The demand and necessity to invest for impact, globally and locally, is on the rise. However, current investment options and regulations in BC & Canada significantly restrict Canadians from investing in local opportunities. The result is that nearly all investment capital leaves local communities and is placed into far-off stock markets and corporations. This disconnects investors from the positive or negative impacts of their investments. An unintended consequence is that while our investments create significant jobs and wealth elsewhere, the places we live, work, and play are overlooked and under-financed. At the same time, rural business development studies and economic development organizations have identified that ‘access to capital is a top barrier to business start-ups, expansions and successions.
Community Investment Co-ops (CICs) are a new and innovative support system for rural and urban economic and business development that effectively bridges the gap between local investors and local ventures in need of financing. CICs are a cost-effective, community-owned and controlled impact fund. They enable residents to become partners in locally-driven economic development, which leads to stronger and more sustainable economies. In other words, local money won’t be in stocks and mutual funds but, more importantly, in local projects and people.
Community Investment Co-ops across Canada have successfully financed ventures that generate significant local impacts, including affordable housing; renewable energy, sustainable agriculture and food production; locally-owned small business development, technology, and community economic development projects. The longer a dollar can circulate within a community, the greater its economic and social impacts.
Eight new Community Investment Co-ops have been established in British Columbia in the past few years. This growth can be attributed to the sixth global Co-operative principle: cooperation amongst co-operatives. With help from the BC Co-operative Association, The British Columbia Community Impact Investment Coalition (BC CIIC) has brought together Community Investment Co-ops and other local lending organizations from across BC to build a movement for local ethical investing that benefits rural and urban local communities. The mission of the BC CIIC is to be a learning community for Community Impact Investment practitioners to advocate and develop enabling Community Impact Investment programs with the Provincial Government and other BC organizations.
Four of the eight Community Investment Co-ops are launching local impact funds in November and December.
Community Investment Co-op (CIC) Quick Facts
- Canadian residents and Canadian-controlled entities are eligible for membership in most CICs
- A member-elected Board oversees the governance of the CICs, supported by an Investment Committee and Marketing & Communications Committee
- Each member is entitled to only one vote at General Meetings of the Association, regardless of how many shares they own, a democratic control mechanism built into the Co-op structure
- Each CIC determines if it will set a limit, or no limit, on the amount of membership and investment shares they may issue to its members. However, each member must qualify under one of the securities exemptions relied upon by the Co-op prior to purchasing shares
- Capital raised from the sale of membership and investment shares is deposited into the CICs bank account to act as a revolving financing pool for local businesses and projects
- Local ventures that generate economic, social, environmental or community benefits can apply for financing and are approved by local Investment Committees
- On behalf of most CICs, professional analysis and due diligence on applications will be completed by a third-party partner organization such as a Community Futures or a Credit Union on a fee-for-services basis
- When the Co-op determines its maximum investment amount for each applicant, it then partners with other local financiers to leverage any remaining financing
Additional values that CICs bring to the existing financing sector
- Business development supports and connections
- Local investors and expertise
- Flexible financing options
- Advocacy for additional financing
- Committed customers and ambassadors
- Local mentors and ongoing supports
The primary source of revenue for the Community Investment Co-op comes from investment Interest income, which covers its operational expenses. Members who own shares are entitled to annual profits of the Investment Co-op by way of dividends, as recommended by the Board of Directors from year to year. As a community impact investment organization, the Investment Co-op inspires investors and local ventures to make a positive impact (social, environmental and community) while making a profit.
Membership in each Community Investment Co-op in British Columbia is open and voluntary. Most Community Investment Co-ops accept applications from individuals, corporations, governments and First Nations.