Summary: August 14, 2012 Calgary Community Capital Network
Topic: Cooperative investment models
The Calgary Community Capital Network is a monthly gathering for people interested in local investment models. Business Alliance for Local Living Economies (BALLE) is North America’s fastest growing network of independent businesses building the new economy, as such it offers monthly webinars to connect resources in support of accelerating community capital networks. As Calgary’s BALLE network, REAP and its partners host gatherings where Calgary stakeholders can learn from success stories across the continent via BALLE’s webinar and then discuss opportunities for applying those models in Calgary. These events take place on the second Tuesday each month from 11:00 am – 1:00 pm.
On August 14, the Community Capital Network started with a BALLE webinar by Chris Michael featuring Workers Development in New York City and concluded with a presentation by Seth Leon of Alberta Community and Co-operative Association. While both presentations were strongly in favour of co-operatives as a meaningful and effective business model, it was also clear that co-operatives benefit from being embedded in, and supported by, a close-knit community.
It turns out that small-town Alberta may actually have an advantage over metropolitan New York City when it comes to making co-operatives really work.
Workers Diner, NYC
Chris Michael is a founder of Workers Development, an organization dedicated to pioneering “new methods of building sustainable, replicable, worker-owned businesses”.
Michael is an expert on co-operatives, a strong believer in the intrinsic value of the business model, and is experimenting with a unique co-operative structure for his enterprise. Along the way, he has gained some insightful knowledge about co-op startups.
Workers Development’s first project, the Workers Diner, is more complex than the setup of a traditional co-operative. Michael and his partners are attempting to raise funds by selling shares in their restaurant. However, owners of the shares would not actually have a say in the running of the restaurant, which would be shared amongst those who actually work at the diner.
According to Michael, “social science research indicates that worker co-operatives are as sustainable, if not more” than the traditional business model. But he also admits that “what we’re offering is unique and a bit more complex for investors to get their heads around”.
An unorthodox business model may make raising funds for the diner challenging, but Workers Development’s biggest obstacle may be the very place they call home. This is what Michael calls “the challenge of location” or “the challenge of networking”.
New York is an immense city, where “things happen on a large scale,” says Michael during his BALLE webinar presentation, perhaps lacking “the kind of connection with human beings that often makes a co-operative startup successful.”
Since starting to sell stock in March of 2012, Worker’s Development has raised “a couple thousand dollars”, and is challenged to make its startup goal of $450,000. Marketing has proven to be a pricey way to raise interest around the project, especially in a city full of great ideas and a lot of competition, or place where tapping into the resources of a connected community can be difficult.
Successful cooperatives making inroads in rural Alberta
There are several examples of smaller settings closer to Calgary having tremendous success with the co-operative model, partly because they are based in compact communities very different from New York City.
Seth Leon of the Alberta Community and Co-operative Association has some great examples of local success stories, and ideas to replicate that success around the province.
Leon spoke to the Calgary Community Capital Network about the town of Westlock just north of Edmonton. With fewer than 5,000 residents, the town managed to raise 1.5 million dollars in just six weeks to purchase a grain terminal slated for shutdown by Agricorp. The money was raised by asking local investors to purchase shares, using the co-operative model. The terminal has turned out to be a financial success for investors earning steady dividends, and a wonderful example of the community coming together to support the local economy.
“The co-operative structure can establish local investing… because in Alberta or most of Canada, the only way you can invest locally is through the co-operative act,” says Leon.
Sangudo, Alberta is a hamlet of fewer than 400 residents and the site of another co-operative success story. Like many small rural centres, the settlement was languishing: local industry was suffering from the draw of larger urban centres and the population was decreasing. But in 2010, a group of residents got together and started the Sangudo Opportunity Development Co-operative (SODC) as a way for local residents to invest in businesses that would create jobs and support local entrepreneurs right where they live. Starting with Sangudo Custom Meat Packers, the SODC has purchased a total of three local business projects that are now run by Sangudo residents, and plans to keep going. Like residents of Westlock, investors and the community are continuing to profit.
“What makes investing in co-ops work is that it is based on leaders in the community… combining human, social and financial capital,” says Leon.
Support from the community appears to be a vital part of the successful startup of co-operatives, a business model that can, in turn, add value to the local economy while also helping communities thrive. It is inspiring to find examples of this success close to home. The Community Capital Network event left me wondering where else this proven model could be applied to spark local investment opportunities in Calgary.
This article is the first in a new series of REAP event summaries, helping to capture the content and insights generated by REAP’s ongoing events. Kirti Bhadresa is REAP Member and local entrepreneur. For more information visit www.caboose-ink.ca.