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Funding Explained

(Michael Bryant)

The B4RN Concept

The operational model underpinning Broadband for the Rural North (B4RN) combines community endeavour with a non-profit professional contribution to build hyperfast fibre broadband networks at a fraction of the cost of a purely commercial approach. Even so, materials and some labour costs have to be paid for, so every B4RN community project has a financial component.

The finances for a project fall into two categories, the core build element and the local element.

The core build is the main infrastructure for a network, comprising the ducting and chambers which distribute the network throughout the community, the main control cabinet and the optical fibre itself. In addition, although voluntary and local low-cost labour are used wherever possible, some technical or complex build work will require the use of professional contractors. When a project is first assessed, B4RN estimates the core costs on the basis of the proposed route map for the network and experience of previous projects and sets that as a financial target for the relevant community. B4RN pays directly for the core build from capital resources and the community's obligation is to contribute to those resources by investing in B4RN via shares or loans to a level equivalent to the set target.

Although every B4RN project is run by local volunteers, there will inevitably be costs involved in managing and implementing a project. These costs form the local element. At the most mundane level, there will be routine administrative costs such as printing, transportation, telecomms. and so on, and the work of volunteer build-teams will need to be supported by tools and equipment purchased at the local level.

What it Means for Casterton

Core Build

Thanks to the compact nature of the local community, the core build budget for Casterton was set by B4RN very modestly at just under £70,000 (some communities have targets over three times as much), so that is the figure we adopted for our investment target. In September 2016 B4RN investments attributable to Casterton residents reached £75,500, easily meeting our financial obligations to get our core network built. The following detail is therefore given as a matter of information rather than an invitation to participate in the B4RN investment schemes.

B4RN have two basic schemes for investment, through share purchases and through loans to the company.

In simple terms, each share has a nominal value of £1 and can only ever be sold back to B4RN for £1 (after having been held for four years), but the sweetener is that, because B4RN is an Enterprise Initiative Scheme company, tax payers can claim back from HMRC 30% of the value of their investment, effectively reducing the cost of every £100 worth of shares to £70. In addition, after shares have been held for three years, they start earning interest (currently 5%) paid annually as additional shares and for every £1,500 of investment a subscriber is entitled to a free B4RN fibre installation (saving £150).

The B4RN loan investment scheme comprises two options, five or ten year term investments currently earning 5% per annum. For the ten year scheme it is possible to negotiate a draw-down arrangement so that the investment can be used to generate an income stream.

In either case, as long as the investor made it clear at the application stage that they wanted their investment to be associated with the Casterton Project then their investment would count towards Casterton's £70,000 target.

Although we have met our core build target it is in our interest that B4RN is well resourced, so If you would like to invest in B4RN shares then download an application form. You have to apply using the paper form, but you can pay for the shares by BACS. The bank details are on the form and you can use your surname+01 as the reference 'number' (no need to contact B4RN as it suggests on the form). The minimum investment is £100 and the maximum £100,000.

If you are attracted to the loan option then you have to deal directly with B4RN. Give them a call on 01524 555887 and ask for details of the loan scheme.

Either way, if you decide to invest, just remember to tick the 'designated for a specific area' box on the form and write rext to it “FOR CASTERTON”. Even though we have met our target it is useful for B4RN to know if you are positively supporting our project.

Local Costs

Your local project is run by a team of volunteers under the auspices of a formally constituted body called The B4RN For Casterton Group. We normally shorten that to B4RN for Casterton and refer to the volunteer team as The Project Team.

As a legal entity we have a management committee with elected officers and we operate a bank account to handle local finances which requires at least two signatures to withdraw funds. Our constitution has safeguards against misuse of funds by any committee member.

We call our local element funding our Extras Fund and have added to it through a small grant, fund-raising activity and through direct donations. Now that the project is nearing its conclusion we are no longer seeking to add to the Extras Fund.

Many thanks to all those who have helped the project with any kind of financial contribution.

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