Across the U.S., community-led co-op organizations empower people to access nutritious food, develop affordable housing, and create democratic workplaces. Co-ops have such a rich history of community empowerment that National Cooperative Bank (NCB) was founded in 1978 by an act of Congress. NCB is the only bank in the United States dedicated to delivering banking products and solutions to cooperatives and other member-owned organizations to help communities thrive.
In 1981, NCB shifted from a government-sponsored entity to a privately held cooperative with co-op borrower members. Over the 40+ years since its founding, NCB has expanded its impact while staying true to its mission, financing all kinds of cooperatives across the country as well as groups and organizations that are not co-ops but operate similarly, such as homeowner associations and community solar projects in low-income communities.
As part of its enabling legislation, NCB has an uncommon mandate to ensure its efforts benefit those most in need, supporting low- and moderate-income communities and cooperative expansion initiatives. This mandate to operate for the benefit of its cooperative members—not outside investors—allows the bank to focus on its commitment to support affordable housing, healthy food, renewable energy, small businesses, community-driven health care and non-profit organizations. The bank currently has 3,200+ cooperative members and many more customers, and more than 40 percent of its portfolio serves low- and moderate-income communities. The types of organizations NCB supports include:
- Community-owned housing such as co-ops and community associations
- Community-driven healthcare solutions
- Retailer-owned grocers and consumer-owned food cooperatives
- Small business cooperatives
- Consumer-owned credit unions, leagues and credit union service organizations
- Community Development Financial Institutions
National Cooperative Bank CEO Casey Fannon has been with the organization for more than 29 years. In this Q&A, Casey shares how NCB helps support the entire co-op ecosystem as part of the work to drive a more just and equitable economy.
Why did Congress single out co-op organizations specifically for financial support? Why is a bank that provides financial services focused on co-ops beneficial to the entire economy?
Casey Fannon: In the years leading up to our creation, there was a big effort by the NCBA CLUSA (National Cooperative Business Association and Cooperative League of the USA) to create National Cooperative Bank because many consumer cooperatives weren’t being adequately served by other financial institutions.
A lot of consumer-owned co-ops, particularly food and housing co-ops, face challenges with traditional banks. This is because traditional banks rely on personal guarantees for security, which is the standard lending practice. For a co-op, that doesn’t fit. Co-ops—whether consumer, purchasing, or worker-owned—are owned by many members and therefore have no individual guarantor. Many financial institutions don’t know how to work with that model. Some banks also hesitate to lend to a co-op because they don’t know who will be on the board in the future. Members vote for new directors, and there isn’t one consistent owner running the show. Banks see that as a risk. We, on the other hand, see the co-op model as a strength. A co-op is a democratically run organization in which members who benefit from the company’s actions elect its leaders. This structure makes its members and leaders inherently invested in and driven toward its success.
How does NCB’s specialty and expertise in working with these organizations help you serve underrepresented communities?
NCB has been able to bridge the capital markets—the Wall Street world—with housing co-ops, our biggest market. Whether it’s market-rate co-ops in New York City or limited-equity, affordable housing co-ops in Kansas or Georgia, our focus on this industry has allowed us to build relationships these communities otherwise wouldn’t have. For example, our relationship with Fannie Mae and the commercial mortgage-backed securities (CMBS) market ensures a constant flow of loans that we securitize into the capital markets, alongside some of the largest financial institutions in the country. This enables NCB to interact directly with co-op communities, and our members benefit from lower costs of capital.
We also design our programs specifically for co-ops, creating consistency and providing high-level service. While credit unions primarily serve individual consumers, NCB—a co-op itself—serves the credit unions, providing essential banking and settlement services. By leveraging economies of scale, we can reduce costs for our credit union customers, which in turn leads to higher deposit rates and lower loan rates.
NCB is mandated to ensure its work benefits the communities it serves, especially low-income communities. What does that mean in practice?
Profitability matters to us, but we’re not driven solely by it. As a for-profit institution, we aim to earn and distribute profits, but our focus remains on helping communities.
One example is our investment in Frolic Community, a co-op real estate developer in Seattle addressing gentrification by increasing density on single-family lots. Their model allows residents to remain in their communities while creating additional units and opportunities. We’ve provided both loans and investments to Frolic and are proud of the impact they’re having.
