28 Years of REED Funding: Looking Back From the Founding Six Members to Today

In early September, the East River Electric Cooperative held its annual meeting to celebrate 74 years of serving rural South Dakota and Western Minnesota communities. While the meeting focused on the performance of a single cooperative, the general discussion was much bigger. This year’s theme was Cooperatives: Partners in Progress, because we are stronger together.

There’s no better example of electric cooperatives working as partners than the evolution of the Rural Electric Economic Development (REED) Fund. Since 1996, this fund has helped a growing number of member cooperatives fund projects that support local communities. REED dollars have helped South Dakota residents age in place and contributed to the development of rural fire halls.

In the 29th year of its existence, the REED Fund is powered by 27 member cooperatives. Learn more about its impact and how it all got started.

Seven Cooperatives United to Develop a Revolving Loan Fund 

The development of the REED Fund started well before its first loan was issued. It was initiated in 1994 by seven electric cooperatives in the region who wanted to develop a revolving loan fund. Each member submitted a grant application to the REA Rural Economic Development Loan and Grant (REDLG) Program by the USDA. In 1995, the USDA approved all of these loan applications.

The REED Fund was made possible by:

• East River Electric Cooperative
• FEM Electric Association
• H-D Electric Cooperative
• Intercounty Electric Association (now Central Electric Cooperative)
• Northern Electric Cooperative
• Turner-Hutchinson Electric Cooperative (now Southeastern Electric Cooperative)
• Whetstone Valley Electric Cooperative

Contributions from each of these cooperatives gave the revolving loan fund the money it needed to start supporting projects in local communities.

More Cooperatives Joined and the REED Fund Started to Grow

In 1996, the USDA issued seven zero-interest loans totaling $1,741,000 as part of the REDLG grant program. Excitement about the REED Fund was starting to grow, and more cooperatives decided to join. During the 18 months between March 1996 and September 1997, six more members joined, bringing the total REED partnership to 12 cooperatives. In December 1998, REED received IRS approval as a private, non-profit, tax-exempt [501(c)(3)] corporation.

Since its inception, all member cooperatives except two have received at least one REDLG grant, highlighting how everyone contributes to the Fund in some way.

Today, 27 member cooperatives support REED, and as of January 2024, the organization has received 87 REDLG grants. These 0% interest loans total $21,082,793. There are also active applications currently awaiting USDA approval.

The REED Fund Has Issued $125 Million in Loans Since 1996

It took a tremendous amount of work for REED to develop a sustainable revolving loan program that could support the wide region that member cooperatives cover. However, it has had an insurmountable impact on local communities in the past 28 years.

REED has issued $125 million in loans and has seen $1 billion in total project impact. The REED Fund closed 21 loans worth $13.204 million in 2023 and is on track to hit similar impact levels in 2024. Four of those loans were issued at 0% interest.

“The REED Fund is designed to be sustainable because of its revolving loan model,” says Eric Fosheim, Economic Development Manager at the REED Fund. “The principal that gets paid back – and much of the interest that gets paid back – is lent out again in the form of new loans. This allows us to grow our capital over time.”

Most loan applications use the REED Fund to partially cover projects, and leverage local public and private partnerships to help create a larger impact. On average, for every $1.25 that REED puts into a project, $10 is invested in those same projects. Applicants also contribute their own equity, into these projects to ensure their success. 

The REED Fund Supports Direct Economic Development and Quality of Life Projects

When you look at the projects funded by the REED Fund, you might be surprised by their diversity. While some projects relate directly to economic development and business financing – like financing for rural fire infrastructure or investments in housing – others contribute to the quality of life of residents. The REED Fund has issued loans for bowling alleys, race tracks, and other entertainment projects that make life in rural South Dakota more enjoyable.

“Quality of life investment is economic development,” says Fosheim. “You need to create a place where people want to live before you can bring jobs and housing to the area. The REED Fund is happy to support projects that bring excitement and recreation to our communities, which can encourage current residents to stay and new ones to move in.”

Keep Up With the REED Fund 

In the 28 years since its inception, the REED Fund has issued $125 million across 415 loans and impacted more than 10,000 jobs – and this is just the beginning. The REED Fund expects to grow in the coming years, bringing in new members, issuing more loans, and supporting its communities. Keep up with our projects or apply for financing yourself. Our next loan might be in your hometown.