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WASHINGTON-In a column for the membership late last year, National Cooperative Business Association President Paul Hazen lamented the loss of another cooperative and, as with credit unions, capital was cited as the reason for the conversion. “Diamond Walnut turned its back on nearly a century of member control when it voted in July to switch to investor ownership,” he wrote. “As with other conversions, need for investment capital was cited as a motivating factor. “There’s no question raising capital is a serious problem for some co-ops. It lurks in the shadows behind most conversions and has led states to experiment with new business forms that award earnings and voting power to outside investors.” Hazen said there may be a place for new forms of business, but those committed to the cooperative structure while generating investment capital will face difficult decisions: increase member contributions or increase debt through borrowing. “Relying primarily on members for equity capital is a big part of what makes co-ops unique. It’s central to the concept of member ownership. At the same time, if cooperatives don’t find additional sources of capital, their numbers surely will start to dwindle.” He pointed to various options for some cooperatives to raise capital that are rarely used like preferred stocks and social capital. He pointed to different options available around and outside the U.S. for reform. “In the meantime, cooperatives have other options for raising capital. They should use them,” Hazen concluded.

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