Manchester Food Co-op Board Meeting

1. Manchester Food Co-op Board Meeting November 30, 2010

2. These are your questions… • Review the overall steps/accomplishments required to lead us to 2012 opening, and also to successfully sustain our business through the early vulnerable years.   Refresher of our "big picture" road map... • Better understanding of the process to obtain funding from lenders.  How does the Co-op Fund of NE work differently from other lenders?  • How many lenders do co-ops typically use?  • What are the total loan amounts and fundraising we need to open doors?   Some examples of the breakdown of funding for other co-ops, the % from loans, memberships, fundraising, etc.?

3. The Road Map…

4. Organizing Phase • Manchester has accomplished a great deal in its first year • Incorporation • Outreach and recruitment of members • Business plan competition • Market feasibility study

5. What is next? • More organizing -- continue to recruit new members and raise sufficient funds for equity stake to leverage grants. • Planning: Establish the work through the committees: finance, membership, facilities, etc. • Outreach: Visit other co-ops and take members who are interested along to motivate, educate and inspire them to achieve a store of your own. • Fundraising: Secure grant funding to hire project manager or store manager • More organizing and outreach: Continue to work on recruiting members after you have achieved target membership. • More Planning: Refine your startup financials based on what you learned from the market feasibility study and projected location. • More fundraising: Secure startup funds and finalize location, and operating systems, including hirings. You can’t finalize a location till you have your funding secured. • Cultivate relationships with Hanover Food Co-op and Associated Grocers. Hanover will help with training staff and manager. Associated Grocers can help with equipment based on the proposed layout.

6. Have we recruited the necessary talent? • Do we have a core group of supporters who are willing to lead this project through to completion? (typically 12-20 people) • Do the members of this group have enough free time to dedicate to the co-op? • Are there enough additional, committed supporters to help on committees, task forces and special events? (at least 20-30 more) • Are there one or more persons who can lead, coordinate, and motivate an ever-changing group of volunteers? • Do members of your group have specific experience or skills that will be needed? (accounting, legal, graphic arts, copywriting, grant writing, fundraising, etc.) If not, are these skills readily available in your community at a cost that you can afford? • Can you raise enough funds to hire a Project Manager? (A project manager should bring experience and expertise to the organizing effort, help coordinate volunteer activities and reduce the burden on the core group.)

7. Capital: Sources of Funds -- Grants, Loans, Equity • Loans – from members, CFNE, LEAF, conventional banks, Food Cooperative Initiative • Membership loans for worker members: LEAF • Equity – from members • Grants: New Hampshire Community Development Finance Authority, Food Cooperative Initiative, USDA if there is a clear connection to local supported agriculture and lowering obesity.

8. Do you know how much money you need to raise? If you don’t, do you know what you need to do to determine the proformas? Can you as a group raise what is needed to leverage grants and loans to get to the startup phase? Capital: Sources of Funds grants, Loans, Equity

9. New Hampshire Community Development Finance Authority CDBG Economic Development • CDBG Economic Development grants provide funds through an annual set-aside for activities, which create and retain employment, primarily for low and moderate income people, by providing business financing through Regional Development Corporations (RDC) and Economic Development Entities (EDE), or through public facility improvements to support economic development efforts. The main goal in this category is to create jobs that provide good wages, benefits, and training programs. CDBG Economic Development Funds can be used for acquisition of land and buildings, construction of commercial buildings, purchase of machinery and equipment, employee training, and public facilities improvements. Applications are accepted on a first-come, first-served basis.

10. New Hampshire Community Development Finance Authority • Municipalities and counties can apply to use the grant funds in a variety of ways, but typically the funds are subgranted to a Regional Development Corporation (RDC), or Economic Development Entity (EDE), or used directly by the municipality. (See map below with links to related web sites) • RDC’s and EDE's can use the CDBG Economic Development funds to make loans to businesses, to acquire and develop real property for sale or lease, to businesses. In both cases the for-profit businesses commit to creating jobs for low and moderate income people. At least 60% of the jobs being created must be available to low and moderate income people. For each $1 of CDBG funds requested, $1 of non-CDBG money must be committed to the project. Matching funds can come from the business, the municipality or other sources and can be in the form of debt, equity, or the donation of land to an RDC or EDE. The commitment of match must be provided on submission of the application to CDFA.

11. New Hampshire Community Development Finance Authority • When used directly by a municipality, funds are used to build or upgrade publicly owned infrastructure which will support the for-profit businesses in their need to expand, resulting in jobs for low and moderate income people. • To apply for funds, interested persons should review the CDBG Program Rules,Rules/Appendices,Application and Recent Awards to help you decide the best route to take in preparing your application. • Concord food co-op received $1.3 million for their expansion http://www.nhcdfa.org/web/testimonial_sites/concord_coop/concord_coop_ss.html • Littleton received $450,000 based on an equity match from members.

12. USDA: Community Food Projects Competitive Grants The program is designed to: • Meet the needs of low-income people by increasing their access to fresher, more nutritious food supplies. • Increase the self-reliance of communities in providing for their own food needs. • Promote comprehensive responses to local food, farm, and nutrition issues. .