Another example is Detroit Food Commons, a co-op in an African American community that was underserved in terms of food access. We helped them start the co-op, bringing expertise in both the food and the co-op models, which often involves high leverage, no personal guarantees, and city support.
How does investment in these communities act as a foundation for a more equitable, circular economy?
One of our foundational principles is to “do well to do good.” This means we need to maintain a profitable position, but making a difference drives our loan and investment decisions. Most co-ops aren’t profit-driven in the same way a traditional company is. They are created to solve real problems. The areas we focus on—energy, health care, housing, and financial services—are basic human needs, and the co-op community exists to serve them. We fuel that growth through the capital and services we provide.
As a cooperative ourselves, our earnings are redistributed to our users. This creates a circular, non-extractive model. Profits don’t leave the ecosystem but rather return, either directly, through patronage refunds, or indirectly, through favorable terms, such as lower loan rates or higher deposit rates. This keeps the flow of capital within the cooperative community.
Governance is also critical. Co-op members vote on who runs their organization, electing management or the board. Capital is then reinvested into the community, creating a self-sustaining cycle. Importantly, we focus on basic, essential industries, not speculative investments, so our impact stays aligned with the real needs of the cooperative ecosystem.
Co-ops are often created by people in the community who identify a problem then try to find a way to implement a solution. What role do NCB and other service providers play?
Self-help is one of the foundational principles of cooperation. Co-ops aren’t looking for other people to solve their problems. They’re looking to solve the problem themselves. But you need a rich ecosystem to make that happen—technical assistance, capital, training. We play a critical role in that ecosystem, but there’s a long list of technical assistance providers that make co-op creation possible. It takes a village.
To that point, NCB plays multiple support roles in this ecosystem. Can you describe some of the ways you provide support beyond your primary financial function?
As a regulated financial institution, it’s not possible for us to fund thousands of small startups. We can’t be everything to everybody. We recognize that, so we try to create and support entities and solutions to help solve those problems in the ecosystem in other ways.
For example, we provide grants to co-op development centers or community development financial institutions (CDFIs), which can turn around and put that money directly into the community. We created a company called Rochdale Capital, now an aspiring CDFI. NCB contributed $9.5 million to Rochdale to create a community development loan fund serving the needs of the smallest cooperatives in underserved communities. They sit in our office, and we support them in many ways, and that partnership enriches the entire co-op system.
Another example: Every year, we sponsor the Co-op Innovation Awards in partnership with Capital Impact Partners. The program aims to increase cooperative development in disinvested communities. Last year marked the 10th year of the awards and we surpassed $1 million in grants awarded to 30 innovative organizations across the country. These awardees have subsequently leveraged their awards to secure more than $13 million in additional funding from foundations, investors, and government agencies.
The 2024 awards provided catalytic grant funding to awardees focused on lowering the cost of school meals via group purchasing, creating more cooperatively owned real estate projects, supporting employee-owned restaurants nationwide, and developing a food distribution hub for rural and Native communities.
Financial education seems to play a significant role in your mission. Could you share a bit about that aspect of your work?
While we are predominantly a commercial bank, we also have a consumer and residential focus. Our branch in Hillsboro, Ohio, is our largest consumer footprint, and through that branch we provide traditional retail banking. Our financial education focus is twofold. We offer online education tools open to the public and work closely with the local high schools in Hillsboro and the surrounding counties, offering online financial education to the students.
We also support technical assistance providers throughout the co-op ecosystem and are generous donors to this network. For example, we fund Start.coop, which helps entrepreneurs either start new co-ops or transition existing companies into cooperatives. We supported them in building online training modules to guide this process. And we support the Food Cooperative Initiative, which works with new and aspiring co-ops for three to five years to get them off the ground, free of charge. They provide business planning, education, financial analysis, site viability studies, and governance training. We contribute to the Federation of Southern Cooperatives in Birmingham, which supports African American farmers in protecting and securing heirs’ property rights, helping them keep their land.
Beyond funding, we share financial education through social media on topics like cybersecurity, budgeting, and credit improvement. We have approximately 10 lines of business and a team of business development officers who attend roughly 60 trade shows, conferences, and events each year. Through these efforts, we continually work to educate both customers and the broader community.
National Cooperative Bank is the only bank in the United States dedicated to delivering nationwide banking products and solutions to cooperatives and other member-owned organizations to help communities thrive. Learn more about NCB and its work and impact.