Sowing Seeds for Food-Based Local Economies
When Woody Tasch, in 2008, published Inquiries into the Nature of Slow Money: Investing as if Food, Farms and Fertility Mattered, and launched the nonprofit Slow Money to catalyze the flow of capital into small and local food enterprises, he did not have a clue how to do it. But he captured the zeitgeist. Five years later, 650 farmers, ranchers, local food entrepreneurs, food activists and investors met at the fourth Slow Money gathering in Boulder in late April.
“Colorado imports 97% of all the food we consume here,” said Michael Brownlee, co-founder of Localization Partners, LC, a Slow Money affiliate in Boulder. “We’re an agricultural state, and this profound imbalance is part of the context of Slow Money here.”
According to Brownlee, the food localization effort in Colorado is no longer about a “preferential lifestyle” but rather about economic development. Denver mayor Michael Hancock recently announced an official food localization goal of 20% by 2020, and Brownlee says Slow Money will be a key part of the strategy.
“What we’re engaged in is restorative economics,” he said. “We’re learning how to restore agriculture and food production, which means getting to reverse the widespread damage by big industrial agriculture and a globalized food system. Not surprisingly, it turns out we’ve got as unconscious about how we feed ourselves as we have about what our money is doing. Slow Money is about becoming very conscious and very deliberate with both.”
The highlight of the conference was the pitch-fest by 24 stellar entrepreneurs representing every aspect of a re-imagined locally based food system. It was the final presentation, though, that brought a standing ovation—and the $50,000 prize. Revision International works in Westwood, a Denver neighborhood where the average family income is just over $11,000 and one-third the residents are under 18. Last year, it helped over 200 families (including 40 Somali refugee families who spent 16 years in refugee camps in Kenya) produce an estimated 25,000 pounds of fresh produce on 1 1/4 acres of land. Now those families want to establish a for-profit cooperative, sell their excess, and eventually expand into value-added products.
“We’re competing against a different mindset that solves food deserts by plopping down a grocery store then walking away,” Revision International CEO Eric Kornacki told the crowd. “This paradigm contends that to solve poverty, all you need to do is give tax breaks to Walmart and let them create jobs…
“The Westwood Food Coop can truly localize the food system, while reclaiming food deserts and planting seeds that mature into self-sufficient communities,” he continued. “The cooperative will increase food production, increase healthy food access, create good-paying jobs, and more importantly, generate wealth that is controlled by the community—and stays in the community. This is a cooperative model creating a regenerative economy.”
See Barron’s blog post about the conference here:
http://blogs.barrons.com/penta/2013/05/13/slow-food-slow-money/
Revenue-based financing: an alternative for angels and impact investors
A new tool for investing directly in small and growing businesses is beginning to gain currency among angels and impact investors
“I’m a raving fan because I think revenue-based financing aligns interests [between investors and entrepreneurs] better than a lot of traditional investment vehicles,” says Jerry Carleton, an attorney with the Immix Law Group in Portland, Oregon that has organized a couple of dozen RBF financings during the last five years. One beauty of RBF, he points out, is that it renders the valuation conversation—often an awkward and belabored one—irrelevant. He has used the technique to raise funds for manufacturing and service businesses as well as high tech.
In Seattle, serial entrepreneur Michael “Luni” Libes, who has been an entrepreneur-in-residence at the University of Washington and the Bainbridge Graduate Institute, where he also teaches entrepreneurship, has started Fledge, a “conscious company” incubator based on the TechStars model. Like TechStars, he mentors start-ups in exchange for 6% of the company. In his case, though, RBS accounts for half of that.
“This model allows me to support entrepreneurs that are establishing lifestyle businesses,” he says.
Although technology investors are often “agnostic” as to whether their clients want to run their businesses forever or flip them and start again, impact investors are drawn to RBF precisely because it does not require an exit. “Exits are destabilizing events for employees and for the community,” says Juliana Eades, president of the New Hampshire Community Loan Fund, a community development financial institution that provides loans to small businesses in the state. “I like RBS because it solves the exit problem and it is mission compatible.”
Another impact investor that’s embracing RBF is the VSJF Flexible Capital Fund, a for-profit subsidiary of the Vermont Sustainable Jobs Fund. Charged with accelerating Vermont’s green economy, its mission is to provide “near equity” (subordinated debt as well as royalty financing) to fill a gap and strengthen the state’s sustainable agriculture and food systems, renewable energy and natural resource sector.
“We are working with companies that are built to last; hence, we are looking at sharing in the upside of the business through revenue sharing rather than ownership,” says Janice St. Onge, deputy director of the Vermont Sustainable Jobs Fund and president of the VSJF Flexible Capital Fund. “We’re not about working with companies that are built to flip.”
the rest of the story can be found here:
www.fa-mag.com/news/a-new-tool-for-angel-investors-13957.html
Teaching Independence Via the Garden
“If I had studied Ag in college, they would have convinced me that what I do every day is impossible,” says vegetable farmer, educator, researcher and author Eliot Coleman. Best known for growing vegetables year-round in unheated greenhouses in northern Maine, Coleman has been called America’s most innovative small farmer. Not only is he reinventing the harvest, he’s helping to turn the economics of small farming upside down.
