Learn how the Slow Money Institute is turning investing into a community activity.
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.
Through national gatherings, regional events and local activities, over $35 million has been invested in some 300 small food enterprises since 2009.
From their website www.SlowMoney.org
• In Vermont, $280,000 was invested in Green Mountain Organic Creamery after they presented at the Slow Money 2nd National Gathering. Located in Hinesberg, Vermont, the local dairy was started by the farmers from Kimball Brook Farm.
• In the Pacific Northwest, Slow Money members and event attendees have invested in excess of $5 million, including a substantial investment in a new farm incubator and three other ventures.
• In North Carolina, over 80 loans ranging from $500 to $25,000, and totaling to more than $1 million, have been made to 58 small food enterprises, from beekeepers to small farmers, from a food coop to an organic cotton clothing maker.
• In Colorado, Localization Partners has been seeded with a 10-year, $1.5 million loan at 0 percent interest, and an additional $1.2 million has been invested in Grant Family Farms, the region’s largest diversified organic farm.
• In Ohio, 27 folks have invested $300,000 with Abby Turner in the operations of Lucky Penny Farm, a pastured farmstead and goat dairy.
• In Texas, the newly formed local investment club has made a $3,000 loan to Bastrop Cattle Company, a 100-percent grass-fed local beef operation. The club has since made three additional loans. They have named themselves STIC — the Sustainable Texas Investment Club.
• In Northern California, Slow Money members and event attendees have invested over $1.75 million, including investments in Point Reyes Compost Company, Catalán Family Farm, and People’s Community Market. The Northern California chapter is also where the new national crowd funding service, Credibles.org got its start.
• In Maine, members of the Slow Money network have provided $8.5 million to 73 small food enterprises and also launched two investment clubs: No Small Potatoes Investment Club, which has made 23 micro-loans totaling $105,000, and Maine Organic Lenders, which has made six loans totaling $87,000.
• In the greater Boston area, which has been hosting regular chapter meetings, one Slow Money member invested $5,000 in Tres Gatos, a local restaurant. An investment club, Sprout Lenders, has been formed with $35,000 committed from 14 people and has already made two investments. As of early 2013, Boston's series of local entrepreneur showcases have resulted in two local loans totaling to $45,000.
The Slow Money Principles
In order to enhance food security, food safety and food access; improve nutrition and health; promote cultural, ecological and economic diversity; and accelerate the transition from an economy based on extraction and consumption to an economy based on preservation and restoration, we do hereby affirm the following Slow Money Principles:
I. We must bring money back down to earth.
II. There is such a thing as money that is too fast, companies that are too big, finance that is too complex. Therefore, we must slow our money down—not all of it, of course, but enough to matter.
III. The 20th century was the era of Buy Low/Sell High and Wealth Now/Philanthropy Later—what one venture capitalist called “the largest legal accumulation of wealth in history.” The 21st century will be the era of nurture capital, built around principles of carrying capacity, care of the commons, sense of place and non-violence.
IV. We must learn to invest as if food, farms and fertility mattered. We must connect investors to the places where they live, creating vital relationships and new sources of capital for small food enterprises.
V. Let us celebrate the new generation of entrepreneurs, consumers and investors who are showing the way from Making A Killing to Making a Living.
VI. Paul Newman said, “I just happen to think that in life we need to be a little like the farmer who puts back into the soil what he takes out.” Recognizing the wisdom of these words, let us begin rebuilding our economy from the ground up, asking:
What would the world be like if we invested 50 percent of our assets within 50 miles of where we live?
What if there was a new generation of companies that gave away 50 percent of their profits?
What if there were 50 percent more organic matter in our soil 50 years from now?
Individuals are urged to go to the Slow Money website and add their voice, by signing on to the Principles.
Randel A. Agrella lives and gardens in Maine. An heirloom seed saver since 1982, he offers heirloom plants in season on his website, www.AbundantAcres.net. His articles have appeared in Heirloom Gardener since 2005.
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