Managing community funds

An introduction to managing community funds

Across Scotland, communities are receiving income from renewable energy schemes which they can spend to benefit their local areas. There is now a growing body of knowledge on the advantages and disadvantages of different approaches and how they can be used to the communities’ best advantage.

Having a good idea of what outcomes you wish to achieve will help you make good decisions, and the recommendation is that planning should start before the first cheque arrives. If this is a community owned
and managed renewable energy project, planning and community consultation should start before you decide
that you should proceed with the project. A good community development plan will give some indication of the scale of the project you might want to meet the needs of your community. The development plan will also help you explain the project to others, particularly when you are seeking additional finance, and will provide the basis for decision making when, eventually, your project starts generating income.

Your structure and process should be in proportion to the scale of the fund at your disposal. There is no point setting up elaborate systems and governance to manage and distribute a small fund. Find the simplest, uncluttered solution while maintaining accountability and transparency. You will need some paperwork, but keep it in proportion to the scale of the task. Whether a large fund or a small fund it will need planning and the earlier this is done the better. It is up to you to decide what constitutes large as opposed to small, and this will not be the same for every group.

The resulting income can be used to benefit the local community in many ways, currently communities are choosing areas like:

  • creating a fund to provide grants for the benefit of the local community
  • investing in jobs, housing, new business starts (often community owned and run)
  • investing in energy efficiency measures
  • addressing fuel poverty
  • putting aside capital to replace the turbine
  • covering operating costs of your organisation
  • investing part of the income*

* Investment to provide some stability for the long term management of funds eg. investing in stocks and bonds, other renewable energy schemes.


Relationship between levels of ownership/control, risk/responsibility and income

Diagram Ownership relationships


Communities can attain benefit, revenue and investment from renewable energy projects in three ways. These
depend on, and are linked to, the type of ownership of the developments see Models of ownership

The case studies section gives examples and more information on these models.

Regardless of how the income is generated, an effective community fund should:

  • match locally identified needs
  • achieve maximum impact
  • have a fair and transparent process
  • show that money has been spent appropriately

These pages provide practical advice on what to consider in managing a fund. There are also examples of three communities and their chosen fund management model. This document does not give legal or tax advice.
In such situations it is recommended guidance is sought from an appropriate professional.

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