USDA Rural Development Programs
The United States Department of Agriculture (USDA) is the single largest source of cooperative development funding in the US. Two programs are most relevant for cooperatives seeking grant support.
Rural Cooperative Development Grant (RCDG)
Up to $200K/yearThe RCDG funds organisations — typically cooperative development centres, universities, or non-profits — to provide technical assistance to cooperatives in rural areas. Eligible activities include feasibility studies, business plan development, legal structuring advice, financial analysis, and member education programmes.
Note: Individual cooperatives do not receive RCDG funds directly. A cooperative development organisation (CDO) applies on behalf of the cooperatives it serves. If you are forming a cooperative in a rural area, contact your nearest CDO — they may already have RCDG funding to assist you at no cost.
Value-Added Producer Grant (VAPG)
Up to $250KThe VAPG is a competitive grant for agricultural producers — including cooperatives — seeking to develop value-added products from their raw commodities. Examples include a dairy co-op launching an artisan cheese line, a grain co-op building a milling operation, or a fruit growers' co-op entering the juice market.
Awards range from planning grants (~$75K) to working capital grants (~$250K). Farmer-owned cooperatives and farmer-producer groups receive priority consideration. Applications typically open in late spring — check the USDA Rural Development announcement page.
CoBank and Farm Credit System
CoBank — a Farm Credit System bank — does not administer grants directly, but the Farm Credit System funds a range of cooperative education and development initiatives through its member institutions. CoBank's Sharing Success programme donates millions annually to rural cooperatives and community organisations. Agricultural cooperatives that bank with CoBank or a Farm Credit association should ask about grant eligibility through those relationships.
SBA Support for Worker Cooperatives
The Small Business Administration (SBA) does not administer cooperative-specific grant programs, but worker cooperatives are eligible for the same SBA loan programs available to other small businesses — including 7(a) loans, 504 loans, and microloans. Worker cooperatives that qualify as small businesses (typically under 500 employees and below SBA revenue thresholds) can access SBA capital on the same terms as conventional businesses.
SBA Community Advantage loans — delivered through mission-based lenders — are particularly relevant for worker cooperatives in underserved communities. Some SBA Small Business Development Centers (SBDCs) have staff with cooperative experience who can assist with business plan development and financing applications at no charge.
State-Level Cooperative Development Programs
Several US states have enacted legislation or funded programs specifically supporting cooperative development. The following states have the most active programs as of 2024.
California
The California Center for Cooperative Development (CCCD) provides technical assistance and the state's AB 816 (2015) established worker cooperative as a distinct legal entity. Several county economic development agencies offer matching grants for feasibility studies.
New York
The NYC Department of Small Business Services (SBS) has provided grant funding to worker cooperative incubators. The Bronx Cooperative Development Initiative and organisations like 1 Worker 1 Vote receive city and state grants to develop worker co-ops in low-income communities.
Massachusetts
The Massachusetts Center for Employee Ownership (MassCEO) and the Cooperative Fund of New England provide grants and patient-capital loans. The state's Employee Ownership Trust framework enables business conversions with partial grant support for feasibility and legal costs.
Wisconsin
The University of Wisconsin Center for Cooperatives (UWCC) is one of the longest-running cooperative research and extension programs in the US. Wisconsin's strong dairy cooperative tradition has produced state-level support for agricultural co-op development through the Wisconsin Department of Agriculture, Trade and Consumer Protection.
Additional state programs exist in Vermont, Colorado, Minnesota, and Oregon. Contact your state's department of agriculture or economic development and ask specifically about cooperative support programs.
CDFI Financing for Cooperatives
Community Development Financial Institutions (CDFIs) are federally certified lenders and investors focused on underserved markets. Many CDFIs specialise in cooperative financing — particularly worker cooperatives, food cooperatives, and community-owned enterprises in low-income areas.
While CDFIs primarily provide loans, they also administer technical assistance grants funded through the CDFI Fund (a US Treasury program). Cooperatives serving low-income communities, communities of colour, or rural areas are often prioritised.
Specialist cooperative CDFIs include the Cooperative Fund of New England, National Cooperative Bank (NCB), and Local Enterprise Assistance Fund (LEAF). The CDFI Coalition's member directory lists all certified CDFIs — search by geography and specialisation.
Foundation Funding for Cooperatives
Cooperative Development Foundation (CDF)
The CDF is the primary philanthropic arm of the US cooperative movement. It awards grants for cooperative education, technical assistance, and international development. CDF grants typically range from $5,000 to $50,000 and prioritise projects that advance cooperative development in underserved communities.
W.K. Kellogg Foundation
Kellogg has funded cooperative development in agriculture, food systems, and rural communities for decades. Its Food and Community programme has supported food cooperative networks and community-owned grocery stores in food-desert communities. Kellogg does not accept unsolicited proposals — connections through cooperative networks are the primary path to funding.
