Charlotte County – Investors and community advocates have found common cause in a new investment vehicle called the Community Economic Development Corporation (CEDC). The CEDC was created by an act of the Financial and Consumer Services Commission in April of 2016, as a way to give people in New Brunswick a way to channel their investment dollars into their local economy.
The CEDC exists as a pool of money which is raised by selling shares (or other forms of eligible securities) to people in a defined community, and these funds are controlled by a local group of officers and directors.
According to Wendy Keats, the Executive Director of the Co-operative Enterprise Council of New Brunswick (CECNB), models like the CEDC have been used in other jurisdictions successfully for more than a decade.
“The Co-operative Enterprise Council in New Brunswick for many years kind of lead the charge to try to get the provincial government to bring in legislation that was similar to what had been happening for more than a decade in Nova Scotia. Their program is called a Community Economic Development Investment Fund, commonly known as a CEDIF, and we wanted it in New Brunswick.”
Keats said the utility of the Nova Scotia model had been well proven, and it worked well to strengthen local, and especially rural, economies, so Keats’ organization worked with successive provincial governments in order to get it implemented in New Brunswick.
Since then, Keats, along with groups across the province, have been working to get the word about the community value proposition of CEDC’s.
“We’ve been doing a lot of education and building awareness and capacity for communities to use was what can be a fairly complex tool, which is, you know, securities, which most kinds of community groups and not very familiar with.”
Due to the unfamiliarity most community groups have with not only raising capital by selling securities, but the CEDC’s themselves, a pilot project was set up in order for Keats and her colleagues within the government to develop a framework which would allow communities to easily see what CEDC’s are useful for and how to set one up and properly manage it.
“A little over a year ago, they gave us funding to do that,” she said, “and Charlotte County was one of the communities selected to participate in the pilot project.”
“You know, one of the interesting things about this is, this is really new and innovative and people really need a bit of time to wrap their minds around it. This is not at all the traditional way that people have dealt with social environmental, cultural, economic development issues, so it does take a while to settle in people’s minds and for them to really grasp how it can be used.”
Since funding was acquired for the pilot project, a number of meetings with local groups and interested parties have taken place. Since those first meetings, a steering committee has been formed which has done a call out for board members with an interest in the project who also understand investment principles, business development, and community economic development.
As for why people would want to invest in a CEDC, the benefits are numerous. Investors not can not only see returns on any capital that they contribute, but they also become eligible for tax breaks.
The CEDC program is linked to the New Brunswick Small Business Investor Tax Credit (SBITC) program which offers a 50 per cent personal income tax credit to investors on eligible investments made in CEDCs.
Keats sees the value of CEDC’s not just in their attractiveness to investors and communities, but also in their potential to address some of the growing concerns about the demographic shifts going on in New Brunswick and other Atlantic provinces.
“To me, one of the biggest crises that we’re facing is that of business succession, and if we don’t do something about it, it could almost be as much of a risk as healthcare is.”
“We’ve got a lot of baby boomers that own small businesses, and they are retiring. The figures are really quite astounding in terms of job loss and economic activity loss,” she said.
Keats believes that one of the most interesting aspects of CEDC’s is their potential use as a way to transition some of those small businesses into employee owned, or worker owned co-ops, and social enterprises.
The local CEDC steering committee will likely soon be ready for community investment, so stay tuned.