by Woody Tasch
“The innate value of this kind of investing is so obvious to me,” stated a woman from Ashland, OR during a Slow Money workshop, “that I don\’t care how much money I make.”
That\’s a stopper. No way around it. An unhittable knuckleball in the fast-pitch world of Buy Low/Sell High.
Innate value? Not caring about how much money we make? What in the world does this mean?
In the case of the woman who said it, it means that that the benefits to her and to her community—more organic farms, more organic food available locally, a more robust local economy—are so tangible and so direct that she doesn\’t need a new benchmark or a new asset class or a fiduciary to explain them.
The word “innate” struck me, when I heard it in this context, as beautiful. Investors talk about the intrinsic value of a company, as distinct from its market cap. But innate value? When I made it to the dictionary, the idea only became more beautiful, rich with connotations of “nature” and “inner,” suggesting a confluence of personal values and ecological awareness.
The word “innate” pops up in another most interesting place: E.O. Wilson\’s term biophilia, which describes the “innate affection humans have for other living organisms.” Another of Wilson\’s terms, biodiversity, is now part of the vernacular. Perhaps biophilia will never become as popular.
Or perhaps the time has come to splice biophilia into the DNA of a new kind of fiduciary responsibility. The kind of fiduciary responsibility that informs the emergence of nurture capital – a new generation of intermediaries and financial products organized around principles of soil fertility, sense of place, economic, cultural and ecological diversity, and nonviolence.
The kind of fiduciary responsibility that enables one million people to put 1% of their money into local food enterprises.
A New Vision
Such talk of biophilia, nurture capital and fiduciary responsibility would have been rather far-fetched as recently as a few years ago. Today this is not the case. It is right in front of us, as plain as day, as confusing as Goldman Sachs\’ billions made from ultra-fast trading and as tangible as a CSA [1]. We are moving away from hundreds of trillion of dollars of derivatives towards a new way of thinking about money that integrates social capital, natural capital and financial capital as simply as a CSA. How “innately beautiful,” the prospect of investors connecting more easily with one another and with enterprises near where they live, with fewer layers of intermediation and less financial razzmatazz.
This is the work of Slow Money, an NGO now nearing the end of its second year; 1,200 members strong, 12,000 signatories strong, more than a half dozen regional slow money initiatives strong, with millions of dollars beginning to flow into dozens of small food enterprises. What we have found during our launch is that people are ready, remarkably eager, in fact, to engage in a new conversation about money, culture and the soil.
“Slow Money is one of the most remarkable initiatives I\’ve seen in decades,” says Tom Miller, former head of Program Related Investments at the Ford Foundation, and an early funder of Grameen Bank. “It is the basis for a fundamental revision of our concepts of fiduciary responsibility.”
Food and the soil are the entry point for the discussion, but at its heart it is about a new vision of restorative economics, about what comes after industrial finance and industrial philanthropy and industrial agriculture, about what it means to be an investor in the 21st century.
The energy that people are bringing to these concerns is nothing short of remarkable. In March 2009, when Slow Money had 40 members, NPR called this a “movement.” In November, when there were 400 members, ACRES USA called it a “revolution.” In December 2009, BusinessWeek reporter John Tozzi cited Slow Money as “one of the big ideas for 2010.”
“Slow Money gets right to heart of everything that\’s wrong with our economy and our culture,” wrote Kerry Trueman in the Huffington Post. “It offers a new kind of capitalism in which both farmers markets and stock markets can flourish.”
The strength of this response reflects a number of fundamental trends:
- concern about the volatility of global financial markets and the self-promotion of Wall Street is widespread;
- frustration with government policies and programs is equally widespread;
- awareness of problems in the food system is growing;
- the organic sector is growing;
- the localization movement is emerging; and,
- the amount of philanthropic and investment capital going to sustainable agriculture and small food enterprises remains calculated in fractions of a percent.
The task of rebuilding local food systems and local economies is beyond the capacity of venture capital and philanthropy. The vast majority of small food enterprises lack the proprietary technology or scalability that venture capitalists require. Philanthropy is insufficient as well, because farms and processing plants and distribution businesses and restaurants and seed companies and niche organic brands need investment capital. The billions of dollars a year that are needed to rebuild local food systems and local economies, and to restore fertility in the soil of the economy, are going to have to come from somewhere else.
