation you will need written assurances from the local authority that a lease or sale will take place if funding is secured, and if possible the draft Heads of Terms of transfer.

The tables below sets out the key legal constraints and the types of funding that can be used.

Legal Structure

Can register as a charity

Can access debt/borrowing

Can access equity or issue shares

Company Limited by Guarantee (with charity status)


Company Limited by shares (private)


Community Benefit Society

Community Interest Company Limited by Guarantee



Charitable Incorporated Organisation


Cooperative Society



When acquiring an interest in property, always ensure appropriate title investigations and searches are carried out to flush out potential finance issues. Any limitation on the ability to use the asset should be avoided. Some community based organisations have long leasehold assets that they cannot use as security for debt because covenants stipulate that should the assets cease to be used for specified charitable purposes, the asset returns to the freeholder. These are of very limited use as security for finance.

 Types of funding

Fundraising or crowd-sourcing

The first port of call for funding for a community project should always be your members, users and wider local community. Raising funds, even small amounts, from your users demonstrates how much support you have and that people are willing to back you with their money. There are plenty of different ways to raise funds, from ‘buy a brick, to events and sponsorship. An enormous amount of advice is available and a good place to start is here https://www.gov.uk/topic/running-charity/fundraising . Although this site is aimed at charities most of the advice is relevant to any type of community organisation. Charities benefit from some extra benefits when fundraising by being able to reclaim ‘gift aid’ from the Government on all donations from UK tax-payers, which is worth an additional 25% on every donation.

Increasingly people are turning to online fundraising or lending sites or ‘crowd-funding’ to reach even more people who might be willing to support a great cause. Again, a lot of advice is available and a good place to start is here http://www.ukcfa.org.uk/ with the UK Crowdfunding Association.

A few general points can be applied to all types of fundraising:

  • Have a clear & exciting vision
  • Make it fun
  • Don’t guilt-trip people
  • Make it possible to give as little or as much as they are able
  • Keep it legal
  • Ensure you don’t spend more in running your fundraising than you raise
  • Think about how companies can support you – perhaps with in-kind support
  • Thank all your donors and remember to keep them informed about the project


These are non-returnable funds provided for projects. Grants may be harder to gain if you are not a registered charity or do not have charitable objectives. Grants are usually given to support specific services or projects, rather than for feasibility work or core funding, but this is not always the case. There are grants for both capital and revenue funding.

Grants available from central and local government and other government bodies are sometimes affected by State Aid rules. Where the grant is considered to give the organisation that is receiving it an unfair competitive edge on other business organisations across Europe, it is called State Aid and is illegal.  However, this rarely affects community projects.

Grants from Government funding programmes may also come with conditions related to the development of the project, (e.g. tendering options). Grant conditions may also affect the use of any revenue generated by the project in the future and may require re-payment or “clawback” of the grant.


Equity finance is capital invested in a business for the medium to long term in return for a share of the ownership and sometimes an element of involvement in the operation of the business / organisation. Rates of return on investment that may be required by investors will vary. The benefit of equity is that it is more ‘patient’ than a loan, as investors are more committed to the success of the business.

  • Equity can be raised from a share issue, venture capitalist or a ‘Business Angel’, (who will provide some support to the organisations development as part of the arrangement).
  • Equity finance is not available to some kinds of organisations, especially charities, and is often unsuitable when the project aims to provide ownership and control of the assets and income from them to a community based organisation. Charities are not able to issue any kind of shares.
  • Community Shares are a specific type of democratic equity developed by the cooperative movement which are as a model of raising equity finance. Only Community Benefit Societies can issue community shares. See communityshares.org.uk
  • Big Potential is an investment readiness fund to help organisations prepare to apply for equity and loan finance, see: http://www.bigpotential.org.uk/about-big-potential


These are funds made available over a set period. The main loan has to be repaid as well as the costs of the loan (interest), with an agreed repayment schedule. They come in a large range of shapes and sizes and have varied rates of interest. There are sometimes fees to pay when they are arranged. 

Some loan funds require security to cover the loan and lenders may wish to ‘take a charge’ on the property involved. This is registered at the Land Registry and although it does not convey ownership or possession rights, it provides that if the property is sold, the value of the charge will go to the lending organisation. Often permission of the landowner is required before you can give away a charge on the asset, so even if you have a long lease you will need to inform the Local Authority if you are planning to do this.

Sources of loan finance include the major commercial banks, many of whom have specialist teams dedicated to the community and voluntary sector, e.g. RBS Nat West, see: http://www.rbs.co.uk/corporate/banking/g2/expert-industry-teams/notprofit.ashx

Specialist lenders for community asset development include:

Many English regions have specialist lenders supporting asset development, e.g. Key Fund http://thekeyfund.co.uk/apply-key-fund/, Wessex Reinvestment Trust http://www.wessexrt.co.uk/ Foundation East http://www.foundationeast.org/ and London Rebuilding Society http://www.londonrebuilding.com/

Community: Is there a fundraising strategy in place that targets funders most relevant to the community sports organization, the project and the sums required?
Community: Are you satisfied that any capital costs required can be secured?
Community: Have any pre-application discussions taken place with potential funders?
Community: Has the time required to raise the necessary funds been factored into the development process?
Local authority: Have you provided assurances in writing about the intention to transfer the site to provide assurance to funders?