3c hapter - Index of

Game Plan for Locavestors
From Brown Rice to Biofuels 179
allows for a class of investor membership where the interest is
purely fi nancial. In an LCA, investors are on more equal footing
with patron-members, rather than being subordinate, and dividends
can potentially be higher. Critics, however, say the hybrid
structure of an LCA undermines the democratic premise and
principles of cooperatives. More promising, perhaps, is an initiative
underway by the NCBA and the Calvert Foundation. To make
co-op investing more accessible, the organizations are exploring
the creation of a National Cooperative Capital Investment Fund,
which would allow individuals, as well as foundations and institutions,
to easily invest in cooperatives around the country. Investors
could put money into the fund, which would make investments in
the cooperatives in the form of preferred shares or subordinate
debt. With the Calvert Foundation acting as fund manager and
intermediary, there would be no SEC obligations for the co- ops,
and individuals would not have to be co- op members to invest.
Hazen hopes the fund will be a real option for investors and cooperatives
soon.
Cooperatives are businesses that are owned by their members and run
for the mutual benefi t of their membership. They generally provide two
types of investment opportunities: Members share in the business’s
surplus revenue (aka profi t) through patronage rebates. In addition,
co- ops often raise expansion capital from members and sometimes
from outside investors by issuing shares that pay a modest but steady
dividend.
Pros:
• Although co- op investment terms vary, they generally involve loans
or non- voting preferred shares that offer steady bond- like dividends.
These investments are the opposite of speculative. When
shares are offered, it is typically at a fi xed price, with a fi xed dividend.
Therefore, there is no depreciation or volatility.
• In addition, members of a co- op share in its prosperity through
improved products and services, patronage rebates, and other perks.