Being a reliable source of power is essential for your community, but it isn’t easy. You have to be prepared to respond to storms and natural disasters. You have to constantly stay ahead of aging equipment and materials. You have to build reserves against these major costs, while also keeping member rates down.
Mutual fund corporate accounts can be an effective way to build these reserves, and Homestead has helped numerous cooperative executives set up these accounts to address emergencies or to plan large capital spends. These reserve accounts:
- Are available when you need them – no waiting for FEMA or bank loan approvals.
- May help reduce debt levels and financing costs.
- Can help you plan for major expenditures, such as replacing a fleet of trucks.
Homestead can help you find low-cost, moderate-risk investments for your reserve accounts. Because of our experience with cooperatives, we can also share ideas about how other co-ops have set up and used them.
Northern Neck Electric is a Warsaw, Virginia based cooperative that wanted to establish a storm reserve to have funding readily available for major storms and reduce the impact of these storms on their financial statement. They had a modest sum of money to fund a reserve, and they wanted ideas about how they could put that money to its best use.
The solution for Northern Neck was to set up a corporate reserve account with specific guidelines as to how and when the money could be used. Northern Neck partnered with Homestead to establish the account and to identify investments suited to their goals and needs. The reserve funds have an opportunity to grow with the market over time, which helps make Northern Neck as prepared as it can be for any change in the weather.
Homestead is happy to share our experiences working with other cooperatives, and how their good ideas can help your community. Contact us.