by Green Finance Institute | September 15, 2026

New research shows the full potential of councils accessing lower-cost, citizen-backed finance within existing prudential frameworks

The paper comes as councils face sustained demand for long-term capital investment and increasing pressure to diversify funding sources

London, UK, 15 September 2026:  The Green Finance Institute (GFI), in partnership with the University of Leeds, today launches new research showing Community Municipal Investments (CMIs) have matured into a credible, scalable and value-for-money addition to the local authority borrowing toolkit.

Arranged through Abundance Investment’s FCA-regulated platform and championed by the GFI since first launched in 2020, CMIs are a form of local authority borrowing that enables councils to raise capital directly from citizens and mission-aligned investors to fund local infrastructure and regeneration projects.

The paper, “Community Municipal Investments – Bringing the Benefits of NS&I to Local Government”, finds that CMIs consistently deliver borrowing costs below the Public Works Loan Board (PWLB) Certainty Rate – the benchmark for council borrowing. To date, 19 UK councils have raised over £30 million through the model at an average discount of 29 basis points below the PWLB Certainty Rate after fees, demonstrating that CMIs can deliver consistent value for money across different rate environments and the political spectrum. The research found that CMIs would have delivered savings for councils on around 89% of borrowing days over the past decade.

The findings point to a structural shift in how councils could fund investment. UK local authorities currently rely on a single, policy-dependent lending source. CMIs introduce a complementary, locally anchored funding channel, reducing exposure to Gilt-market volatility and changes in central government policy while broadening access to capital.

The analysis shows this is not a niche opportunity. With today’s limited tenor range, CMIs could meet the medium-term borrowing requirement of up to 42% of actively borrowing councils – equivalent to £2.3 billion per year. At scale, as envisioned in the paper, the model could deliver up to £76 million in total savings for the sector over the maturity period of that capital raised.

CMIs require no departure from established practice. Borrowing is governed by the Local Government Act 2003 and aligns fully with CIPFA’s Prudential Code. There is nothing new about the principle of citizens investing in their communities, and it was commonplace during the 19^th and 20^th centuries, until the 1980s. Municipal bonds enabled councils to raise capital directly from private individuals, which then led to the delivery of major public infrastructure during a period of rapid urbanisation. This practice fell into decline as administrative capacity at councils waned and PWLB became the dominant source of debt financing.

Beyond cost, CMIs bring system-wide benefits. By fixing rates at launch and raising funds over a defined period, they provide a structured alternative to day-to-day market timing. By diversifying funding sources, they strengthen treasury resilience.

By drawing on citizen and institutional capital, they unlock access to a deep and underutilised pool of UK savings. The paper highlights that UK households hold around £2.4 trillion (and growing) in direct-to-consumer savings and investments – which exceeds annual local authority borrowing needs. Evidence from comparable products shows strong demand for simple, trusted and income-generating investments, particularly where capital is deployed into tangible, local outcomes.

In this context, CMIs are well positioned to evolve beyond a financing tool into a structural part of the local government finance system. Over time, the paper suggests they could operate as an equivalent to NS&I at the local level delivering a durable, citizen-backed source of affordable finance that complements existing borrowing channels.

The model also strengthens the relationship between councils and citizens. By enabling people to invest directly in projects in their area, from energy infrastructure and housing to regeneration and community assets, CMIs provide greater transparency over how capital is deployed and contribute to rebuilding trust and public engagement in local government. The University of Leeds is publishing a complementary paper later this month, titled Making Places Better, Together, which establishes the non-financial value delivered by CMIs to date, including how the model helps reset the relationship between councils and residents by creating a shared civic mission to make places better, together.

Originally pioneered through Local Climate Bonds, CMIs are now being used across a wider range of capital programmes, with growing participation from both residents and institutional investors such as Unity Trust Bank and Esmée Fairbairn Foundation.

The paper concludes that scaling the market does not require new legislation or structural reform, but sustained use by councils and continued development of the investor base.

Miles Ashton, Associate Director at the GFI, said: “Community Municipal Investments are a credible, lower-cost complement to PWLB. At the same time, CMIs provide diversification away from a single funding source and open up access to a deep pool of citizen and values-aligned institutional capital.

At a system level, the opportunity is significant. Over time, CMIs have the potential to become a long-term, citizen-backed source of affordable finance for local government. NS&I has been transformative for central government over the last 160 years, and this model offers a clear pathway to deliver similar benefits at the local level as a low-cost, patient and diverse source of borrowing.”

Mark Davis, Professor of Economic Sociology at the University of Leeds, co-author of Making Places Better, Together report, said: “Rebuilding Britain is going to require new ways of financing local infrastructure while enhancing public purpose, developing innovative financing arrangements that support productive investment rather than financial extraction. CMIs provide councils and city-regions with access to locally rooted capital and strengthen civic engagement by keeping investment returns circulating within local economies. The evidence we’ve been able to gather and analyse through these two linked reports demonstrates both the financial and civic value of the Community Municipal Investment model. We have heard directly from councils and investors how the CMI is a vital civic innovation that is building stronger, fairer and more robust places for the future by giving people a real stake in the places they care about.”

Karl Harder, Co-founder and Joint Managing Director of Abundance Investment, said: “This report provides a vital evidence base for the potential of CMIs to deliver meaningful financial benefits to local councils as well as engaging local citizens to fund investments that create thriving local communities. Since 2020 nineteen councils have launched investments and delivered £30m of local investment. These councils have already seen the benefits of CMIs – saving money on borrowing costs, engaging citizens and making a positive social impact. The report demonstrates there is a clear pathway for CMIs to scale up and amplify these benefits significantly.”

Cllr Angus Millar, City Convener for Climate, Transport and City Centre Recovery, Glasgow City Council, said: “CMIs are a powerful new way to connect with our residents and highlight the green investment projects we are delivering in our local communities, but they are also an efficient financing tool that holds the promise of becoming a valuable way to diversify our sources of borrowing as it scales.”

Joseph Holmes, Chief Executive for West Berkshire Council, said: “Six years ago, West Berkshire Council helped pioneer a new model of local government finance. Community Municipal Investments have shown that local authorities can attract investment from their own communities, channel local wealth into local priorities, and foster a greater sense of ownership over the places people call home. As councils continue to face financial pressures and growing investment needs, CMIs have a vital role to play in building more resilient, engaged and financially empowered communities.”

Cllr Rowan Ree, Labour Councillor for Coningham Ward, Cabinet Member for Finance and Reform, London Borough of Hammersmith & Fulham, said: “CMIs are powerful model for building a more engaged relationship with our residents, but the financial argument is also strong, we have raised six loans, saved money each time versus the PWLB and found the process easy to use and scale.”

Joshua Meek, Chief Impact Officer, Unity Trust Bank, said: “Unity Trust Bank has committed to investing £15 million into Community Municipal Investments and has deployed over £8 million since 2025. The opportunity to invest alongside community members into a structured programme of climate action means Unity is confident that CMIs deliver meaningful activity on the ground. By working through local authorities, action is ‘place-based’ improving the ability to tailor climate action that is needed to support local communities to thrive in a transition to a low carbon economy. Of particular benefit to Unity is the engagement through Abundance and the Green Finance Institute which sets out clear steps to engage with CMIs, which is aligned to Unity’s double bottom line strategy.”