Further complicating the ability of co-ops to raise capital outside their membership is the fact that co-ops operate outside of the public stock market – in part based on the historical recognition of the primacy of members.

Since the purpose of a co-op is not to generate return for shareholders, it was thought that there was no need for co-op shares to be traded publically. This makes the role of “SRI advisors” more difficult when it comes to flowing investment towards co-ops. Although some co-op shares can be considered RRSP eligible, most of this type of investment is done through self-directed RRSPs, not through advisors.

For those co-ops that only allow investment for members, involving advisors would mean having them pitch membership (and therefore a more direct role in the democratic structure of the co-op) rather than a “simple” social investment. Co-ops have the ability to pay commission to sales people to sell shares, but whether or not financial advisors and brokers are willing and able to take a more robust role in this process is unclear. Does this limit the potential pool of investors to angel or high net worth investors and their advisors, or those investors that are willing to take a more direct role in the organization? Further, whether or not it’s appropriate for advisors to “sell” memberships in co-ops is also potentially a murky proposition.

One model to look at that may offer some compromise is that of the Chantier patient capital fund. The fund is a pool of several different sources of funds, including labour sponsored funds and other aggregated sources of investment. This fund provides patient capital investment to co-ops and non-profits that permits them to expand or grow. There is no direct role for the advisor in this scenario, but if there were some sort of aggregated fund that could support co-ops in this way, then advisors could point their clients to it. This may provide a way for the interest in SRI among advisors and investors to be utilized effectively.

Some of the questions raised here also generate additional questions to consider for individual co-ops and the co-op sector alike.

• How can co-ops effectively manage their membership and investment in order to keep their administrative costs down?
• Are there analogies and best practices among those high capital, member-only investment co-ops that emerging sectors with larger and/or non-member investment can use?
• How can co-ops identify and articulate investment opportunities through the right channels
• Does going down this path present philosophical challenges to the co-op sector and co-ops’ member character?

These are questions for another day (and whether or not they can even be answered is debatable), but it seems clear that the idea of facilitating access to capital for co-ops will continue to be a complex topic of discussion.

Photo credit: http://www.flickr.com/photos/uggboy/4807789993/

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