Money talks – and so do people.
The co-op model of business is one where the voices that matter are not those of distant investors, but members – the people who are up close and involved in the business. That makes a difference. But every business needs finance and capital, so how do co-ops cope with the trade-off between access to capital and ownership based on participation?
The relationship, says Arnold Kuipers, Director of Rabobank in Europe, is ‘a tense one’. Arnold was the opening speaker at an outstanding roundtable that we organised this week in London, along with our sisters, Building Societies Association and Association for Financial Mutuals (which has just merged with the British Health Care Association, which is good news).
The experience of Rabobank itself ranges from member capital and guarantees at the outset to a point at which there was no need for external capital. More recently, it developed a model for member shares, as a minority of their capital base built on retained earnings – which, through the sweepstake of regulatory policy, is now sold to institutions outside.
The headline conclusion was that there is no avoiding the trade offs if you need capital. But there is a lot of room for manoeuvre in terms of designing the approach you take to avoid the risks, and in structuring your business around a true understanding of the full costs and opportunities of external capital.
We will be working with our members on models for member capital raising, building on the success story of the last decade around community shares. Pioneered, or rather renewed, by Co-operatives UK, working with Locality and with the support of the Department for Communities and Local Government, since 2009, around 400 community businesses have raised around £120 million in member capital. That is real social investment.
Arnold Kuiper’s presentation is here: arnolds-presentation-co-operatives-uk