Calgary co-op Local Investing YYC is providing capital to local entrepreneurs and small businesses that generate financial, social and environmental returns.
It’s an example of the opportunity development co-op model, which supports local entrepreneurs with a business opportunity in need of investment. Founder member Erin Poeta says its investment model offers “a paradigm shift” away from portfolios traded on Wall Street and Bay Street.
She told guests at an investment offering event that the world is moving “beyond the boxed idea that there are trade-offs when considering the social context, yet we have only begun to explore the potential of community capital in realising this shift”.
Investors are eligible for a 30% tax credit under a three-year, CA$3m programme launched by the government of Alberta last October to support community economic development corporations (CEDCs) that encourage rural economic development or make a social impact.
Investors can become a member of the co-op by purchasing a member share for $250. The co-op says investors can expect a 2-4% return on a five-year investment in local entrepreneurs.
Initially, the co-op is investing $500,000 in three local businesses: Biffco Innovations, Fiasco Gelato and Lowen’s Skincare, and is working with Servus Credit Union.
Taras Nohas, vice president at Servus, says the credit union is supportive of the co-op sector and its efforts to facilitate new business development. He added: “With our branch network and the expertise of our employees, we saw an opportunity to provide secure and easy transfer of share purchase documents and funds from investors to Local Investing YYC.”
Michele Aasgard, executive director of the Alberta Community and Co-operative Association (ACCA), says becoming a member-investor of Local Investing YYC offers “a three-way-win” – with profits returned to members, a 30% tax credit for investors, and shares that are eligible for RRSP/TFSA savings schemes, which offer tax advantages.
And ACCA says there is now growing interest from entrepreneurs who want to set up an opportunity development co-operative, now that the model is included in the government’s CEDC programme.