The MaRS Centre for Impact Investing and the Royal Bank of Canada (RBC) are proud to announce the 2015 RBC Impact Entrepreneurs. The Entrepreneurs were showcased at the 8th annual Social Finance Forum. Since the launch of the iPhone in 2007, smartphones and tablets have revolutionized our lives. These devices increase productivity, strengthen social networks, […]Read More ›
Community Bonds In Action: The Story of the West End Food Co-op (Part 1)
This past October, the West End Food Co-op celebrated the grand opening of its long-awaited Food Hub, a community kitchen and specialty food products store dedicated to resolving food security issues in Toronto’s west end. Located within Parkdale’s Community Health Centre, this highly anticipated initiative was financed by community bonds. Through two campaigns spread over four years, West End met its funding target of $200,000 in September 2012. Though interest in the community bond model continues to grow, West End Food Co-op is one of just four enterprises in Ontario that has issued them. It is also the first co-operative grocery store to open in the city in 25 years. With that in mind, I spoke with John Richmond, Co-Founder and Director at West End, to learn more about what inspired the co-op’s successful community bond campaign and the challenges that he encountered along the way.
West End has been engaging members of the local community to address food security issues since it began organizing an organic farmer’s market in Toronto in 2007. The enterprise formally registered as a co-operative in 2008, and proceeded to launch a community cannery in 2010 to educate members on how to preserve fresh food. It was only fitting that the co-op sought funding from the community when they decided to launch the Food Hub. While West End was in its early stages, John and his fellow directors sought the advisory services of Sally Miller, a highly-regarded co-op consultant with a background in food activism. She proceeded to become one of the founding members of West End and proved to be an invaluable resource during the community bond campaigns, especially since none of the fellow members of the Food Hub project had a finance background. John did however have previous experience serving on the board of a co-op and helping TREC, a renewable energy co-op, raise bonds from a credit union. Under Sally’s guidance, West End created a comprehensive business plan for Food Hub, which provided credibility and was highly effective in demonstrating that West End had done their homework prior to issuing the bonds.
Though John was initially in talks with prospective silent investors for the Food Hub, these deals fell through, partly due to the onset of the financial crisis. He suspects that a general lack of awareness and understanding of the co-operative structure in Ontario also contributed to difficulties with securing capital. Relative to other provinces such as Quebec, there are far fewer co-operatives in Ontario. John and his team evaluated various potential governance models, such as a worker cooperative.
However, while the worker cooperative is often used by grocery store co-ops, it usually entails higher prices for shoppers. Given that the Food Hub aims to make fresh produce accessible and affordable in Parkdale, a lower-income neighbourhood, a worker co-operative was thus not ideal. The multi-stakeholder model that was instead used presented a more favourable situation for all parties involved; workers, consumers, farmers and the Parkdale community, as raising capital would be easier with everyone having a stake in the business. West End also launched a crowd-funding campaign through IndieGogo following its community bond campaigns. Though it only raised $1,250 of its $8,000 goal, it nonetheless enabled those who could not afford the price of a community bond or who had missed the deadline to purchase one to contribute to the Food Hub.
My second post will explain the ins and outs of West End’s community bond campaign and highlight the lessons learned along the way.