2016
TAN Suee Chieh, Chuin Ting Weber, Bruno Roelants, and others
Published in 2016 by the International Co-operative Alliance (ICA), "The Capital Conundrum for Co-operatives" addresses the significant challenges that co-operatives encounter when trying to access suitable long-term capital. The report explores the intricate relationship between co-operative capital and the Co-operative Principles, highlighting the importance of "philosophical capital" over mere financial investment. This comprehensive analysis is the result of contributions from various experts in the cooperative sector, providing a well-rounded perspective on the topic. The report proposes three main approaches to capital engagement: adhering to Co-operative Principles while seeking capital beyond membership, adapting to market realities while preserving these principles, and transforming both market paradigms and principles to better reflect changing contexts. Notably, it features case studies, such as worker cooperatives that exhibit higher survival rates through the use of indivisible reserves and Rabobank's innovative member certificates serving as hybrid capital instruments. A pivotal finding of the study is that external capital can align with cooperative philosophy if structured appropriately. This means ensuring that external investors do not gain voting power and that their rewards are not directly linked to profit maximization. Ultimately, the report asserts that cooperatives can successfully raise capital while upholding their core principles through innovative financial instruments and careful structuring of investor rights, offering viable solutions that maintain cooperative identity amidst modern capital demands.
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