What Is The Best Way To Start An Opportunity Development Coop?
Start a disaster!!! Or a perceived disaster.
In 2005, Northern Gateway Regional School Division decided to close the Sangudo High School – a perceived disaster.
Local citizens were ticked off and came together to try to stop this from happening. A legal process delayed the closure for a few years.
A positive outcome was that a small group of caring leaders gelled. They began exploring ways to enhance the community, attract families, and ensure the community thrives for the long-term – a big task!
What Happened?
Accepted by Alberta Recreation and Parks Association for an initiative called ACE Communities (Active, Creative, Engaged), the group set out to build a new playground, skatepark, horseshoe pits, sand volleyball court and other “sprucing up” to make the sportsground area more attractive and appealing for locals and tourists alike.
On one day, over 200 volunteers of all ages, showed up to complete the project. With grant funding for purchased supplies, and thousands of dollars of local volunteered services, it was approximately a $250,000 project.
This was a fabulous experience to enhance the cultural part of the community.
BUT…
The local economic situation was suffering, with many business buildings vacant and some in a dilapidated condition.
“Retail leakage” was, and still is a concern as people give their money to big box stores and Amazon, rather than supporting local businesses.
The group of leaders decided to apply what they had learned in the playground project in a different way. The intent was invest their time, talent, and treasure to create a business incubator, or a source of funding, to support the transition of local businesses, new businesses, and renovations or expansions of existing businesses.
Accepted for coaching through the Alberta Community & Cooperative Association (ACCA), these leaders undertook a feasibility study to incorporate a cooperative.
What Then?
Project 1
After exploring many opportunities, SODC was incorporated in May 2010 with 22 members. Local capital was raised from these members to invest in Project 1. It purchased Sangudo Custom Meat Packers and supported 2 local entrepreneurs to own and run the business.
Project 2
In 2011, SODC purchased a building on mainstreet from the Sangudo branch of the Royal Canadian Legion. It supported an entrepreneur to renovate the building and open Connections Coffee House in December of 2011.
Project 3
As Project 2 was being completed, the entrepreneurs from Sangudo Custom Meat Packers approached SODC to borrow money to complete major renovations. In 3 weeks, capital from local members was raised to fund this.
Project 4
At the end of the 3-year lease at Sangudo Custom Meat Packers, SODC collected additional funds and consolidated the existing loan to support the entrepreneurs to purchase the real estate. SODC continues to hold a mortgage on this property as the loan is being paid down.
Project 5
With an extreme shortage of good housing (to rent or buy), SODC collected capital to purchase 3 serviced residential lots in the hamlet of Sangudo, with the intent to build single or multi-family housing units.
Project 6
A beautiful 1360 sq. ft. home was built on one of the lots using an unique financing model.
Once completed, and with a soft real estate market, the home was rented for several years and then sold for a profit.
The other 2 lots were sold.
Project 7
The members of the United Church were unable to continue providing services to the community and the building was offered for sale.
The owner of Sangudo Custom Meat Packers wanted to purchase the building to diversify his operation.
SODC collected capital from new and existing members to support the purchase of the building, and additional funding to purchase and install food processing equipment in the kitchen of the Church.
Project 8
Local feedlot operators had been renting farmland for many years. The owner of the land decided to cancel the lease and sell the land.
The feedlot owners applied to SODC for support to purchase this farmland.
The feedlot operator also owns/operates a retail meat shop in Whitecourt and sells their premium beef to upscale restaurants and grocery stores in Edmonton.
Sangudo Custom Meat Packers processes all of these animals, so this project has much broader support to local businesses.
Project 9
Will this be you venture?
What is SODC?
SODC is incorporated in Alberta as a Cooperative Corporation, governed by the Alberta Cooperatives Act.
A Cooperative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.
It provides a vehicle to grow our community through local investment and entrepreneurial opportunities.
How Does SODC Operate?
SODC is governed by a Board of 7 members.
Members buy a Class A Membership share which gives them the right to vote on the operations of the co-op. It operates on the principle of “one member: one vote”.
Investment shares are purchased by members, which are then invested in the project. This means that members are invested in SODC, they are not directly invested in the project.
The finances relating to each project are tracked individually.
Project returns are paid to members annually, after the fiscal year-end. These returns are based on members’ investment in each project and the entire portfolio.
How Does SODC Determine A Good Project?
Investment decisions are based on an application from an entrepreneur(s). This is explored for feasibility by an Investment Committee. If feasible, a recommendation is made to the Board and members to accept the application and begin raising the capital from local citizens.
The intent is to set entrepreneurs up for success. The Investment Committee work with the entrepreneur to determine a payment schedule that fits the cash flow requirements, yet at the same time, will provide SODC investors with a reasonable rate of return.
Where Does The Money Come From?
The money to purchase Investment Shares comes from the members’ own resources. Rather than having that money invested in the stock market and businesses in some other part of the world, it is invested locally, to support the community to thrive.
Also, SODC is an Associate Membership with Common Good Capital, which acts as a Trustee for RRSP and TFSA investments.
This means that members can transfer registered funds they currently have in another institution, to Common Good Capital. These funds can then be invested in projects in the community and remain a registered investment.
This opens up the potential to a much larger pool of capital in the community.