The story began when Coleman read Helen and Scott Nearing’s Living the Good Life, the best-selling classic of the ’60s credited with spawning the era’s homesteading movement. “I thought they were crazy,” he recalls. “They didn’t eat peas in the winter because peas didn’t grow in the winter. I thought: What’s wrong with the freezer?”
But Coleman, who majored in Spanish literature because he spent his summers managing a ski lodge in Chile, was attracted by the Nearings’ independence and ability to survive against all odds. When he read that a teaspoon of soil contained a million organisms, he was so intrigued that he dropped his usual summer plan of mountaineering to try organic farming. When the old-timers using chemical fertilizers began asking how he was able to grow certain vegetables, he realized that organic growing was probably easier.
“It turned out that organic farming was so simple,” he says. “I’m not buying anything. The world’s best fertilizer is compost, which you can make for free, from waste products, in your own backyard.”
A year later, Coleman quit his college teaching job and headed to Harborside, Maine, where the Nearings sold him and his wife 40 wooded acres for $33 per acre, the same price they had paid for it 20 years before. He chopped down trees, removed stumps and built a one-room house for $700. In 1970, a Wall Street Journal article featured the couple growing 80 percent of their own food and living on $2,000 per year.
Coleman loved talking to his new neighbor and mentor.
“It was like college all over again,” he says. “Here was a man who had debated Norman Thomas, survived a trial by the U.S. government in 1917 for writing an anti-war pamphlet and run for the Senate in New York City on the Communist party ticket. Man, this was pretty good if you liked ideas, and I loved ideas!”
In 1974, Nearing offered to pay Coleman’s way to the second European organic farming conference. It was a turning point. Although there were no models for small farming in the U.S., the small farming tradition never died in Europe. There, among other things, Coleman visited the farm of Louis Savier.
“It wasn’t until I stood in Savier’s garden that I realized how well it could be done,” he writes in The Winter Harvest Handbook (2009,) his third landmark book about organic growing and the four-season harvest. “Quality was everywhere: the organized layout, the tidy, closely spaced rows, the ranks of cold frames and hotbeds, the dark chocolate-colored soil and, most especially, the crops glowing with health.”
On another trip abroad Coleman saw his first mobile greenhouse, a concept he now calls the “best (or actually rediscovered) gardening idea of the 21st century.”
Rather than growing summer vegetables like tomatoes in the winter in a heated greenhouse, the notion is to grow winter vegetables such as spinach and carrots in the same ground he uses in the summer. The issue is light, not temperature. Since there is less light in winter, the vegetables simply take longer to grow. It’s less about growing food than harvesting food year-round. The goal is to eat fresh produce throughout the year.
“It’s a different arrangement of time and a different appreciation of quality food,” he says. “We’ve managed to turn winter from deprivation to celebration.”
Although Coleman is a market grower, his four season farm in Harborside is also experimental. Why do beets grow better in seaweed and cabbage in autumn leaves? He sends them to a lab to find out what the differences are. He has also dreamt up new tools—better hoes, small electric tillers, tools for working the soil at various depths, different ways to put crops in the ground, alternative transplant systems. He has given the ideas away, just to get them out there. “I am using techniques now that I didn’t even dream of 20 years ago,” he says. “I am succeeding at things I failed at 10 years ago.”
In these ways, Coleman is helping make the small organic farm a viable enterprise—the first step, he says, to changing the world. “It’s very difficult to control people who can create products without purchasing inputs from the system,” he says. “Fertile soil has the power to make the small farm far more independent of purchased inputs and even more independent of the corporate world.”
copyright elliewinninghoff
Charity Meets Profit
Foundations are using program-related investments to practice philanthropy in the for-profit world
“I’m super-excited about this tool,” says Julie Sunderland, director of program-related investments at the Gates Foundation, which increased its PRI budget from $400 million to $1 billion. “I think [PRIs] are really powerful. I like the focus on the programmatic goals and programmatic intent. Holding ourselves to those standards provides a real powerful screen for us in terms of identifying investments that we think can really make a difference.
“You can do some real creative things,” she adds.
Even though they are investments, PRIs are not limited to the for-profit world; indeed, until recently, most have involved low-interest loans to nonprofits and real estate projects like affordable housing, charter schools and community health centers. They’ve been used to leverage commercial capital in multimillion-dollar community development projects. And together with grants, they were used to build an entire $30 billion industry of community development finance institutions, the mostly loan funds thuat serve minority and low-income people.
