The document discusses how successful cooperatives face a capital shortage as they grow. In early stages, cooperatives have modest needs but low capital intensity per member. As cooperatives become more sophisticated with many services and customers, the capital intensity for members increases and they cannot afford sufficient capitalization. The cooperative then reaches a bifurcation point where it must pursue external capital, compromising its cooperative structure, or restrict growth based on retained profits and members' willingness to provide capital. Mitigating strategies include improving efficiency, increasing members and capital, and reducing capital-intensive activities.

1. Quebec 2012 International
Summit of Cooperatives
Financing & Capitalization
Arnold Kuijpers
Rabobank Nederland

2. Success creates capital shortage (1)
Early stage (financial) cooperative:
•Limited number of services
•Small amount of customers; small scale
•Modest infrastructure
•Limited geographical spread
Capital intensity per member is low;
members can afford capitalization
Rabobank Nederland

3. Success creates capital shortage (2)
Sophisticated (financial) cooperative:
-Many and also complex services
-Many customers; economies of scale/ diversification
-Geographical spread
-Multiple channels; complex infrastructure
Capital intensity for members (<customers) is high;
members cannot afford capitalization.
Rabobank Nederland

4. Success creates capital shortage (3)
At some stage of development of the cooperative
the capitalization is at a bifurcation:
•External capital added, implying double orientation
regarding control and profit focus
•Internal capital only; growth restricted to
- capacity to retain profits and
- capacity and willingness by members to
provide additional capital
Rabobank Nederland

5. Conclusion
A successful and expanding (financial) cooperative,
that wants to stay a cooperative in the future,
will face a capital shortage at some stage of its
development with consequences for its strategy.
Rabobank Nederland

6. Mitigating practices
• Achieve high level of efficiency relative to
industry; creating high profitability; enabling high
addition to equity
• Increase number of members and subsequently
the volume of member capital
• Reduce activities for which the significance for
members is modest relative to the capital usage
Rabobank Nederland

7. Mitigating practices
• Achieve high level of efficiency relative to
industry; creating high profitability; enabling high
addition to equity
• Increase number of members and subsequently
the volume of member capital
• Reduce activities for which the significance for
members is modest relative to the capital usage
Rabobank Nederland