It seems like many co-ops are either in the middle of, just finished, or are about to start a project. And all of those projects need adequate capital to be successful. Raising money from co-op owners has become a standard component of project capitalization and the amounts co-ops are raising has been growing. As with any entrepreneurial venture there are risks, both in raising capital from owners and in the projects themselves. But the risks can be mitigated with proper planning and execution, and owner capital campaigns can be good for co-ops for a lot of reasons:
- Capital from owners is often viewed as equity, strengthening the balance sheet
- Owners tend to be very understanding if the co-op needs to renegotiate terms, or wishes to raise additional money
- Providing this responsible, local investment opportunity adds another facet to the relationship between the co-op and its owners while providing an additional benefit to being a co-op owner
But in this turbulent, and at times disconcerting, period in our society, raising capital from owners has other, farther-reaching effects.
Maintaining independence and local control. By reducing the amount of outside financing needed, our co-ops keep more control in the hands of the owners, where it belongs. Even the most understanding local banks and credit unions may attempt to control who gets paid, and when, and may also dictate how the money is used in the co-op. This is especially likely if the project hits some snags or post-project financial performance is below projections. Autonomy and Independence is a cooperative principle – demonstrate it.
Differentiation and pride of ownership. New grocery stores open, relocate or renovate in most communities, from time to time. But offering our owners the opportunity to have a clear and direct part in our projects, through their loans or investments, is something our competitors don’t offer. It not only makes us special, but gives us many great opportunities to tell our story. Storytelling can build connection and pride in our co-ops and communities and that can build loyalty and sales!
Making our communities and country more just. A great deal of injustice in our country, both historically and today, is deeply rooted in concentration of capital. Keeping more of our money out of large lending institutions, and keeping it in our communities, being used by locally owned organizations like our co-ops and earning a fair return for our co-op owners is a not-so-small way we can make our voices heard and stand up for our ideals. Our co-ops can be heroes by providing this opportunity.
Grab and Go Solutions is a resource from CDS Consulting Co-op to provide easy to implement solutions to common issues facing food co-ops. Watch for future releases tackling a wide variety of topics including HR, governance, member engagement, safety, store and growth.
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