- ‘Local Investing YYC’ the first corporation to access Alberta’s new tax credit.
- The cooperative is central to a new program disrupting traditional investment methods.
- Albertans could see a 2-4% return with a 5-year investment in local entrepreneurs.
Alberta is the epicenter of Canada’s thriving entrepreneurial spirit. Some 384,000 small businesses in the province rub shoulders and compete with national and international giants. Yet how do these small businesses attract investors in a risk averse and recovering economy, while remaining true to their local community? A Calgary based, for-profit cooperative might just be the solution.
Local Investing YYC focuses on providing capital to growth-oriented Calgary entrepreneurs and small businesses that generate financial, social and environmental returns. This means that Albertans can invest in selected local businesses through Local Investing YYC and see the impact of that investment right before their own eyes in their own community, as opposed to investing in portfolios traded on Wall Street and Bay Street.
“We are on the cusp of a paradigm shift in investing; one that moves 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 realizing this shift” explains Erin Poeta, founding member of Local Investing YYC at their investment round offering event in February 2019. Local Investing YYC will initially invest $500,000 in 3 locally owned businesses. Investors are eligible for a 30% tax credit as Local Investing YYC is the first ‘Community Economic Development Corporation’ (CEDC) to be approved in the province since the Government of Alberta launched a three-year program in October 2018.
The cooperative business model at the core of the fundraising plan makes the new investment mechanism unique in Alberta. “Becoming a member-investor in Local Investing YYC is a three-way-win for Albertans. Not only do co-ops return profits back to members, investors receive a 30% tax credit and their shares are RRSP/TFSA eligible,” explains Michele Aasgard, Executive Director of the Alberta Community and Co-operative Association (ACCA). The association is witnessing rapidly growing interest from entrepreneurs and municipalities in starting an ‘Opportunity Development Cooperative’ since securing their inclusion in the Government’s CEDC program.
How It Works
- Contact one of the Local Investing YYC board members or email email@example.com to gain access to additional details.
- Become a member of the Local Investing YYC cooperative by purchasing a member share for $250.
- Complete the forms to purchase any of the 104 investment shares of $5,000.
- Drop the forms and a cheque at 1 of 4 Servus Credit Union branches in Calgary: Mount Royal, Creekside, Sunridge and McKenzie Towne.
- Local Investing YYC invests in screened and selected Calgary businesses.
- Members vote on which businesses Local Investing YYC will invest in future investment rounds.
- Local Investing YYC applies for 30% tax certificate on behalf of its members.
- Investors receive targeted annual return of 2-4% per share.
A challenge Erin identified when starting Local investing YYC, was the need to build credibility and improve accessibility for local investing. Not everyone is comfortable with sending cheques for $5,000 in the mail, and that is where trusted financial cooperative Servus Credit Union stepped in.
“Servus Credit Union has always been supportive of the cooperative sector and its work to facilitate new business development in Alberta,” said Taras Nohas, Senior Vice President Strategy and Governance at Servus. “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.”
At a prime time of year where Albertans have topped up their RRSPs, savvy investors from the Calgary area took the hyperlocal investment opportunity offered by Local Investing YYC. With the 104 available shares all snapped up by March 1, the co-operative and their member-investors are safe in the knowledge that they are giving locally owned businesses in the city the best chance to scale and grow.
About Alberta Community and Cooperative Association (ACCA)
The ACCA is a not-for-profit provincial trade association for cooperatives and credit unions in Alberta. Founded in 2005, ACCA provides cooperative education and development services to support its members who collectively serve 1.7m Albertans. For more information, email firstname.lastname@example.org or visit acca.coop.
About Servus Credit Union Ltd.
Servus Credit Union is a member-owned financial institution serving members from more than 100 locations in 59 communities. Servus aspires to build a better world – one member at a time – by shaping member financial fitness to help Albertans feel in control, financially resilient and able to pursue opportunities. For more information, call toll-free 1.877.378.8728 or visit servus.ca.
About Local Investing YYC
Founded in 2018, Local Investing YYC is a for-profit opportunity development cooperative who provide capital to Calgary-based entrepreneurs that generate financial, social and environmental returns. For more information, visit localinvestingyyc.ca.