Play Live Radio
Next Up:
0:00
0:00
0:00 0:00
Available On Air Stations
Make a sustaining gift today to support local journalism!

New Program Will Invest In Vermont Cooperative Businesses

VSECU is starting a program called Co-op Capital to make equity investments of the state's cooperatives. Credit Unions are a natural match for this approach because they're member-owned cooperatives.
Ilyabolotov
/
iStock.com
VSECU is starting a program called Co-op Capital to make equity investments of the state's cooperatives. Credit Unions are a natural match for this approach because they're member-owned cooperatives.

There are two key ways in which businesses find the money they need to start up or grow. One is by taking out a loan. The other is finding investors willing to buy a share of the business.

But if you’re an investor, why would you put money into a member- or employee-owned cooperative? Unlike a regular business, no matter how much you put in, your share of the business is no bigger and no more important than every other member of the co-op.

“This is part of the reason why co-ops haven’t attracted institutional private equity,” says Rob Miller, CEO of VSECU, formerly known as Vermont State Employees Credit Union.

“What we found is that the tools that traditional businesses to use, whether in the form of debt financing or equity financing, just aren’t quite as sophisticated or readily-available for cooperatives.”

VSECU is starting a program called Co-op Capital to fill the void and make equity investments of the state’s cooperatives.

Credit Unions are a natural match for this approach because they’re member-owned cooperatives.

Miller says this is uncharted territory. Only a handful of states permit credit unions to make equity investments in other cooperatives, andVSECUis the first in the state to do so.

Cooperatives are the only instance where credit unions are permitted to make equity investments. Miller says studies show co-ops are a better investment risk than traditional businesses.

“We actually think it’s good business," he says. "Co-ops also naturally circulate money within the economy because the owners are the patrons."

Joe Bergeron, president of the Association of Vermont Credit Unions, says other members may follow suit.

“I suspect some may watch carefully and consider whether that’s a good path for them,” he says.

A newly-released census by the Massachusetts based Cooperative Development Institute says there are 130 co-ops in Vermont.  

They include member food co-ops, farm cooperatives, housing cooperatives owned by residents, energy co-ops and credit unions. They also include employee-owned businesses.

Roberta MacDonald, with the farmer-owned cheesemaker Cabot, hopes the new investment program will give more employees “the ability to keep your job by owning the company."

VSECU says initially the size of the investments will max out at about $145,000. They’ll typically be structured like a preferred stock, with dividends paid out to the credit union.

Copyright 2016 Vermont Public Radio

Steve has been with VPR since 1994, first serving as host of VPR’s public affairs program and then as a reporter, based in Central Vermont. Many VPR listeners recognize Steve for his special reports from Iran, providing a glimpse of this country that is usually hidden from the rest of the world. Prior to working with VPR, Steve served as program director for WNCS for 17 years, and also worked as news director for WCVR in Randolph. A graduate of Northern Arizona University, Steve also worked for stations in Phoenix and Tucson before moving to Vermont in 1972. Steve has been honored multiple times with national and regional Edward R. Murrow Awards for his VPR reporting, including a 2011 win for best documentary for his report, Afghanistan's Other War.

You make NHPR possible.

NHPR is nonprofit and independent. We rely on readers like you to support the local, national, and international coverage on this website. Your support makes this news available to everyone.

Give today. A monthly donation of $5 makes a real difference.