Managing community funds

Models of fund management

There are three* main options for managing a fund:

  • Management by the community: the community sets up its own organisation or uses another suitable existing one
  • Management by a broker: the community engages an agency to manage the fund
  • Management by the local authority: the local authority distributes funds (commercial wind farms only)

*Developers themselves sometimes take an active role in helping communities make decisions about how or where community benefit funds could be spent and recently have been taking a more proactive approach to managing funds.

A community may have to decide which model best suits its local circumstances. There are a number of essential characteristics which any arrangement should have. These are:

  • Legality: the organisation managing the fund must have the power to do so and comply with any legal and regulatory requirements.
  • Effectiveness: the arrangements must enable the objectives for which the income is being used to be achieved.
  • Transparency: the management arrangements should be clear so that it is possible to see what income has been received and how it has been used.
  • Accountability: the arrangements should include clear governance and accountability for managing the fund.
  • Efficiency: the arrangements should be cost-effective so that as much as possible of the income is used to benefit the local community.
  • Community friendly: the arrangements should be easily understood and accessible to local people and organisations.
  • Autonomy / independence: the degree of local control that is desired balanced by the community’s ability and willingness to manage the associated risks.
  • Capacity: the ability and skills available locally match the size of the task, taking recognition of the time commitment needed.

Consider the following in making the choice:

  • which option best meets the identified needs of your community?
  • which is most likely to deliver the most benefits to your community?
  • which option would your community support?
  • is there an existing local organisation which could manage the fund and is willing to do so or does your community have the commitment and capacity to run a new organisation?
  • consider the cost effectiveness of your solution
  • how would the fund best be used in your community (e.g. for grants schemes, strategic local investment or external investment to generate additional income)?
  • are there any additional requirements specified by the developer (where appropriate)?

When deciding which option to use in managing your community funds the best advice and information may
come from discussions with communities who have already done this.

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