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Financing for CED

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... The Economic Development ... ke Caisse Populaire is one of the largest in Quebec ... Executive Director of the Canadian Community Investment Network Cooperative ... – PowerPoint PPT presentation

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Title: Financing for CED


1
Financing for CED
  • ECON 369
  • Laura Lamb

2
1. Kahnawáke First Nation
  • Kahnawáke Caisse Populaire a community based
    solution to lending
  • Early 1980s The Economic Development Department
    of the Mohawk Council of Kahnawáke agreed that a
    local financial institution was needed to service
    the community.to improve access to capital.

3
Credit union versus a bank?
  • Choose credit union because
  • Credit unions are owned by account holders, every
    account holder has at least one share
  • The democratic approach is a better fit with
    Mohawk culture

4
  • 1986 arrangement between Mohawk Council of
    Kahnawáke and Federation Desjardins establish a
    Caisse Populaire branch in Federation Desjardins

5
 Special products designed for First Nation
financial circumstances
  • Special mortgage arrangements

6
Certificate of possession
  • Certificate of Possession is documentary evidence
    of a First Nation member's lawful possession of
    Reserve lands pursuant to the Indian Act.  This
    is similar to buying a share in a company, but in
    this case the stock equals use of land.
  • The Government of Canada retains legal title to
    the land. 

7
  • Today the Kahnawáke Caisse Populaire is one of
    the largest in Quebec with over 100 million in
    deposits.

8
2. Community Investment
  • Based on research by Seth Asimakos, Executive
    Director of the Canadian Community Investment
    Network Cooperative.
  • Data up to 2008

9
What is community investment?
  • financing and technical assistance that targets
    the underserved to develop opportunities for
    income generation, housing, community renewal,
    and environmental sustainability.

10
Who is the underserved?
  • Those whose financial needs are not being fully
    met by the mainstream financial sector
  • individuals
  • communities
  • social enterprises

11
Why are they underserved?
  • Limited collateral or equity to offer against a
    loan
  • Bad or limited credit history
  • Financial institutions lack of understanding of
    the type of enterprise i.e. social enterprise
  • Profit margins are too low to consider serving
    the potential client/community

12
3. Sources of capital for Community Investment
Funds
  • What type of capital?

13
Who supplies it how much capital?
  • Total value of community investment deals in
    Canada in 2008 was gt1.4 billion

14
4. Community Investment is a growth sector
  • A steady increase in investment from 2002 to
    2008.
  • Some of the growth is real, some is due to
    counting issues.

15
How is this capital allocated?
16
The major players
  • Community Futures Organizations
  • Credit Unions
  • Aboriginal Finance Institutions
  • Community Economic Development Investment Funds

17
Community Futures Organizations
  • Formed in 1980s by federal government to support
    community-based initiatives in low-income rural
    regions across Canada
  • 267 organizations
  • Each receives operating revenue
  • Operate at arms length with volunteer boards
  • Provide financing up to 150,000 for the
    start-up, expansion, or stabilization of local
    business.

18
Credit Unions
  • Organized locally, cooperative models
  • First community investment organizations in
    Canada
  • Earmark a portion of assets for investment in the
    underserved.
  • Large credit unions direct the largest amount of
    money into community investment

19
Aboriginal Finance Institutions
  • Formed by federal government and Aboriginal
    leaders in the 1980s and 1990s
  • Purpose is to reduce barriers to the entry of
    Aboriginal small businesses into the Canadian
    economy
  • Currently, 59 independently-owned and controlled
    AFIs

20
Community Economic Development Investment Funds
  • Variety of structures
  • Some are a blind pool, any entrepreneur can apply
  • Some are industry specific

21
5. What type of projects are investment funds
used for?
  • The conservation economy
  • Affordable Housing
  • Transition to Work
  • Fair Trade
  • Social enterprise

22
 5. New Hampshires Community Development
Finance Authority
  • This material is based on Equity Capital for
    CED by Stewart E. Perry in Making Waves, vol.20
    (1).

23
New Hampshire background
  • Cash starved
  • Low income
  • High unemployment
  • Welfare dependency

24
The Financial authority
  • Tax incentive
  • Corporate donors
  • CED projects
  • Provides capital, capacity competence

25
Capital
  • What type of capital?

26
Competence
  • Competence in what?

27
Capacity
  • Expand capacity to develop

28
The tax credit program
  • Launched in 1991
  • Who is eligible to participate?
  • Who are the eligible recipients?
  • What is the tax benefit?

29
  • Who are the major contributors?

30
Success of the program
  • US30 million in donations in the first few
    years.

31
What projects are being capitalized?
32
Evidence of competence capacity building
33
Economic Impact of CDFA
34
  • Is such a program applicable to Canada?
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