Isla Vista Food Co-op Purchases Its Home
Through a grassroots funding campaign, along with lender support from NCB (National Co-op Bank) and NCDF (Northcountry Cooperative Development Fund), the Isla Vista Food Co-op has recently been able to purchase its home of thirty years. For the $1.625 million purchase, IV Food Co-op raised $200,000 for the down payment, while NCB provided the first mortgage, along with $200,000 from NCDF.
NCB Senior Vice President Michael Novak, commented, “The Bank has a long history of providing essential capital to food cooperatives across the country. The IV Food Co-op staff and the community really rallied together to complete this transaction, and we are proud to have played a part in helping preserve this important community-based organization.” NCB, http://www.ncb.coop, through its Grocery program, is a longstanding resource for cooperative grocers, both consumer-owned and retailer-owned. The Bank’s program offers commercial loans, real estate loans, lines of credit, deposit products, and full service cash management.
NCDF is also a thriving lender owned by co-ops. NCDF (http://www.ncdf.coop) is expanding its service territory through this and other loans to co-ops beyond its traditional Midwest region.
For an earlier story on Isla Vista Food Co-op and its marketing with a small budget and a large imagination, see: http://www.cooperativegrocer.coop/articles/2009-07-02/guerilla-marketing-isla-vista.
For a more detailed story on the Isla Vista Food Co-op's successful crowdfunding, following is a report written by David Thompson for the U.K. "Co-operative News" in early 2013, reprinted with permission:
Co-op Uses Crowd Funding to Buy its Building
The moment came out of the blue. Melissa Cohen, the General Manager of the Isla Vista Co-op (a 40 year old food co-op) near Santa Barbara, California had just returned to her office from days in the Nevada desert at the Burning Man Festival. One by one, she went through her backed up emails. Suddenly, one email stopped her in her tracks. The email was from the owner of their building saying she was going to sell the property. She was giving the co-op 10 days to notify her whether the Co-op would buy the building at her asking price of $1,625,000.
To understand the magnitude of the opportunity a little background is needed. Isla Vista (IV) is a student enclave surrounded by the campus of the University of California, Santa Barbara (UCSB). The 2010 Census shows Isla Vista having a population of 23,096. At 12,376 people per square mile it is one of the densest spots in California. Within the enclave there is a small crazily busy commercial core. At the communal heart is the 3,369 sq ft Isla Vista Co-op and its five parking spaces which does $2.7 million dollars annually. The Co-op has been renting in Isla Vista for forty years and for 32 years renting the existing location. Few IV buildings ever come on the market given the dense demographics and demand. But when they do they sell quickly and privately.
Melissa notified her board of the opportunity and they began a series of meetings. The board had extensive discussions both about whether they should purchase the building and if so how they would purchase the building within the short timeline. Melissa had immediately contacted NCB (National Cooperative Bank) to get some idea of how the co-op could structure the purchase and whether the NCB could meet the deadline. No other bank would likely finance the IV Co-op. Yes, the NCB could finish the financing as long as the Co-op came up with $200,000 as down payment.
The IV Co-op leaders looked at their options. They could continue to rent from a new owner but their lease was up on December 31st 2013 so what would happen after that? Could they really afford to stay there when a new owner raised the rent? What if the new owner gave them notice to leave at the end of 2013? The new owner could then tear down the building to build apartments. The little co-op’s future was suddenly darkened.
As the ten day timeline closed in, eventually there really was no other choice except to buy the building. Meanwhile, Melissa as General Manager had focused on how to raise the $200,000 down payment. The next deadline was that in 60 days the Co-op had to have paid the owner $1.6 plus for the building.
The General Manager thought through where would those dollars come from? They had once approached a number of local foundations but a food co-op was not their priority. They had tried a member capital campaign but the response was minor. Increasing member equity was limited, as 85-90% of the members were students and too few of them had money to invest.
The only way to succeed Melissa thought was to create a “crowdfunding” platform and use social media to get hundreds of people to make outright donations to the co-op. One afternoon, Melissa spotted Abby Wolff, a respected community activist having lunch on the co-op’s patio. Melissa’s instinct button lit up. If she could get Abby to head up the campaign she’d have the best local person for the task. They talked, Abby agreed, and the “We Own It” campaign was launched. For background on the campaign visit; http://projectweownit.wordpress.com
Committees were organized; the student housing co-op hosted a dance, local chefs did a community dinner fundraiser, a Facebook page and a blog started and a local group set up an online donation site. The campaign went into immediate overdrive and word exploded on the internet across thousands of smart phones, computers and text messages. One committee contacted each of the 1,300 members. The Co-op would not know how many electronic paths their message would cross but the immediate results showed their impact. During a UCSB soccer game attended by 50,000 locals, Abby even got the Stadium scoreboard to flash the Co-op’s request for donations message 17 times. Everyone in IV both individuals and organizations were talking about the co-op needing donations to save the day.
Melissa believed that “tiny ripples make giant waves” and that was her message to everyone she talked to. Within the next sixty days, over a thousand individuals made donations. Melissa remembers hand entering 650 credit card donations. Donations came in from all over the world (Australia, Brazil, England and Thailand for example). Hearing of the effort, a local nonprofit gave the co-op the $20,000 it had in its bank account and then hosted receipt of another $20,000 in donations. Joining in the action, the Student Government at UCSB loaned the co-op $40,000 to be repaid over time in store credit. With $150,000 committed, the IV Co-op kicked in the remaining $50,000 from member capital. And in the 60 days the $200,000 was raised, another $$200,000 came in from the Northcountry Cooperative Development Fund and the NCB speedily loaned $1.2. The rest is internet history.
Not everything went according to plan, deadlines were missed, and some rocky moments occurred. However, the co-op manager, the staff and the board all believed more strongly, as time went on, that people would rise to save the co-op. They were right.
In October 2013, the Isla Vista Co-op will hold a party to celebrate its 40th anniversary. Thanks to a co-op’s crowd funding the IV Co-op now owns its building. If you look up Isla Vista you will see that the 23,000 inhabitants of IV’s less than two square miles are famous for their street parties. What a party the Co-op will have this October.
Congratulations to the Isla Vista Co-op for kicking off the Cooperative Development Decade with one of the first and certainly the largest so far achievement in the new world of crowd funding.
Crowd funding or crowdfunding describes the collective effort of individuals who network and pool their money, usually via the Internet, to support efforts initiated by other people or organizations.