Healthy Local Food Systems, Healthy Local Economies

By Don Shaffer,
President and CEO,
RSF Social Finance

At RSF Social Finance, we are extraordinarily passionate about sustainable agriculture. Why are we so passionate about it?

• We believe it is now imperative to make a two-pronged case for sustainable agriculture: (1) it is the obvious choice for ecological stewardship reasons, and (2) we can feed the world in the 21^st century using these methods. If you doubt this, I urge readers to check out developments at the Center for Diversified Farming Systems at UC Berkeley, for example. CDFS includes a multi-disciplinary team of researchers who are busting the myth that we need industrial-scale monocrops and massive applications of petrochemical fertilizers and pesticides to support a food economy that can work for all. http://food.berkeley.edu/dfs• We believe the time has arrived to go “beyond organic.” Consumers are finally getting access to organic food at reasonable prices (relative to 25 years ago). This is great. But we’re more excited about the maturing of the local food movement, which includes beyond organic. One of the hottest areas of venture capital investment today, for example, is the shift of food distribution from conventional hub-and-spoke retail grocery stores to more direct farm-to-table delivery. RSF has loans and/or investments in many of the leading players in this field. We believe another promising area that will mature over the next decade is Biodynamic agriculture and other methods like advanced microbial composting. If organic is “doing less bad” to the soil, then Biodynamic is “actively doing good” to build soil health & fertility. http://rsfsocialfinance.org/wp-content/uploads/downloads/2013/10/Fall-2013-lo-res.pdf

• We believe a focus on sustainable agriculture will create a positive domino effect towards the shift in consciousness and behavior that is needed to bring us back from the brink of climate change. In 2009, RSF hosted a gathering of 25 finance leaders to celebrate our 25^th anniversary and discuss how we could work together to make a positive difference; one of the main takeaways was: “If we get food and agriculture right, everything else will follow.” Since then, we have intensified our efforts to innovate in the field of sustainable agriculture-related finance. And yet we are constantly reminded of the complexity of agricultural systems. The emerging field of carbon sequestration in soil and grasslands has much promise, but I like a recent post by Peter Donovan from the Soil Carbon Coalition that puts the issue in perspective: https://soilcarboncoalition.org/sequestration-to-investment/

There is no simple solution. A critical root-principle for us: how we do things is equally as important as what we do.

RSF exists to help create a world where financial transactions are direct, transparent, and personal, based on long-term relationships. Our hypothesis: If each transaction can become a relationship, then it is possible for an economy based on love and mutual respect to emerge.

We have found that when participants in a financial transaction are more visible to each other—when they understand each other’s needs and intentions, and sustain a personal connection—then risk decreases and fulfillment increases.

Why is this relevant to the topic of sustainable agriculture and investing? Because there is a clear connection between good farming and healthy investing. It all starts with a deep listening process, then iterative experimentation, then more listening…. in a continuous cycle.

One result of this listening-experimentation cycle for us has been the RSF Local Initiatives Fund.

In 2012, in collaboration with a generous donor, we piloted the RSF Local Initiatives Fund pilot program to meet the growing need we have seen for an alternative approach to financing regional food systems. Throughout our history, RSF has had to turn away many impactful organizations that could not yet benefit from a loan, but instead, could use grants or equity-like capital to spur their growth. We have learned that without more flexible capital available, particularly in the early enterprise stage, it is extremely difficult for entrepreneurs to build food systems that generate positive social, environmental, and economic change.

The RSF Local Initiatives Fund is a first-of-its-kind and leading-edge philanthropic fund that employs an integrated capital approach—one that focuses on the coordinated use of investments, loans, and grants to provide much-needed, flexible capital for entrepreneurs who are building regional food systems and resilient local economies. In the first two years of the pilot, we deployed $2 million to 40 early-stage sustainable food and agriculture enterprises with a focus on technical assistance grants, loan guarantees and place-based Shared Gifting circles.

Next up, we will be offering three additional integrated capital funds based on this philanthropic framework in the area of sustainable agriculture – each with particular emphasis and leveraging gifted funds to make low-interest loans, loan guarantees, and equity investments. The new funds will be:

Also on the philanthropic side, we love what our friends are doing at Kiva Zip https://zip.kiva.org and Community Sourced Capital https://www.communitysourcedcapital.com

For those looking for return of investment-capital-and-interest, there is the $100 million RSF Social Investment Fund, through which we have been making direct loans to social enterprises in the areas of Food & Agriculture, Education & the Arts, and Ecological Stewardship for 31 years. Minimum investment is $1,000.

Great investment options exist that support sustainable agriculture at regional Community-Development Finance Institutions (CDFIs) and community-loan funds. As one practical example if you’re in the Northeastern U.S., you can check out the following sites to get a sense for what’s available; we’re big fans of all these folks and there are others:

Maine:
New Hampshire:
Vermont:
New England:
New England (cooperatives):
Western Massachusetts:
Boston region:
Philadelphia region:

Of course the pioneering work of Slow Money is worth exploring too: http://www.slowmoney.org

If you have questions or comments about any subjects related to participating in integrated capital funds, investing, and sustainable agriculture, please contact us at- http://rsfsocialfinance.org . This is a fertile field that will only continue to grow. And GreenMoney Journal readers need to keep pushing the envelope!

Article by Don Shaffer, who has served as President & CEO of RSF Social Finance since 2007. He grew up in central New Jersey, and comes from a long ancestry of Quaker farmers and small business people in and around Philadelphia. Don lives in Berkeley, California with his wife Jennifer and their two children, Sabine and Samuel. He graduated from Cornell University with a BA in American History.

Don has been a social entrepreneur for many years, growing a for-profit education business, a software company, and a sporting goods manufacturer, in addition to a non-profit, the Business Alliance for Local Living Economies (BALLE).

As leaders in social finance, Don and the team at RSF seek to transform the way the world works with money. In a world where our financial system can be described as complex, opaque, and anonymous, based on short-term outcomes, RSF is constantly asking the question, “How can we model financial transactions that are direct, transparent, and personal, based on long-term relationships?” Under Don’s leadership, RSF’s total assets have grown 40 percent in the past three years, to over $160 million.