2016
TAN Suee Chieh, Chuin Ting Weber, Bruno Roelants, and others
"The Capital Conundrum for Co-operatives," published by the International Co-operative Alliance in 2016, explores the challenges faced by co-operatives in securing long-term capital. The report highlights the intricate relationship between co-operative capital and Co-operative Principles, advocating for a concept of "philosophical capital" alongside financial investment. It presents three approaches for capital engagement: adhering to principles while seeking outside capital, adapting to market demands while preserving core values, and transforming both market paradigms and principles to meet evolving needs. Noteworthy case studies illustrate successful strategies, such as worker cooperatives utilizing indivisible reserves and Rabobank's innovative member certificates. The report concludes that external capital can align with cooperative philosophy if structured appropriately, ensuring that investors do not gain voting rights and their returns are not linked to profit maximization. Ultimately, it emphasizes the potential for co-operatives to raise necessary capital while maintaining their foundational principles.
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