Slow Money
That somewhere else is you and me – millions of individuals who sense that every time we move in and out of the stock market we are complicit in an economy that is based on a 19th century view of the world and the economy, a view that equates progress and well-being with maximum consumption and which recognizes no ecological limits to growth, a view developed a century or so before we saw the earth rising over the moon and so felt in our bones for the first time that there is no away to which we can throw our waste. Now, it is time for us to rediscover here with our investment capital. To consider the places where we live, and our land, itself, as much as we consider sectors and distant markets and asset classes when we make our investment decisions.
To catalyze this process, Slow Money is building a national network and local networks, developing a family of new investment products, and creating the Soil Trust, an innovative non-profit fund.
National Network. We start with social capital, so that our transactions will be disciplined by relationships – farmers, food entrepreneurs, donors, NGO leaders and investors all working together to nurture co-investment relationships, develop deal flow and build shared vision. Slow Money\’s inaugural national gathering, in September 2009 in Santa Fe, NM, hosted over 400 attendees from 34 states and six countries. $260,000 was invested in four of 26 presenting small food enterprises. Our second national gathering was held in June 2010 in Shelburne Farms, VT, drawing 600 people and facilitating the flow of more than $3 million into eight presenting enterprises (as of early October), with more expected. 24 entrepreneur presentations from this event can be viewed at http://www.slowmoney.org
Local Networks. Slow Money groups are meeting regularly in many regions. In Pittsboro, NC, small loans are being made to food enterprises with help from a family foundation. In Austin, TX a steering committee meets weekly and has hosted one public meeting that was attended by more than 150 people. In Madison, WI, a series of workshops are leading to the design of a local fund. Members of Slow Money Maine have collaborated to make a few small loans. Slow Money Northwest is organizing a Microloan Development Fund and hosting its first meeting for angel investors and entrepreneurs in November.
Slow Money Investment Products. Slow Money is exploring with Portfolio 21, RSF Social Finance, Calvert, Mission Markets and BSW Wealth Advisors the creation of for-profit Slow Money products for non-accredited investors, opening the playing field to everyday citizens who want to make sustainable food investments. Investments in these vehicles will promote Slow Money\’s mission in two ways: first, the portfolios themselves will be as proactively targeted at organic food and soil fertility as possible; and, second, the buying and selling of these securities will have structured into them small contributions to the Soil Trust (described below). Feasibility work is underway on “Slow Munis” (bonds dedicated to local food investing), in collaboration with leading investors and land trust professionals. A number of Slow Money Alliance founding members are launching funds, including Farmland L.P. and the Vermont Sustainable Jobs Fund.
The Soil Trust. The Soil Trust, a non-profit fund currently in formation, will pool a large number of small donations to create a permanent, philanthropic investment fund dedicated to small food enterprises and soil fertility. The Trust will provide guarantees, co-investment capital and seed capital to local slow money investors.
Why the Soil Trust?
Because our goal is not only to catalyze the flow of capital to small food enterprises and local economies, but to do so in way that “puts back into the soil what we take out.” These were Paul Newman\’s words. We take them to heart. They are integral to the Slow Money Principles, which you can find and sign on http://www.slowmoney.org
The Soil Trust is a vehicle through which individual buy/sell decisions in Slow Money investment products, as well as small individual donations, will be aggregated slowly, over a generation, building a substantial pool of investment capital that is permanently dedicated to the preservation and restoration of the soil. Donations in, investments out. Returns stay in the fund and are reinvested. “Putting back into the soil what we take out” at work. In foundation lingo, a “100% mission aligned foundation.” Put another way, a foundation whose primary purpose is investing, not grantmaking.
The prospects for such a structural innovation are exciting. “Slow Money is not only planting inspiring seeds, but also creating the conditions and the relationships for fundamental change and lasting impact,” stated Barry Hollister, of Pittsfield, MA. “I was, and am, therefore, extraordinarily pleased have been able to make the first contribution, right there on the spot in that tent in Shelburne Farms that was brimming with so many wonderful and talented folks, to the Soil Trust. In Soil We Trust.”
[Expanded Version of the Article]
A Look Inside the Slow Money Book
The following is an excerpt from Inquiries into the Nature of Slow Money: Investing as if Food, Farms and Fertility Mattered.
There is such a thing as money that is too fast.