Ford Foundation — Worker Ownership
The Ford Foundation's Future of Work(ers) initiative has specifically funded worker ownership conversions, including worker buyouts of closing businesses. Ford has made multi-year grants to organisations like the Democracy at Work Institute (DAWI) and the National Center for Employee Ownership (NCEO) that in turn support individual co-ops.
International Cooperative Funding
ICA Development Fund
The International Cooperative Alliance (ICA) operates development programs supporting cooperatives in emerging economies. Funding focuses on capacity building, governance strengthening, and cooperative law reform. The ICA's regional offices (Africa, Americas, Asia-Pacific, Europe) each have distinct funding streams.
UN FAO Cooperative Development
The Food and Agriculture Organization of the United Nations supports agricultural cooperative development in developing countries, particularly in sub-Saharan Africa and South Asia. FAO cooperative programs focus on smallholder farmer organisations, input supply co-ops, and market access. Funding flows through national agriculture ministries and NGO partners rather than directly to cooperatives.
UK — Co-operatives UK Development Fund
Co-operatives UK (the national membership body) administers development grants for new and growing cooperatives in the United Kingdom. Grants typically cover feasibility studies, legal setup costs, and first-year technical assistance. The UK Government's Community Ownership Fund has also provided capital grants to community-owned enterprises including co-ops.
UK — Unity Trust Bank
Unity Trust Bank was founded by trade unions and the Co-operative Bank. It provides loans and occasionally grant partnerships to cooperatives, social enterprises, and community organisations across the UK. While primarily a lender, Unity Trust participates in blended finance structures that combine grant and loan funding.
How to Apply for Cooperative Grants
Grant applications for cooperatives typically require several documents that should be prepared before the application window opens. Rushing these materials degrades application quality and reduces success rates.
Feasibility study
Almost every grant above $25K requires a feasibility study demonstrating member demand, market opportunity, and projected financial viability. Commissioning one early — even before an application cycle — strengthens every future application.
Member commitment letters
Grantors want evidence that real people are committed to the cooperative. Collect signed letters from founding members stating their intent to join, contribute equity, and use the cooperative's services.
Business plan
A 3-5 year financial projection, governance structure, and market analysis. Many cooperative development centres (CDOs) can help you build this if you lack the capacity in-house.
Legal entity
Most grantors require the cooperative to be legally incorporated before funds are awarded. File articles of incorporation and adopt bylaws as early as possible — even before funding is secured.
Matching funds
USDA RCDG and VAPG require matching contributions (often 25-50%). Line up member equity contributions, local government support, or bank loans to meet the match requirement before applying.
What Grants Cannot Fund
Understanding ineligible uses saves time and avoids disqualification. Across nearly all cooperative grant programs, the following are explicitly excluded:
- ×Personal income or salary for cooperative members or founders (outside of reasonable staff compensation)
- ×Lobbying or political activities
- ×Purchase of land or buildings (capital grants for real property are rare and typically require separate programme eligibility)
- ×Debt repayment or refinancing existing loans
- ×Religious activities
- ×Projects that have already been completed before the grant award
Frequently Asked Questions
What is the USDA Rural Cooperative Development Grant (RCDG)?
The RCDG is a competitive grant from USDA Rural Development that funds organisations (not the cooperatives themselves) to provide technical assistance to new and expanding cooperatives in rural areas. Awards are typically up to $200,000 per year and cover costs such as feasibility studies, business planning, legal structuring, and member education. Applications open annually — check grants.gov and the USDA Rural Development website for the current request for applications (RFA).
Can a newly formed cooperative apply for grants?
Most federal programs require at least a basic business structure — articles of incorporation, bylaws, and an EIN — before a cooperative can apply directly. USDA RCDG is awarded to cooperative development centres, which then assist nascent co-ops. Some state programs and foundations will fund cooperatives in the feasibility stage if they demonstrate committed founding members and a clear community benefit. A completed feasibility study is almost always required for grants above $25,000.
What is the difference between a CDFI loan and a cooperative grant?
CDFIs (Community Development Financial Institutions) primarily make loans and provide equity investments to underserved businesses, including cooperatives. Some CDFIs also administer grant programs — particularly for technical assistance and capacity building — but the core CDFI instrument is a loan. Grants from CDFIs are often available to cooperatives serving low-income communities, as CDFIs themselves receive federal CDFI Fund grants that they pass through to eligible businesses.
Are there grants available for cooperative housing?
Yes, though they are less numerous than agricultural or worker cooperative grants. HUD's Community Development Block Grant (CDBG) program can fund affordable housing cooperatives, particularly limited-equity co-ops serving low-income households. The National Cooperative Bank (NCB) and some state housing finance agencies offer financing for affordable co-op housing. The Cooperative Development Foundation (CDF) has also funded housing cooperative feasibility work through its grant programmes.