Investing in the Local Food Systems

Learn how the Slow Money Institute is turning investing into a community activity.

| Fall 2014

  • Large gatherings to share success stories and ideas for improvement in the future help spread the Slow Money Institute's ideas.
    Photo courtesy Slow Money
  • Thousands of dollars have been invested in organic, local farms and ventures through Slow Money initiatives.
    Photo courtesy Slow Money
  • Investing as a community activity is sustainable and easy to do.
    Photo courtesy Slow Money
  • The Slow Money Institute is dedicated to encouraging local investment at lower rates of return.
    Photo courtesy Slow Money

The Slow Money Institute is an innovative, not-for-profit organization devoted to catalyzing the flow of investment capital to small food enterprises. The idea is to connect investors with local companies that desperately need capital to expand their businesses. 

Slow Money is a national network and a family of local networks, organized around the Slow Money Principles (see last page of article), regional and national events, and financial products and services. The organization operates via local groups that are created to offer capital to small businesses which often cannot obtain financing through more conventional channels.

The “slow” part comes in because investors are voluntarily accepting a lower rate of return on their investment, as the trade-off to supporting local, pure-food businesses, which, in turn, get a better rate on the financing that they receive from the group. “We're trying to inspire more people to invest in their local food system,” Michael Bartner, Slow Money vice president, explained recently. “We're like the CSA of investing,” Bartner added, stressing that under this model, investing becomes “a community activity.”

It's a win-win situation — investors make a profit, while organic farms and companies receive a much-needed infusion of capital. Additionally, “slow” money remains within the local area, increasing income to the businesses involved, creating jobs, and hopefully recirculating locally, as well as contributing to rebuilding local food systems, and growing the overall market.

Nineteen local networks and 10 investment clubs have formed. No matter a group's location, it's about neighbors with funds to invest getting together with farmers and other food entrepreneurs who are looking for financial backing in order to expand. Together, they hammer out deals that work to everyone's advantage. Nor are all members big-time investors.

And Slow Money isn't just about making loans. Because each local network enjoys autonomy in making its arrangements (the money is, after all, coming from local investors), a wide range of options exist and have been employed, and can include larger loans as well as other arrangements like equity investment (“partnerships”) and royalty-based relationships. In the latter arrangements, investors' return comes in the form of ongoing royalties received on products sold. This stunning flexibility means that investors and recipients are free to set up any arrangement that satisfies all the parties involved.

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