Investing in Your Community

Welcome to the Community investment section of the Knowledge centre. This section of resource is about giving you the essential information you require after the delivery of your project. Click on the actions you are interested in to learn more.

Community investment
Complete funding policies
Define governance and organisational structure
Define funding process
Define funding procedure
Yield analysis
What am I getting myself and my community into?

Complete funding Policies

It is important for Community Trusts to have a strong Funding Policy to set out the principles for guiding decisions on spend of community income. A good quality Funding Policy can help manage the expectations of your wider community, ensure you don’t lose sight of what you want to achieve and help avoid future conflict over funding decisions.

The Funding Policy should relate closely to the priorities identified in your Community Development Plan (CDP): The Community Development Plan should clearly set out the key aims which you want to achieve with your fund and the Funding Policy will set the parameters by which you are able to fund it.

The CDP identifies the needs and wishes of the community and sets out a plan for prioritising and addressing them over the projected duration of the income stream as follows:

The needs and requirements of the community

The CDP should identify the services, amenities and facilities that are lacking or missing in your area. This should be backed up by evidence from community consultation (where the community identify and prioritise their needs) and reference to local and national statistics, where appropriate.

A plan for how your community will address the needs and requirements

The CDP should contain an action plan detailing how the needs and requirements will be addressed in both the short and long-term – this should also be subject to periodic review and update, where necessary. The community needs can be addressed through projects which provide new or improved services, activities, amenities and facilities. Set out the order in which you wish to develop your projects according to the priorities you have identified.

If it has been a couple of years since your community put together its Community Development Plan, revisit it and ensure it is still relevant and fit for purpose. The community’s needs and priorities may have changed and the CDP should be updated regularly to ensure it is still fit for purpose.

Good community consultation and input to the CDP will help your community group to ensure that the Funding Policy reflects the community’s wishes, whilst maintaining community cohesion and local consensus. The CDP provides you with information that helps you decide what local funding policies are needed to guide what and who the fund will ultimately benefit. The link between the CDP and Funding Policy gives transparency to your community group’s decision making process.

The Funding Policy also can set out the ethical requirements or technical and geographical restrictions you want to put on the fund. These policies will be used to inform the eligibility and assessment criteria, and the application process for your fund. Keep in mind how your own Funding Policy will relate to other local and wider funding policies and strategies and be mindful of not duplicating or assuming the responsibility of other organisations such as your local authority or their services.

The following are examples of questions you might want to provide guidance for through your funding policies:

  • Do you want your policy to prioritise themes e.g. fuel poverty, renewable energy and training?
  • Will your policy set out who will distribute the funds? You’re Trust, an external organisation or an assessment panel?
  • Who will be eligible to apply for funding? Third, Public and Private Sector?
  • What will you fund? Capital and revenue? Grant and loan?
  • Will there be a maximum funding limit?
  • Do you require match funding?
  • Do you want to give a larger number of small awards or a small number of large awards?
  • Would you have any ethical considerations/restrictions?
  • How will you set your terms & conditions?
  • How will you implement or enforce grant terms & conditions?


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Governance and Organisational Structure

As an intermediary body supporting Community Councils and developers, the Scottish Community Foundation has developed models of practice to assist with the recruitment and selection of a local assessment panel. In general, Community Councils have a designated place on the panel and the remaining members are recruited from the wider community. The numbers can vary depending on the size of a panel; general between 6 and 12 members with a 2:1 ratio of community Council to community members.

The emphasis is on providing the opportunity for community members to be nominated or self nominate themselves to the local panel. Allowing the panel to reflect the broad interests of a local community and not be perceived as the ‘usual suspects’.  Community Councils are encouraged to lead on a process for recruitment which is open, transparent and publicly available. Guidance is provided on the pros and cons of the preferred nomination process which can range from an open public meeting to a closed ballot is provided. Community members are encouraged to consider and share what they feel they can bring to a panel. The selection process (should there be more people than places) will use the skills and experience section to assist with the selection process bringing a mix of experience to the panel. Panel members generally serve for between 1 and 3 years and the identification of new panel members reflects the recruitment process.


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Define Funding Process

Hopefully, the preceding sections have helped your community established key related elements that will be a pre-requisite to any community fund distribution scheme:

  • Why is your community fund being created,
  • What sort of fund is being created
  • What the structures are that will allow the fund to be administered,
  • Who is going to the administer this fund, and, lastly,
  • What are the local funding policies needed that will guide what and who the fund will ultimately benefit .

With these key elements broadly in place, the next few sections can now focus on the How: How to create the practical mechanisms which will allow a community fund to operate in practice.

We hope to help you define:

  • the processes that you will need to establish to allow fund distribution,
  • the procedures necessary to deliver these processes and finally discuss
  • the paperwork that:
  • will be used to communicate the processes and procedures to potential beneficiaries,
  • will support the processes and procedures and ultimately
  • will allow for recording, monitoring and evaluating your completed fund distribution schemes when they become active.

The Process

In essence, we are trying to create a clear and defensible way to:
capture all the potential ideas in the community for things that could be funded, then
scrutinise these in order to identify and support suitable activities, and
the best ways to use funds to achieve our desired outcomes:



Early screening - Eligibility Criteria

The most straight forward way to focus distribution of funds at an early stage is by the use and communication of eligibility criteria. If these are well thought out and clear, they allow early screening of proposals and projects and can save a huge amount of unnecessary work for both potential beneficiaries and the fund administrators.


