There are many ways to fund a co-operative, depending on how it is governed and the organisation's needs, particularly the capital required for start-up.
Equal Care has successfully used several methods to raise funding both before and after trading revenue began which are detailed on the following pages; however, it's useful to list the range of options available, as they each have their use in beginning and maintaining a co-operative.
Government Grants: Various government schemes support co-operatives, especially those promoting community development, sustainability, and social enterprises
EU Funds: Although post-Brexit, some EU programs might still be available under specific circumstances.
Local Authority Funding: Local councils often have grants for community projects.
Business Income and Trade
Commercial Activities: Generating income through the co-operative’s core business activities.
Partnerships and Sponsorships: Collaborating with businesses or organisations that share the co-operative’s values for mutual benefit.
Member Contributions
Membership Fees: Regular fees paid by members.
Commons Contribution: a proportion of the fees paid to the co-operative by service users that are used to support the co-operative itself. The Commons Contribution pays for everything the co-op spends on but cannot charge for, such as business operations roles, administrative costs, and operating and maintaining the technology platform.
Share Capital: Members purchase shares in the co-operative, providing capital and securing ownership. This is often achieved using a Community Share Offer.
Co-operative Loan Funds: Specific funds like Co-operative & Community Finance or Big Issue Invest offer tailored loans.
Community Shares: Issuing community shares allows locals to invest in the co-operative, often with the benefit of social and financial returns.
Crowdfunding
Equity Crowdfunding: Platforms like Crowdcube or Seedrs allow people to invest in exchange for equity.
Reward-based Crowdfunding: Platforms like Kickstarter or Indiegogo where supporters receive rewards for their contributions.
Donation-based Crowdfunding: Platforms like GoFundMe for raising funds without offering financial returns or rewards.
Community Bonds
Community Bonds: Similar to community shares but structured as debt, these bonds can be sold to raise capital, which is then repaid with interest.
Bank Loans and Overdrafts
Ethical Banks: Banks like Triodos and Co-operative Bank understand co-operative values and offer tailored financial products.
Credit Unions: Local credit unions can provide loans with more favorable terms for co-operatives.
Philanthropy and Donations
Charitable Foundations: Applying for funds from philanthropic trusts and foundations that support social enterprises.
Individual Donations: Encouraging donations from individuals who support the co-operative’s mission.
Alternative Financing Options
Peer-to-Peer Lending: Platforms like Funding Circle facilitate loans from individual lenders.
Social Impact Bonds: Funding projects that deliver specific social outcomes, where the government or other commissioners pay returns if the outcomes are achieved.
Key Considerations in Fundraising
Clear Mission and Vision: Clearly articulate the co-operative’s mission and how the funds will be used to achieve its goals.
Member Engagement: Involve members in fundraising efforts, ensuring they are informed and supportive of the methods used.
Legal and Regulatory Compliance: Ensure all fundraising activities comply with relevant laws and regulations, including those specific to co-operatives. See FCA.
Professional Advice: Consult financial advisors or co-operative development bodies to explore the best options and strategies.
Be conscious that funders' goals may not always align with those of the organisation. Winning these bids may bring in money, but they may also take the co-operative in directions it does not wish to travel. Try to select funders who are the best fit and who provide material help beyond just money.
