Shetland’s communities were consulted on the best way to manage a community fund from the proposed Viking Energy Wind Farm - and any other renewable energy projects that may be proposed. SAOS, (Scottish Agricultural Organisation Society Ltd), a wholly independent organisation, were contracted by Voluntary Action Shetland (VAS) to consult with Shetland’s communities on various options for the fund.

The consultation is guided by a Steering Group set up by the Association of Shetland Community Councils with representatives from various Community Councils who are both for and against the Wind Farm whose administration is assisted by VAS.

Shetland folk were invited to complete a consultation response on a leaflet in the Shetland Times or online; see full report by clicking on the following link.

What is it?

The proposed wind farm being developed by Viking Energy would affect a number of communities directly and Shetland in general. Viking Energy recognises this and is offering direct benefits in the form of an annual fund for the lifetime of the wind farm. Shetland’s communities would have control of the fund to spend on projects they believe have merit.

Who benefits?

The fund would be solely for the benefit of Shetland and, if directed by the consultation, a proportion might be ring fenced for the communities most affected including Lunnasting, North Nesting, South Nesting, Delting, East Burrafirth, Aithsting and Weisdale. It is very important that Shetlanders are happy that the fund will be distributed equitably and fairly and on projects that provide real and lasting benefits. In order to have flexibility it is not intended to limit where funds can be spent within Shetland or who can apply for them, but importantly that the decisions on what projects are funded lie with Shetlanders. The steering group are currently working on distribution criteria to reflect the findings of the consultation.

What are the benefits?

The aim of the fund is to sponsor educational, community, economic development, environmental, energy efficiency and general community amenity schemes or projects. Also to assist with projects that require an element of private funding to help unlock funding sources from elsewhere such as lottery grants. The consultation asks for examples of how the funds might be used within the various communities. Should the wind farm go ahead this will help decide the objectives of the fund.

How is the fund to be managed?

The fund must operate in an open and accountable way and it is essential that the most appropriate legal structure and guidelines are used. This will also ensure that arrangements are workable between the different communities. The consultation considered whether the fund should be governed as a registered charity, which although bringing taxable benefits to Viking Energy, may constrain the flexibility and use of the fund.

What possibilities were explored?

Two types of organisation were considered:

Co-operative for the Benefit of the Community
Company Limited by Guarantee

Each of these has some advantages and disadvantages and the appropriate structure for the management of the fund is a key issue for the consultation.

The prefered structure was a Community Coop; this is the direction the steering group has taken, currently this does not have charitable status.

The governing rules of the Community Benefit Fund Ltd can be downloaded here.

Note: A Community Interest Company was also considered, but it is designed for trading activities providing limited returns on capital invested with an asset lock. The organisation to manage the fund will not be a trading company and will not own physical assets. “Asset Lock” is a general term used to cover all the provisions designed to ensure that the assets of the CIC (including any profits or other surpluses generated by its activities) are used for the benefit of the community.

What is a Community Coop?

A Co-operative for the Benefit of the Community is set up using Industrial & Provident Societies Acts using model rules pre-registered with the Financial Services Authority that require little amendment. They have an in-built democratic structure protected by the Act based on one member one vote, the members being those who will use the services of the co-op i.e. those living in Shetland. The Act also refers to being a bonafide co-operative which means adhering to the seven principles of co-operation; those include democracy, independence and concern for the community.

What about charitable status?

Charitable status means that the funds provided by Viking Energy are not taxed at source. The objects of the charity are agreed by the Office of the Scottish Charity Regulator who check to ensure that the work funded by the charity comply with the charitable objects and an annual report is made to provide information on activities. However, charitable objects are restrictive and may not cover certain types of project.