Community Benefit Funds – a review of their design, operation and governance

Over the last 15 years, community benefit funds from onshore wind renewable projects have become a valuable – even critical – source of independent funding into some of Scotland’s communities.

Despite attracting few accolades, the renewables sector has been quietly blazing a trail in its provision of this funding into communities not only by simply providing it in the first place, but also because of the primacy of communities themselves in determining how funds are used. 

Community benefit funds come in different shapes and sizes and there are many variables across and between arrangements. These include how the area of benefit is determined, who administers the annual payments, who is making decisions about fund strategy and spend and how accountable and transparent a fund is. But they are all local assets contributing to or complementing a range of local and national policy priorities.

The contrasting and divergent practice can make community benefit hard to pin down and despite efforts like the Community Benefits Register, ascertaining a more comprehensive and qualitative picture of community benefit practice in Scotland remains elusive. 

Foundation Scotland is the leading national administrator of community benefit funds in Scotland. Through the provision of specialist fund design, grant-making, facilitation and fund management services, we currently support more than 350 communities to distribute around £7m annually from seventy different community benefit funds. This is around 25-30% of the community benefit funds currently reaching Scotland’s communities. Because they are designed to suit the community they benefit, the funds vary in terms of governance, administration arrangements and impact.

Foundation Scotland is delighted to have appointed University of Strathclyde to undertake a study of the community benefit work it has been doing for over 15 years in partnership with communities and developers across Scotland. The project team, led by Professor Matt Hannon in the Hunter Centre for Entrepreneurship within Strathclyde Business School, brings an inter-disciplinary mix of expertise across business, public policy, engineering anthropology and community engagement – and a deep understanding of the challenges and opportunities of community-led action.

By reviewing key features of effective practice and lessons learned, this study aims to contribute to bridging the gap in knowledge and understanding about community benefit funds from renewables, and also be a resource to inform and influence evolving good practice in community led approaches to community benefit funds across other renewable technologies, emerging natural capital markets and the wider philanthropic and funding sectors.

Rachel Searle, Head of Communities and Impact at Foundation Scotland said: “This study is long overdue, and will provide a much-needed evidence base on what helps or hinders good practice, focusing particularly on the different community benefit fund models that we’re involved with and support. With projected community benefit funding from onshore wind alone set to increase to over £60,000,000 by 2030, it’s really important that learning from practice to date is identified and shared to help inform the next era of community benefit arrangements.”  

Matt Hannon, Professor of Sustainable Energy Business and Policy, Hunter Centre for Entrepreneurship, Strathclyde Business School, said: “Communities hold the key to achieving a fairer and greener future. It is therefore essential they feel empowered and represented by the transition to net-zero. Community benefit funds offer one potential tool, allowing communities to capture a larger share of revenue from the fast-growing renewables sector and giving them control over how this is spent. However, different benefit fund models have emerged, with relatively little critique of what works best across different contexts. This timely project explores what constitutes best practice for community benefit funds in terms of delivering long-term community wealth building.”