NCBA Research: Equity Fund for Coops Posted by AVCU on 1:53 PM

CUNA’s Cooperative Alliance Committee, chaired by AVCU President Joe Bergeron, recently heard a report from the National Cooperative Business Association (NCBA) on plans to explore development of an equity fund composed of investments by individuals and cooperatives for investment in high quality cooperative based projects.

In its effort to secure additional access to capital for all cooperatives, NCBA convened the inaugural meeting of its Equity Fund Planning Committee to implement recommendations made in a recently completed Feasibility Study. On January 28^th in Washington D.C., the committee reviewed a Feasibility Study prepared by the Calvert Foundation, which recommended a private equity fund to support the growth and development of cooperatives. The committee’s purpose is to create a business plan for a national Cooperative Equity Fund that will accept investments from individuals, cooperatives and other businesses, foundations and others, to invest exclusively in cooperatively-owned organizations. These investments will provide a source of equity capital for new and expanding cooperatives, enhancing opportunities to grow what many consider to be the best business model for economic and social progress.

Meanwhile, the Obama Administration's FY2011 budget has boosted funding of the Rural Cooperative Development Grant (RCDG) Program to $16.8 million. The RCDG is the sole budget item dedicated to developing U.S. cooperatives, and provides funding for more than 20 co-op development centers serving more than 40 states. The new amount (an increase of $5.5 million) is significant and does not include the $3.64 million for grants to support small and socially disadvantaged producers. Last year, the program received its first real increase in many years, from $6 million to $11.5, which has helped the centers more adequately respond to the growing need for business development support in rural areas. While the funding still needs approval in the House and Senate appropriations process, the President’s proposal helps make the case for cooperatives.