13. USDA: Community Food Projects Competitive Grants Additionally, projects should: • Meet specific state, local, or neighborhood food and agricultural needs for infrastructure improvement and development Plan for long-term solutions. • Create innovative marketing activities that mutually benefit agricultural producers and low-income consumers. • Preferred projects also develop linkages between two or more sectors of the food system, support the development of entrepreneurial projects, develop innovative linkages between the for-profit and nonprofit food sectors, encourage long-term planning activities and multisystem, intera July 23, 2007 linkages build long-term capacity of communities to address the food and agricultural problems of communities, such as food policy councils and food planning associations.

14. USDA: Community Food Projects Competitive Grants • These grants are intended to help eligible private nonprofit entities that need a one-time infusion of federal assistance to establish and carry out multipurpose community food projects. Projects are funded from $10,000-$300,000 and from 1 to 3 years. They are one-time grants that require a dollar-for-dollar match in resources. Approximately 18 percent of the submitted proposals have received awards during the history of this program. Funds have been authorized through the year, 2007 at $5 million per year.

15. Food Cooperative Initiative Seed Fund Grants • The Food Co-op Initiative Seed Fund was created to provide early development capital to co-op organizing groups that wish to partner with us in their endeavor. In addition to the grant award, we will commit to regular follow-up and assistance with your team. • Grants are available up to $10,000 when funds are available. We depend on the generosity of other organizations to support this grant program and only a limited number of awards can be offered. The grant money must be matched in equal dollars by the newly forming co-op. The most desirable means to obtain the equal match should be an effort of the newly formed group in the community, which directly correlates to the cooperative value of self-help. Selection Criteria • The applicant must intend on becoming a cooperative organization and fully understand the cooperative structure, values, and principles. They should be able to articulate a clear vision, and have organized a strong, committed team to their endeavor. Priority is given to co-ops with a high likelihood of feasibility, potential for significant community impact, and evidence of strong partnerships and support. Specific criteria for grants may change from time to time and will be posted when we are accepting applications.

16. Food Cooperative Initiative Sprout Fund • The Sprout Fund is a pool of dollars dedicated by NCB for the purpose of providing capital during the mid to later stages of planning and implementation. Food Co-op Initiative reviews applications from incorporated cooperative organizations and makes recommendations to NCB on whether the loan application should be approved. • Loans may be requested for up to $25,000 and must be matched in equal dollars by the cooperative. Selection Criteria • The uses of the Sprout Fund loans are specifically designed for new co-ops that have completed all of the organizing activities and are ready to move forward. The cooperative must be in good standing within its various jurisdictions of operation and be able to provide legal documentation that supports its current status. It must provide fundraising results, financial statements, or other needed documents in order to verify the co-op's current financial condition. Applicants must be able to describe their vision and the strength of their leadership team, including board and management. Membership size, financial projections, market research, and impact in your community are taken into consideration. Finally, the loan must be matched by funds from the cooperative.

17. Cooperative Fund of New England Terms of Loans Amount and terms • Loans from the Cooperative Fund are presently limited to $500,000 per applicant. This limit is subject to change since it is based on 10% of the • sum of CFNE’s investment base. It is best to verify the limit before submitting an application. The term of the repayment is normally on a monthly basis although other • terms, such as quarterly or seasonal repayment, are available as appropriate. The interest rates range from 6.5% to 9% and are negotiable. Loan agreement • When the loan is approved, the borrower will enter into a loan agreement with CFNE which sets out the repayment terms, security arrangements and other important terms and conditions of the loan. • While not as restrictive or obtrusive as most commercial loan contracts, the agreement is never the less a detailed and comprehensive one. Specific obligations • Particularly important among the provisions of the loan agreement are the obligations to provide financial and organizational information to CFNE on a regular basis. • Financial statements must be submitted within two months after the end of each fiscal quarter. • Minutes of meetings of members and directors must be submitted on a monthly basis. • The co-op is also under a continuing obligation to immediately inform CFNE of any significant developments adversely affecting the business. • It is also required to provide other information relevant to the terms of the loan agreement which may be specifically requested by CFNE including updated financial projections.

18. Local Enterprise Assistance Fund • Typical length of loan: 5 years • Loan size depends on risk and strength of proposal and whether it is eligible for CDFI funds

19. New Hampshire Community Loan Fund • Can provide gap finance if insufficient funds are available from the Cooperative Fund of New England and the Local Enterprise Assistance Fund.

20. Example of funding sources used by a co-op in Montana Past Funding • State of Montana $500.00 • Anonymous donation $4998.45 • Catholic Campaign for Human Development $10,000.00 • First Interstate Grant $2,500.00 • First Interstate Donation $2,500.00 Current Sources • Catholic Campaign for Human Development $90,000.00 • Title One, City of Missoula $9,958.00 • Northwest Area Foundation – Great Strides Award $17,750.00 • Howard Bowers Fund $2,000.00 • Montana Growth Through Agriculture $37,580.00 • USDA – Community Food Projects $89,830.00 • Lake County Community Development Corporation – USDA grant pass through $8,000.00 • Missoula Community Foundation $500.00 • (Missoula Community Co‐op, 2006)