This report – commissioned and published by Connected Places Catapult – examines the diverse ecosystem of community-based finance in the UK, mapping the key actors, mechanisms, and success stories that demonstrate its potential. We explore how individual citizens, high-net-worth individuals, local authorities, and institutional investors can better mobilise their capital for local impact. Through case studies and analysis, we identify both the barriers preventing these mechanisms from scaling and the opportunities to overcome them.
The UK stands at a pivotal moment for transforming how finance can drive local economic development. The government’s “Invest 2035” industrial strategy green paper, published in November 2024, sets out an ambitious vision for increasing market dynamism and directing capital toward growth-driving sectors.
Combined with renewed commitments to devolution, and reforms to the Local Government Pension Scheme (LGPS), these policy shifts create significant opportunities for regions to develop coherent, long-term strategies for inclusive growth.
This evolving landscape presents a particularly promising moment for place- based impact investing (PBII), where investors collaborate with local authorities and communities to develop investment propositions tailored to specific regional needs. In deploying capital to local impact and innovation opportunities, there is significant untapped potential in the UK’s community-based finance ecosystem – both in attracting institutional investment and enabling local stakeholders to invest directly in their communities’ future.
There are a range of organisations and intermediaries already demonstrating effective ways to mobilise local capital alongside institutional investment. Online investment platforms enable citizens to invest in green infrastructure with as little as £5, while Community Development Finance Institutions (CDFIs) provide crucial support to underserved businesses. Local funds drive strategic investment in social enterprises and community businesses. Together, these pioneers create blueprints for inclusive community-led economic growth that could be replicated across the country.
At a time when communities across the UK are seeking new ways to drive sustainable economic development, community-based finance offers a powerful tool for ensuring growth is both inclusive and locally-led. By understanding and building on existing success stories, while also addressing key challenges, we can create a more diverse and resilient financial ecosystem that better serves local needs and aspirations.