Brought to you in partnership with Locality, Plunkett UK and Power to Change
The Community Shares Handbook
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4.2 Membership offers

Purpose

The primary purpose of a membership offer is to recruit members rather than to raise investment capital. Building up the membership can be an important starting point for many community businesses, especially those hoping to attract significant amounts of public funding. Members can also contribute significantly to strengthening the business model of the organisation, not only by investing capital but also by contributing to the business as customers, volunteers, supporters, activists, and even suppliers or paid workers.

A membership offer is often appropriate for societies at the pre-start stage that need to raise development finance to test and prove the viability of their business proposal.  This development finance will usually take the form of gifts, grants and donations; although some societies may find it easier to raise this finance through a pioneer share offer. Members are more likely to donate than non-members, and although donations should never be a condition of membership, people are more likely to be incentivised to donate to a society if they are members.

Structure

Before making a membership offer, it is important to plan how the society’s relationship with members will evolve over time. The rules of the society must enable it to make a membership offer without compromising its ability to make other types of share offer in the future. This may mean establishing a distinct class of membership share (see Section 2.2.5) that is neither withdrawable nor transferable.

It may require the member to pay an annual subscription. The subscription rate should reflect the cost of providing membership services, and not be used to raise development finance for the society, unless this is explicitly stated in the offer document. Annual subscriptions are an effective way of ensuring that members still support the society and want to be members. Alternatively, the membership rules of the society can include other requirements that ensure only those who express an interest in membership remain as members.

Contents

Compared with other types of offer document, a membership offer document can be fairly brief, typically no more than 500 words or a single side of A4. The document should focus on explaining the purpose of the society, the benefits of membership, and the benefits it aims to generate for the wider community. It should also provide the basic information highlighted in Section 5.2, bearing in mind the following points:

  • The minimum investment required to become a member should be restricted to a nominal amount. Many societies set this as low as £1, although this can be costly for societies because of the expense of servicing members. More typically, the amount ranges from £5 to £25.
  • Any requirement to pay an annual subscription to maintain membership should be clearly stated.
  • If the shares being offered are non-withdrawable and non-transferable, this should be stated, but it also obviates the need to provide the following basic information: financial risk, withdrawable share capital, and restrictions on financial return.