Geographical area

  • of the overall defined area of benefit,
  • of the activity proposed,
  • of activity or residency of benefitting individuals/groups/enterprises,

Nature of the applicant

  • Resident/Sex/Demographic (but be aware and take advice on any potentially exclusive measures which may be perceived as in contradiction to overriding human rights legislation)
  • Individuals/Groups/Enterprises
  • Not for profit/private
  • Formally constituted/new/emerging

Nature of the activity

  • Community and Group Reputation - Safe, legal, fair and honest?
  • Size/scale – different approach based on scale of financial commitment etc?
  • Well considered – evidence of research of need, cost and logistics?
  • Timescale - Discrete or repeated event, prolonged duration, or open ended activities?
  • Additionality – is it in competition and conflict with or a repetition of existing public and private sector activity
  • Partnerships – does it involve working with other partners? Are you excluded or encouraging this?

Special interest of groups and activities (included or excluded?)

  • overall sustainability/resilience
  • environmental preservation and/or energy efficiency
  • economic viability and/or incubation of enterprise
  • focussed social inclusion and enablement
  • other ethical
  • political
  • religious
  • demography

Early screening - Support

Although a useful management tool, if the eligibility criteria are extensive and/or too proscriptive they may inhibit worthwhile but partially formed ideas and applicants from coming forward. So, it may also strengthen your scheme to have a two stage approach, which allows initial expressions of interest from applicants but has follow up support for proposal development that will benefit.


Depending on available resources and the fund manager’s assessment of need for enablement within each community, this can take the form of anything from written guidance and checklists to a dedicated grants officer who can provide advice and signpost groups to ways to make sure they communicate how their ideas are eligible.

Development of ideas

After initial screening for eligibility it is likely that most proposals will need some form of research and development in order to have as much information as possible available to allow the proposal to be assessed fully.

Commonly the keys factor as to the level of work needed to do this closely mirrors the size, cost and complexity of the proposals.

If the proposal is to request small funding for a simple one-off event such as a youth trip then very little extra information may be required other than travel details, cost, and confirmation of eligibility. In contrast a proposal to acquire and run a large capital asset such as a community care facility, or set up a significant social enterprise for food production and retail, is likely to require considerably more support evidence. This can take the form of more information about the detailed nature of the proposal, its costs, risks, evidence of eligible and desirable benefit from it being funded.

For example:

  • Evidence of demand and need assessment
  • Feasibility studies
  • Alternative options appraisals
  • Detailed physical, operational and business plans
  • Options to acquire and /or lease
  • Permitting and/or professional certification
  • Contracts/agreements with partners and/or demonstration of supply chains in place.
  • Safety, environmental and financial risk assessments.


As with earlier stages, it may be necessary to plan to provide support for this idea development work, again to match resource, need and demand within your community.

Assessment and Selection

Irrespective of which model of fund management we have adopted and the process we have put into place so far, as long as we are actively managing funds and/or funds are finite, the next stage in the process is usually to have some sort of assessment of proposals to allow selection of projects and activities to fund. This is invariably the area of fund management which experiences the highest levels of controversy and potential criticism as it is most closely associated with the immediate effects on what receives the resources and what doesn’t within the community.

Although strongly inter-related the two process are distinct and different. The assessment process will examine all proposals and their support information and quantify their merit in a way that will let them be selected, but the selection process will take other things, and external factors, into account; such as availability of funds, relative merits of proposals in relation to funding policy priorities etc. over and above individual proposal merits. To provide a clear and defensible process, it can be wise to keep the two aspects separately defined.

Assessment – Using Criteria

Assessment can be anything from an open discussion of the strength and merits of a proposal to a very proscriptive quantitative scoring of the proposal against every aim, objective and priority in your community development plans and funding polices. Usually an approach somewhere in-between the two is found in practice, but would recommend that the process should be documentable as a minimum.

Like the early screening process having criteria as reference to assess against helps structure your assessment. As this exercise may need to be more thorough than the yes/no of screening, it can be helpful to have a sliding scale (0-3?) to assess how well the proposal meets the reference criteria we have defined previously in your CDPs and funding policy information.

Addresses local fuel poverty plans 
(0 = not at all, 1 = slightly, 2 = moderately, 3 = completely)
Is financially self sustaining
(0 = not at all, 1 = slightly, 2 = moderately, 3 = completely)


It is possible to have wider scales if you feel you are not achieving enough differentiation on certain topics or between proposals. Normally any projects that have a negative impact on assessable criteria would have failed to be eligible at an early stage, but it is also possible to include negative category scoring so that proposals that might have limited negative effect but overriding positive effects can be assessed.

Assessment - Weighting

In addition it is possible to include weighting in any assessment process. The weighting can reflect priorities that we have as fund managers. These can be fixed or able to be adjusted to match demand, need and previous funding activity. However, like all previous process, it is will be good to have a demonstrable and defensible justification of why this exists and/or has been altered.

After these continue the process, looking at: Selection; Granting and administering funds; Monitoring outcomes and Aftercare

Fund management

Transparency and openness; cost; staffing; accounts; payment methods - in advance or post spend; regular instalments; % of funding; existing community company structure – need for change?


Geographical area, special interest groups eg political or religious (inclusive or exclusive?)
Assessment criteria
Assessing and decision making – scoring system
Communication – process for appl.; Successful/unsuccessful appl.; speed of response; single point of contact; support for applicants


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Define Funding Procedure

Assessment - if scoring, individual discussed or combination of both. Use of “independent” assessors or arm length group/experts
Selection – Funders do not normally publically publish details of unsuccessful projects but it is normal to respond to queries as to why something was not successful. You are unlikely to fall under the FOI legislation but it is good practice to go through proposals with unsuccessful parties if requested to do so.








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