The discussion paper

Our first major output will be a discussion paper surveying the landscape of financing mechanisms for civic renewal. The paper will examine historic and international examples, develop design principles for both long-term civic funding settlements and for transitional investment mechanisms, and will assess a list of plausible mechanisms against these principles.

The initial list of mechanisms we are exploring is as follows:

• Hypothecated business levies. Brazil has financed civic infrastructure for decades through levies on big employers. Could Britain do the same? Could there be a role for levies, based on a principle of polluter pays, learning from how we pay for regulators? Or could we deploy a ‘use it or lose it’ levy, like the UK’s Apprenticeship Levy, to encourage businesses to invest in the communities where they are based?

• Collective place-based funding. In Britain we already invest in local infrastructure via developer contributions, and much of this money goes unspent. Could this or a similar mechanism be used to repair and maintain vital civic infrastructure? Or could a mechanism like Business Improvement Districts - a way for local businesses to agree and then mandate investment in shared local priorities - be adapted to agree investment in community priorities?

• Public funding via general taxation. There is a long history of investment in communities by the state, from the New Deal for Communities to the current Pride in Place programme. Often these programmes have been accused of being too top down, something Pride in Place is now grappling with. What role should direct state funding play in the mix, what are the downsides, and what mechanisms - e.g. spinouts, endowments - could safeguard true community ownership?

• Community shares and crowdfunding. Over the last decade we have seen significant innovation in methods for communities to fund civic work for themselves, not just raising money but fostering pride and ownership. Over £210m has been raised through Community Share Issues and far more through crowdfunding platforms. Could more be done to support these mechanisms, such as by repeating or expanding previous government match-funding?

• Memberships and subscriptions. Britain has a rich history of membership associations - friendly societies, working men's and women’s clubs, trades unions - and civic institutions like the National Trust. Some friendly societies, like the Manchester-based Oddfellows, still survive. What could be done to revive or amplify these traditions? 

• Foundation philanthropy. In the last decade there has been decisive investment in civic renewal by foundations. Today, the UK’s top ten endowments hold over £55 billion in assets and major foundations spend billions every year. Could the UK’s largest endowments come together to commit to a decade of joint investment? Could models like Pando Funds be used to invest into the underlying root systems of civic life? Can we design such funding to be long-term or even self-sustaining, so that it helps to mature the field of civic renewal, and builds sustainable community wealth?

• Private philanthropy and individual giving. Throughout the history of civic life, rich individuals like Andrew Carnegie played a formative role, funding libraries or gifting space for public parks. Could today’s ultra-High Net Worth individuals leave an equivalent legacy? What could be done to encourage this? And are there ways we could encourage a share of baby boomer inheritance to be channelled into the commons?

• Procurement and anchor institutions. One third of UK public spending - £400 billion - flows through procurement. Could we redirect even a fraction of this spend to local suppliers? Should this become a norm for anchor institutions like hospitals and universities; buying from, investing in, and hiring from, the communities in which they are based?

• Tax reliefs. Britain forgoes nearly £7 billion a year in tax revenue from reliefs on charities, but payroll giving is barely used; three-quarters of eligible employers don’t even offer it. Could a redesigned scheme unlock billions more? Would tax relief and payroll giving work better, and be more culturally resonant, if they were linked to the places people live and work?

• Impact investment. UK impact investment has grown 13-fold since 2011, but over half of this investment flows into housing. Could other products and models unlock more funding for civic activities, and for place-based social entrepreneurs? Could we make more use of place-based social investment funds? Could major assets like local government pension funds be tilted towards place-based investment and community wealth-building?

For each of these mechanisms, we will undertake financial modelling to understand how much they could viably contribute. We will also go beyond modelling to explore the wider qualities these mechanisms could support. We are particularly interested in:

• Behavioural and cultural effects. Britain’s civic history is full of institutions that were powerful in part because of their funding models: the voluntarist networks of friendly societies, the movement of working men's clubs, modern treasures like the National Trust, and models like coops. At their best, these institutions became vehicles for collective agency because they combined their funding model with membership. We will explore the potential to significantly expand these models.

• Resilience. In an unstable world, we need to consider the stability of any funding settlement. Indeed, resilience and adaptability is one reason civic capacity is valuable, and worth rebuilding. It is not a coincidence that some of the most robust responses to crises like the Covid pandemic were highly distributed, and led by communities. There is also growing recognition of the importance of a strong civic life to national security, civic preparedness, and disaster recovery. These qualities will be undermined if we fund civic renewal in ways that could be wiped out by a single decision in Whitehall, or a bad year in the markets. We therefore want to explore how resilient the various funding mechanisms would be to social, political, and economic shocks. As one aspect of this, we will explore the value of building community wealth.

The goal ultimately is to develop a series of funding mechanisms that, together, could support a new social contract between people, government, civic actors, and wealth-holders.

The Discussion Paper will support open discussion about the viability of these different mechanisms, and the contribution they could each make, as well as creative ideas about how these mechanisms could be combined. Reach out if you have initial reflections.