TAN Suee Chieh, Chuin Ting Weber, Bruno Roelants & others
International Co-operative Alliance
2016
🌍 Context and Publisher "The Capital Conundrum for Co-operatives," published in 2016 by the International Co-operative Alliance (ICA), presents an in-depth analysis of the challenges that co-operatives face in accessing long-term capital. The ICA, a leading global organization in the cooperative movement, aims to promote and develop cooperative enterprises worldwide. This report is a product of the Blue Ribbon Commission, which comprises experts dedicated to exploring cooperative financing issues and enhancing the sustainability of cooperative models. 📊 Key Findings The report identifies the intricate relationship between cooperative capital and Co-operative Principles, emphasizing that "philosophical capital" often takes precedence over mere financial investment. It outlines three primary approaches to capital engagement for cooperatives: adhering to Co-operative Principles while seeking external capital, adapting to market realities without compromising core principles, and transforming both market paradigms and cooperative principles to suit evolving contexts. 🔍 Case Studies and Solutions Several case studies highlight successful capital raising strategies within cooperatives. Worker cooperatives have shown higher survival rates by utilizing indivisible reserves, while Rabobank has innovatively employed member certificates as hybrid capital instruments. Additionally, Fonterra developed a fund allowing farmers to sell economic rights while retaining voting control, illustrating that external capital can coexist with cooperative philosophies when structured appropriately. 💡 Compatibility of External Capital A significant finding of the report is the assertion that external capital can align with cooperative values if it is carefully structured. The report argues that external investors should not have voting power and that their returns should not be strictly tied to profit maximization. This perspective is crucial for sustaining the cooperative identity while meeting modern capital needs. 👥 Expertise of Authors The report features contributions from various specialists across cooperative sectors, each providing insights based on their expertise. Notable contributors include TAN Suee Chieh and Chuin Ting Weber (introduction and editorial), Bruno Roelants (capital building in industrial and service cooperatives), and George Ombado (capital needs of the African cooperative sector), among others. Their diverse backgrounds enrich the analysis and provide a comprehensive understanding of capital building across different types of cooperatives. 🏁 Conclusion In conclusion, while cooperatives face distinct challenges in securing capital, the report offers viable solutions that uphold cooperative principles. It suggests that innovation in financial instruments and the careful structuring of investor rights can enable cooperatives to thrive in the modern economy while maintaining their foundational values.
Published in 2016 by the International Co-operative Alliance (ICA), "The Capital Conundrum for Co-operatives" is a comprehensive report from the Alliance's Blue Ribbon Commission examining the challenges co-operatives face in accessing suitable long-term capital.
The report's key findings include:
The relationship between co-operative capital and Co-operative Principles is complex, with emphasis on "philosophical capital" rather than purely financial investment
Three main approaches to capital engagement are proposed:Adhering to Co-operative Principles while seeking capital beyond membershipAdapting to market realities while preserving existing principlesTransforming both market paradigm and principles to reflect changing contexts
The report features several notable case studies:Worker cooperatives demonstrating higher survival rates when using indivisible reservesRabobank's innovative use of member certificates as hybrid capital instrumentsFonterra's creation of a fund allowing farmers to sell economic rights while retaining voting control
A crucial finding is that external capital can be compatible with cooperative philosophy if properly structured - external investors should not gain voting power and their rewards should not be tied to profitability maximization.
The report emphasizes that cooperatives can successfully raise capital while maintaining their core principles through innovative financial instruments and careful structuring of investor rights.
The authors are specialists in various cooperative sectors, bringing diverse expertise to examine capital building across different types of cooperatives, from worker cooperatives to large financial institutions.
The report concludes that while cooperatives face unique challenges in accessing capital, there are viable solutions that preserve cooperative identity while meeting modern capital needs.
The report was authored by multiple experts, each contributing chapters based on their expertise:
- TAN Suee Chieh and Chuin Ting Weber - Introduction and editorial
- Bruno Roelants - Capital Building in Industrial and Service Co-operatives
- Frank Lowery and Wayne Schatz - The Co-operators Group Limited: A Canadian Perspective
- Arnold Kuijpers and Hans Groeneveld - Co-operative Capital of a Large Financial Co-operative: The Capitalization Evolution of Rabobank
- Bill Hampel - Co-operative Capital: A Necessary Evil - The Case of US Credit Unions
- Jean-Louis Bancel - Co-operative capital: An essential combination of science and conscience
- Peter Hunt - New capital instruments for financial mutuals: Ideas for co-operatives from the UK experience
- George Ombado - Co-operative Principles and the Capital Needs of the African Co-operative Sector
- Professor Nicola M Shadbolt and Alex Duncan - Perspectives from the Ground: Fonterra Co-operative Case Study