Cooperative Principal

= local investment clubs and democratic cooperative collectives that jointly invest in the cooperative economy (started in Minnesota, USA)

URL = http://thecp.coop/

Description

"In order to make it easier for folks to start and run local investment clubs, we founded the Cooperative Principal. In terms of organizational structure, think of a bike wheel where the center or hub is the Cooperative Principal (CP), a Minnesota based non-profit. This center hub serves the local clubs that are at the end of the spokes, around the wheel. The CP provides the education, documents and some administrative support to make starting a legal, properly registered club easier. Then, on an on-going basis, the CP provides investment ideas and analysis, facilitates local clubs connecting with each other and promotes the growth of the larger co-op movement. To be part of this network members pay a member fee of $99.

The first club we started, CP Local 001, currently has 17 members. These members contribute $50 per month and together they have invested over $10,000 in Eastside Food Cooperative, Maple Valley Co-op, NorthEast Investment Cooperative, Seward Community Co-op, and the Wedge Co-op. While the minimum amount to purchase preferred stock or member loans in each of these co-ops varies, all are out of reach for most individual cooperative members. This creates an inherent contradiction, the people who generally want to support and invest in co-ops face a high barrier to entry while the co-ops frequently have a difficult time getting financing. This is the beauty of CP Investment Clubs, people who on their own can’t afford to invest in their values now have a vehicle to do so and co-ops have access to a new source of capital.

Beyond the dollars and cents, there is a social and educational component to The Cooperative Principal. Members meet in person a minimum of 4 times per year, ideally in a social setting (think microbrewery!) and the clubs operate in a cooperative, democratic manner. Based on investment analysis from the central non-profit, or their own research, members discuss and vote on where to put their pooled funds. Club members are both participating in their own democratic organizations and supporting the co-op economy in a way that is only possible by working together. Local 001 Members have also found that club meetings are downright fun. As more clubs start we envision that clubs can share ideas and support each other."

Discussion

Matt Cropp:

"Under American securities law, a group may form an organization that is exempt from the regulations governing “investment companies” so long as it meets certain conditions, such as including all members in decision making and being organized as a “pass through” entity such as a partnership or an LLC (which limits clubs to a maximum of 100 members). People have been forming such clubs for the better part of a century, but the focus has generally been around investing in publicly traded securities while saving money on brokerage fees and learning about finance.

The jump to applying this time-tested model to investing in cooperatives was first made in Minneapolis in 2013, when Co-op Principal was established. Club members agree to invest $50 per month, and they meet monthly (often at a local brewery) to discuss and vote on co-op investment opportunities. Since its founding, Co-op Principal has had a five-figure capital impact on its local co-op economy, and the club has generated annual returns for its members in the 2-4% range.

The vision of Co-op Principal’s founders was not simply to create a club in their city, but to spread the model across the country. To advance this agenda, they created a parallel non-profit intended to house model documents and provide support to other groups looking to get their own clubs going. Since its establishment, a similar club is now up and running in Boston, and at least three more are in the process of organizing for early 2017 launches. Active conversations are also now underway around how the growing of network of clubs can contribute resources to the non-profit for the purpose of developing the sort of shared plug-and-play online infrastructure that could drastically simplify the process of both starting new clubs and operating existing ones.

The spread of these clubs has several potentially powerful implications for building the co-op movement grass-roots. Most obviously, it creates a new player in the local co-op capital ecosystem that can fill some existing gaps, including being a source of early development investments for start-ups (whose organizers, in turn, might join the club) and serving as an early “pump-priming” investor for member loan and equity crowdfunding campaigns.

Second, the 100 member size limitation and participatory decision-making requirements mean that clubs will tend to be geographically specific and meet on a regular basis. As a result, they can potentially serve as hubs through which co-op “movement” people can find and get to know each other in particular communities. Over time, the trust and skills developed working together in the club will hopefully transfer into working on start-up and conversion projects, with the clubs serving as incubators and accelerators for new co-op enterprise ideas.

Finally, by creating a direct stake in the financial stability and well-being of a number of co-ops, co-op investment clubs have the potential to partially counter the “democratic deficit” experienced by many consumer co-ops by creating an organized mechanism for mobilizing members for governance engagement when necessary. While hopefully rarely activate for this purpose, having an organized group of members monitoring the behavior and performance of co-ops in their community might catch and address issues earlier than would be possible in a co-op with an entirely atomized membership.

In short, co-op investment clubs are easy to set up (and hopefully will become even easier in the coming year) and have the potential to boost any community’s co-op movement in a number of positive ways. As such, every committed cooperator should seek out such a club in their community and, if it doesn’t exist, reach out to Co-op Principal for advice about starting one. Through small monthly investments and building a welcoming community of committed co-op enthusiasts, a robust network of cooperating co-op investment clubs could form the foundation of a reinvigorated co-op movement." (http://www.coopwatercooler.com/discussions//building-to-co-op-movement-base-with-investment-clubs)