Money that is too fast is money that has become so detached from people, place, and the activities that it is financing that not even the experts understand it fully. Money that is too fast makes it impossible to say whether the world economy is going through a correction in the credit markets, triggered by the subprime mortgage crisis, or whether we are teetering on the edge of something much deeper and more challenging, tied to petrodollars, derivatives, hedge funds, futures, arbitrage, and a byzantine hyper-securitized system of intermediation that no quant, no program trader, no speculator, no investment bank CEO, can any longer fully understand or manage. Just as no one can say precisely where the meat in a hamburger comes from (it may contain meat from hundreds of animals), no one can say where the money in this or that security has come from, where it is going, what is behind it, whether—if it were to be “stopped” and, like a hot potato, held by someone for more than a few instants—it represents any intrinsic or real value. Money that is too fast creates an environment in which, when questioned by the press about the outcome of the credit crisis, former treasury secretary Robert Rubin can only respond, “No one knows.”
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 Principles:
I. We must bring money back down to earth. . .
VI. Paul Newman said: “I just happen to think that in life we need to be a little more like the farmer who puts back into the soil what he takes out.” Recognizing the wisdom of these words, let us start rebuilding the economy from the ground up, asking:
- What would the world be like if we invested 50% of our assets within 50 miles of where we live?
- What if there were a new generation of companies that gave away 50% of their profits?
- What if there were 50% more organic matter in our soil 50 years from now?
A Report from the 2010 Annual Slow Money Gathering
Adapted from an article by Mark Cherrington
It began with a whirlwind showcasing 26 small food enterprises from around the country looking for investment. Some of entrepreneurs were fairly large and had very polished presentations, as expected at investment showcases like this. But many of them were farmers looking not to take over the world or promise lucrative exit strategies, but only to preserve the land and spread the message.
For example, City Fresh Foods, a Boston-based company that works with underserved communities, was investors to help bring organic food to schools, elder facilities, and daycare centers in inner-city neighborhoods like Roxbury. Even more inspiring, they are buying up inner-city vacant land (there are some 600 acres of it in Boston), bringing in topsoil, and turning it into farmland.
Jerry Cunningham, a farmer from Austin, Texas, was typical of many presenters in being an atypical entrepreneur. “I\’m a farmer growing pasture-raised chicken eggs and grassfed beef,” he says, “and my passion is healthy soil.” He started his business when the CEO of Whole Foods asked him to produce pastured organic eggs for the stores. “So I started making my plans,” he said, “and I saw that I was going to have to get my feed from Pennsylvania or Virginia or someplace like that, and I decided to make a little feed mill to feed my own chickens. I didn\’t have any employees; I just ran it by myself. It\’s like the Field of Dreams: build it and they will come. People started to ask me to grind feed for them, and then more and more and more.”
Cunningham says that he had investment offers from four very large investors, “but the one that was most eye opening for me was this one middle-aged woman from Vermont who was obviously a farmer and didn\’t have a lot of money of her own. She said, ‘What\’s your minimum investment? I\’d just like to invest something in your feed mills.\’ That\’s the kind of people who were there: unselfish, caring people who want to change the way we feed America.”
Attendees also included experienced venture capitalists and investment advisors. Scott Collier, a venture capitalist from Austin, Texas observed: “This is a new way to start thinking about risk, return, and social impact. It is motivating people in powerful ways. A bunch of us are meeting every Friday to explore ways to do Slow Money investing in our region.”
Small investors were well represented during the final part of the event and everyone seemed to be touched by what they had heard and moved by being with so many like-minded folks. One woman stood up and explained that the people in her community had pooled their money to send her to the event, including paying her for the days of work she missed. And she was not alone in representing regular folks making sacrifices. Another woman presented a check for $250 and said, “You can see how little I make: this is 1 percent of my income, and I\’m giving it to the organization.”
Article by Woody Tasch is founder and chairman of Slow Money, a 501(c)3 non-profit formed in 2008 to catalyze the flow of investment capital to small food enterprises and to promote new principles of fiduciary responsibility to support sustainable agriculture and the emergence of a restorative economy. Tasch is chairman Emeritus of Investors\’ Circle, a nonprofit network of investors that has facilitated the flow of $130 million to 200 sustainability minded, early stage companies and venture funds. For most of the 1990\’s Woody was treasurer of the Jessie Smith Noyes Foundation, where he pioneered mission related investing. He is an experienced venture-capital investor and entrepreneur, he has served on numerous for-profit and non-profit boards, and was founding chairman of the Community Development Venture Capital Alliance, which supports venture investing in economically disadvantaged regions. His new book Inquiries into the Nature of Slow Money is available directly from the publisher Chelsea Green at http://www.chelseagreen.com . You can reach him at info@slowmoney.org
ARTICLE NOTE:
[1] CSA stands for community supported agriculture. In a CSA, customers buy shares of a farm\’s annual produce in advance. For instance, if a CSA has 100 members, each member purchases 1/100th of the farm\’s output, picked up weekly.