More recently, however, foundations have expanded their reach, and the IRS last year published additional guidance with respect to the types of projects that are permissible as PRIs. Until then, the existing examples (dating back to the l960s) were about US-based disadvantaged individuals and deteriorating urban areas. The new examples are based on projects for which foundations have sought and received private letter rulings, but the facts were changed to provide principles-based guidance.
For example, PRIs can be made for projects in foreign countries and for-profit projects with potentially high profit margins. They can even include below-market rate loans to and equity investments in the same entity. And they can be targeted toward a variety of charitable purposes that are not included among those that usually define nonprofit 501c3 status, such as advancing science.
This is the second part of a two part series about PRIs. Part one is: The Untapped Power of PRIs, the previous post.
see the story here:
The Untapped Power of PRIs
Program Related Investments are little-known tools that expand the way foundations can put their money to good use
Lender, Organizer —and Gamechanger
The New Hampshire Community Loan Fund’s transformative work in the mortgage market for manufactured homes is a model for systems-led change
Manufactured homes in mobile home parks were not an always intriguing alternative for low-income people. Homeowners could be evicted on 30 days notice simply because their landlord wanted to do something different with the land. And their value depreciated over time. The New Hampshire Community Loan Fund’s transformative work in the mortgage market for these homes has changed that.
To read the rest of the story, go here:
www.fa-mag.com/news/impactful-returns-from-mobile-home-parks-12926.html
The Giving Generation
How the new philanthropists’ intellectual capital is changing society
Unlike the days of yore, when folks waited until retirement before turning into tea-and-biscuits philanthropists, many newly wealthy Americans today are rolling up their sleeves and starting small-to-medium foundations when they are in mid-life transition. Foundations now in the hands of people in their 40s control a charitable war chest worth some $83 billion-nearly twice the giant Gates and Ford Foundations combined. But it’s not the size of the philanthropic assets in question that makes this mid-life group so important, it’s the little seen intellectual capital they are building that will be critical to tomorrow’s society.
To read the full story at Barron’s Penta, go here:
The Go-To Rating Service for Do-Good Loan Funds
The CARS rating service includes deep dive due diligence and analysis
Local wind farms that finance services for low-income people, microfinance for Native Americans, conservation easements that protect working waterfronts and the lobster industry in Maine. These are the types of activities financed by “community development finance institutions,” or CDFIs, most of which are revolving loan funds that serve minorities and low-income people. But while there is huge interest by impact investors, it can be baffling to analyze a nonprofit and understand the risk of investing in one.
Fortunately, there is a way. CARS (the CDFI Assessment Rating System) is the go-to rating system for these loan funds, most of which are nonprofit. It also performs deep dive due diligence and analysis.
To read the rest of the story, go here:
http://www.fa-mag.com/news/a-go-to-place-where-advisors-can-evaluate-nonprofit-loan-funds-12679.html
CARS’ website is here:
Investing in the Lobster Coast
Coastal Enterprises Inc., one of the most pioneering and sophisticated impact investors in the country, specializes in fisheries, food and forests
How do you develop a rural economy that is 90% covered in trees and includes 4613 islands—but which has no major corporations, lousy soil and an inhospitable climate most of the year?
In 1977, when Ron Phillips started Coastal Enterprises, Inc., or CEI, a Wiscasset-based revolving loan fund and community development finance institution, Maine was a like a “third world country,” he said—one based on natural resources and extractive industries with “less value-added than you’d like to see.”
CEI is particularly lauded for its work with Somali immigrants, and its efforts regarding first-of-its-kind conservation easements to preserve the “working” nature of Maine’s waterfronts. And its do-good tentacles can be found from Millinocket, Maine to Lopiwa, Hawaii Island.
The rest of the story can be found here:
www.fa-mag.com/news/investing-in-the-lobster-coast-12102.html
No-Risk Native Investment
The pioneering Lakota Funds, which brought micro-loans and business training to Indian country, is launching a credit union
Imagine a reservation the size of Connecticut with 30,000 people living on it who have no access to banking services—and which is ringed by predatory payday lenders.
That’s how Randy Rice, community impact investments portfolio manager at Boston-based Trillium Asset Management, describes the Pine Ridge Reservation to investors. Located 75 southeast of the Black Hills in South Dakota, it is home to the Oglala Lakota, part of the Great Sioux Nation.
“My clients understand the need for the Lakota Funds,” Rice says, referring to the community development finance institution, or CDFI, that was started there in l987 to support the creation of micro-businesses. “If you had told me 13 years ago that there would be 350 businesses on the Pine Ridge Reservation, I am not sure I would have believed you. One thing that has impressed us as investors is that as they begin to fulfill their mission, they continue to broaden that mission.”
You can read more about the Lakota Fund here:
http://www.fa-mag.com/pw-mag/impact-investing/11837-no-risk-native-investment.html
For more background and context about Pine Ridge, watch photographer Aaron Huey’s TED talk here:
