Ben Sandel, CDS Consulting Co-op, presented about how to choose, plan, and execute a successful capital campaign for your co-op at Neighboring Food Co-op Association's Fifth Annual Meeting in Greenfield, MA. This presentation includes planning strategy, which vehicle(s) to use, and building your team, and draws on experience learned from dozens of food co-op capital campaigns. This presentation was supported and made possible by Food Co-op Initiative (FCI).

1. “Let’s put on a show!”
Planning a Capital Campaign
Presented by:
Ben Sandel
540-421-6976
BenSandel@cdsconsulting.coop
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2. What do we think about money?
! “Money doesn't talk, it swears...” ~Bob Dylan
! “Money makes the world go ‘round” ~Fred Ebb
! “For the love of money is a root of all kinds of
evil ...” ~1 Timothy 6:10
! “Money is power, freedom, a cushion, the root of
all evil, the sum of blessings.” ~Carl Sandburg
! “Money is a needful and precious thing, and
when well used, a noble thing…” ~Louisa May
Alcott

3. Why do we raise $$ from owners?
Capital from owners is:
– Less costly – generally lower interest than money
from conventional lenders
– Subordinate – will take second (and even lower)
position behind bank loans, mortgages etc
– More flexible – more easily structured to meet the
financial needs of your co-op
– Unsecured – one of the few sources of capital that
does not require collateral
– Friendlier – easier to renegotiate or extend, if needed

4. It’s a good thing to do cooperatively
Association of Members
(group activity)
Business Enterprise
(building economic engine)
Community Focus
(providing service)
Entrepreneurship
(distributing risk, educating
About cooperative business)

5. It’s a good thing to do cooperatively
Co-ops exist to serve their members, and capital
campaigns enhance co-ops’ ability to serve them
by:
– Providing another meaningful way to interact with
members
– Offering an additional service of value to members
– Demonstrating the cooperative’s principles in a
tangible way

6. Planning for a Capital Campaign in
4 easy steps:
Step 1:
Lay the legal & financial groundwork.

7. Make it legal
² Find a good lawyer
² Check state & federal laws & exemptions
² Review bylaws, articles & incorporation status
² See if Preferred Shares are allowed
² Check if filings are required
² Have your lawyer check your prospectus, subscription
agreement & promissory note
² Start 3 months ahead

8. Develop your financial story
² Work with an expert to create pro forma financial
statements
² Demonstrates due diligence
² Defines your financial needs – like how much from members!
² Will yield valuable information needed for other documentation,
first position financing, ongoing planning and monitoring
² Decide which vehicle(s) your co-op will use

9. Member Loans or Preferred Shares?
LOANS
! Fixed payback dates
! Debt
! Easier ‘sell’
! Members have more
control
! Established and
proven

10. Member Loans or Preferred Shares?
LOANS
! Fixed payback dates
! Debt
! Easier ‘sell’
! Members have more
control
! Established and
proven
SHARES
! Buyback at board
discretion
! Equity
! More challenging
‘sell’
! Board/ops have
more control
! Innovative with less
track record

11. Member Loans or Preferred Shares?
LOANS
! Fixed payback dates
! Debt
! Easier ‘sell’
! Members have more
control
! Established and
proven
SHARES
! Buyback at board
discretion
! Equity
! More challenging
‘sell’
! Board/ops have
more control
! Innovative with less
track record
Both may require state or federal registration, and/or bylaws revisions.
Consult an attorney experienced in cooperative law AND securities!

12. A blended approach?
Offering both member loans and preferred shares
PROS
! Offers options to members and board/operations
! Balance of equity and debt
! Shares portion is more flexible
CONS
! Increases paperwork, legal costs, complication
! More challenging ‘story’ to members
! Additional burden on operations
! May require more filings, registrations

13. And what about…
² Direct Public Offerings (DPOs)
² Private offerings
² Crowdfunding
² Crowdinvesting
² Grants
² Donations
² Co-op to co-op financing
² Economic development funding

14. Planning for a Capital Campaign in
4 easy steps:
Step 1:
Lay the legal & financial groundwork.
Step 2:
Build the campaign team.

15. Build the campaign team
q Coordinator
q Callers
q Collectors
q Communicators
q Large investor connectors
q Administrative help and gofers
q Legal, regulatory, financial and campaign
expertise
– Don’t underestimate the time commitment!

16. Coordinator

17. Callers
Ø A small group (2-5) of people who:
Ø Like to ask people for money and are GOOD at it
Ø Can instill credibility in 15 seconds over the phone
Ø Are able to make a commitment for substantial time
for the duration of the campaign

18. Collectors
Ø Follow up with members who have
made a verbal commitment, to:
Ø Complete the paperwork, correctly
Ø Answer any questions about the campaign
Ø Finalize the details, including term and interest rate, if
applicable

19. Communicators
Ø Oversee the creation of all promotional materials
Ø Establish a communication schedule designed to build
momentum
Ø Coordinate communication across all platforms
Ø Postal and e-mail
Ø Social media
Ø Press releases and interviews
Ø Ensure members and the community get frequent
updates on campaign progress and members get
additional appeals

20. Large Investor Connectors
Ø Create target lists of potential large investors
Ø About 2x as many targets as intended large investments
Ø Establish a customized strategy for each target
Ø Gain audience with potential large investors
Ø Work with the coordinator to craft materials tailored to
the target investors

21. Planning for a Capital Campaign in
4 easy steps:
Step 1:
Lay the legal & financial groundwork.
Step 3:
Target sources and develop
strategies.
Step 2:
Build the campaign team.

22. Sources and strategies
ü Pre-commitments – 10 to 15%
ü Large investors – 25 to 30 %
ü General membership – all the rest!
Pre-commitments from your board, volunteers and
a few key supporters should make up
of your total capital campaign goal.

23. Planning for a Capital Campaign in
4 easy steps:
Step 1:
Lay the legal & financial groundwork.
Step 4:
Develop systems &
materials.
Step 3:
Target sources and develop
strategies.
Step 2:
Build the campaign team.

24. For legal compliance
• Risk & disclosure documents
• Promissory notes
• Share certificates
• Subscription agreements
Whatever else your lawyer
says you should have…

25. Tracking systems
To monitor and assess all aspects of
campaign progress and caller
performance.
Robust and tested… before you
need them

27. Internal systems and materials
• Call lists
• Calling scripts and talking points
• FAQs
• Accountability and org charts
• Workflow diagrams
• Thank you notes

28. Materials for communication and
promotion
• Brochures
• Appeal letters
• Testimonials
• Email updates
• Press releases
• Tracking systems
• Yard signs
• Confirmation letters
• Share certificates

29. Help is available
! In addition to the legal expertise, using professional
support for planning, implementation, marketing and
other components can help ensure a successful
campaign. CDS Consulting Co-op can help:
http://www.cdsconsulting.coop/start_coop/
! More information on planning capital campaigns can be
found in the Capital Campaign Workbook on the Food
Co-op Initiative website:
http://www.foodcoopinitiative.coop/FinancialTools