Deloitte presents first global survey on cooperative capitalization since the 2008 economic crisis
Amid new market realities, the cooperative model roves a competitive advantage
QUEBEC, Oct. 11, 2012 /CNW Telbec/ - The post-2008 economic crisis has negatively impacted the ability of all commercial organizations to achieve adequate funding. The unique structure of cooperatives further complicates this reality, and requires a customized approach to overcome financing challenges. In response, large cooperatives are gaining experience with external funding sources and innovative funding instruments, and view these as critical to achieving their strategic objectives says a new report by Deloitte. The study, Funding the future: Emerging strategies in cooperative financing and capitalization, presents the results of the first global survey on cooperative funding since the 2008 financial crisis. CFOs and senior executives from the world's largest cooperatives were asked how their organizations had fared during the crisis, and how their financing and capitalization strategies were evolving to respond to new market realities.
This report focuses on two major areas - the need for funds and sources of funds - and provides clear evidence that financing and capitalization are becoming increasingly important for cooperatives. The survey demonstrated that the cooperative structure places additional constraints on the types of instruments and strategies that can be employed. In order to meet their strategic objectives, the world's largest cooperatives are using a more diverse array of funding options and exploring the use of non-traditional funding instruments. Only 35% of respondents are planning to use obligatory member capital as an equity lever, in future, compared to 50% today. To compensate, cooperatives are expanding the use of other types of equity instruments. Fifty-three percent are planning to issue equity instruments to external investors compared to 38% today. Funding via international debt markets is also set to grow from 24% to 53%.
The survey confirmed that adherence to cooperative principles remains strong. Recommitting to cooperative principles such as a longer-term strategic and operational focus, member economic participation, and cooperation among cooperatives were identified as value-added approaches to solving a cooperative's capitalization needs.
Funding the future: Emerging strategies in cooperative financing and capitalization will be presented at the 2012 International Summit of Cooperatives held in Quebec City, Canada, during a conference by Chris Harvey, Global Financial Services Sector Leader. "At Deloitte, we are delighted to contribute to this historic event by furthering the dialogue on how cooperatives can improve access to funding at a time when this issue is emerging as a critical determinant of business strategy, success and sustainability", says Harvey. "We encourage cooperatives to recommit to cooperative principles to develop a distinct and sustainable advantage, while engaging regulators to ensure that their unique structure is reflected in new legislation."
For a more detailed discussion of Deloitte's analysis and recommendations, read the full report at www.deloitte.com/ca/cooperative.
About the 2012 International Summit of Cooperatives
More than 2,500 decision-makers and influential figures from the international cooperative and mutualist community will attend the 2012 International Summit of Cooperatives in Quebec City and Lévis, Canada, from October 8 to 11, 2012. Under the theme "The Amazing Power of Cooperatives," the Summit aims to offer solutions that will promote the development and performance of cooperatives and mutuals so that they are better prepared to meet the economic and financial challenges they face. Visit: www.2012intlsummit.coop
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