Sources Of Permanent Capital For Cooperatives
Permanent capital provides financial stability for cooperatives. It consists of all the capital reserves that are unallocated to members. Unallocated equity can be defined as: ”The share of net margin (savings) from member and/or non-member business retained by the cooperative for operating purposes. This is considered permanent capital in that there is no obligation to redeem this equity to current or past members unless the cooperative is dissolved” (University of Wisconsin Center for Cooperatives).
Such permanent reserves provide a financial buffer during times of economic recession without having to impair member equity.