Tag: Impact Investing

(above) Kevin Pourier’s Buffalo Horn Art: Connoting the achievement of bringing the Buffalo back. “wasna” carrying container by a hunter or warrior for nutrient dense “fast food”.

As White House National Climate Advisor Gina McCarthy espouses, we need to think in systemic terms when tackling our collective challenges — COVID, economic downturn, seeking social justice to heal racism, and climate change — these are all challenges that must be approached together. Our best guides — environmentally, socially, in governance practices and economically — are still our Indigenous brothers and sisters.

Eighty percent of the earth’s biodiversity is stewarded by 5 percent of the indigenous people living on 25 percent of the world’s land surfaces. Indigenous people, as a culture, have been very successful in living in balance with the environment.¹ One could attest that their multi-dimensional, multi-generational ways of living and their spiritual connection with the lands and all species is the fundamental chord in the harmony and vitality they achieve.

Eighty percent of the earth’s biodiversity is stewarded by 5 percent of the indigenous people living on 25 percent of the world’s land surfaces. Indigenous people, as a culture, have been very successful in living in balance with the environment.

I attended the ASBC/SVC Spring Conference² in April 2021. This session in particular impacted me — fundamentally. “Restorative Investing for Racial Justice: Learning More about the Tanka Bar Investment.” Participants included Aner Ben-Ami (Candide Group), Dawn Sherman (Native American Natural Foods (NANF)/Tanka Bar), Jeff Cyr (Raven Capital Partners), and Laina Greene (Angels of Impact). Some of the text of this article is drawn from that session.

In 2006 Native American Natural Foods (NANF), an Oglala Lakota enterprise mounted on the Pine Ridge Reservation in South Dakota, launched the Tanka Bar, the first commercial bison meat-and-fruit energy bar, based on a traditional Lakota recipe called ‘wasna.’ The intent of the enterprise was to bring the Buffalo back, as the Oglala Lakota people experience themselves and the Buffalo as Sister Nations. With lean buffalo meat reintroduced into their diet, the Oglala Lakota curtailed obesity and diabetes; simultaneously reintroducing the Buffalo led to regenerated soil and community health. With a goal of equitable wealth creation within its robust supply chain, NANF aimed to create livelihoods for their community members and Native ranchers (unemployment on the reservation is around 70 percent!), and bring bison back to the prairie, with profound climate and cultural implications.

Buffalo Returns – Pine Ridge Indian Reservation was on the brink of economic ruin and tribal elders Mark and Karlene felt they could find a solution. See how their company, Tanka, used cultural tradition to help create a sustainable economy for the Lakota people. Film produced with help from American Express

After its founding in 2006 by Karlene Hunter and Mark Tilsen, NANF experienced two good years, followed by 2008’s global economic dive and being pushed out of the market by well-funded “copy-cat” competition seeking to reap the rewards of buffalo meat products. Since “giving up” was not an option, NANF CEO Dawn Sherman and team “hung on” in the isolation of Pine Ridge for 3 years. NANF kept the company alive through the strength of their creation story with Buffalo, their core indigenous values, their leadership nation-wide and their on-line marketing. NANF negotiated a strategic partnership with Niman Ranch, which covered sales and supply chain management; brought in their primary bison supplier as a strategic partner; and built up their Advisors and Board. They found in the Candide Group, an equity investor partner, ready to provide regenerative funding for their food enterprise that upholds indigenous values using traditional recipes.

Aner Ben-Ami of the Candide Group³ is involved in redefining investing within the firm. Ben-Ami working with the Candide Group partner base, developed a model of investing that is based on food justice. The Group seeks through its investments to promote social justice and equity; they aim to help re-define who wins and who loses in our economy. The Group casts a wide net, knowing many issues are deeply intersectional and no issue is more intersectional than food. Our food industry can be redesigned to create wealth for the historically disadvantaged—often people of color (POC) workers/suppliers—as well as to serve healthy and nutritious food to lower income (often POC) communities. As investors, as we move capital away from an extraction economy to one based on shared ownership, it is critical to evaluate each enterprise’s fundamental principles.

Jeff Cyr is Managing Partner of Raven Capital Partners’ Raven Indigenous Impact Fund (RIIF)⁴, Canada’s first Indigenous financial intermediary. The Fund is working at the Canada-US Border practicing Restorative Economics. The group’s fundamental perspective is relationality in place-based capital, using money as medicine⁵ in service of Restorative Economics. Given Raven Capital’s focus, it was a natural alliance for Jeff to work with Candide Group’s Ben-Ami on an Indigenous investment.

The Candide Group saw the Tanka Bar enterprise’s equitable wealth creation, soil health, Indigenous values, investment structures, and focus on long-term Native ownership. Dawn Sherman’s team, with her elders’ approval, worked with Aner and Jeff to move the profit-seeking—not profit-maximizing—relationship forward at the “speed of trust.”⁶

The investment with decolonizing outcomes has created an innovative, reasonable 8-9 percent “all boats rise” solution built as a values-relations protocol, as well as a restorative, entrepreneur-friendly deal structure.

NANF has been opposed to the idea of building the business to sell it. NANF’s goal is to create wealth for Native owners, workers and ranchers through systemic, regenerative agriculture cultivating a keystone species while building soil health and human health. NANF believes that the goals proposed can only be fulfilled if NANF stays in Native hands under 100 percent native leadership over the long term.

Ben-Ami states: This is an equity investment with meaningful departures from convention:

• “Native override”: Any financial distribution must include more than 51% of proceeds going to Native owners. These terms differ from conventional terms in one key way. Typically, preferred equity investors are the FIRST to get repaid. If a business must be sold because it cannot generate a return for all shareholders, preferred shareholders get all proceeds until they at least get their money back. This isn’t the case here – non-indigenous equity investors would recover at most 49% of proceeds.
• Redemption right: Investors don’t expect NANF to pursue a sale of the business, instead investors have a redemption right. Investors ask the company to buy our shares back. If that isn’t possible—i.e. the company doesn’t have the resources—investors are collectively committed to prioritizing a third-party Native buyer. This scenario would result in an INCREASE in Native ownership; additionally, non-Native shareholders’ returns would be capped at a maximum of 2x initial investment. This is very different from a typical equity investment, where investors expect the company to be sold to the highest bidder.
• For investors working with a severely under-resourced Native-owned company, there are certain additional considerations: Costs to holistic exit could be a pro bono attorney—term sheets lead investors’ attorney. Investors took on significant percentage of legal costs given atypical terms. Investors helped fund an outsourced CFO to support the process on the company side, so that NANF’s CEO was not solely responsible for financial analyses and projections.

Ben-Ami stated: “We’re honored to be a partner to NANF’s work, and encourage others to follow their journey in using decolonized wisdom for regenerative growth.”

• Jeff Cyr: Indigenous investors take a lot of time. With good relationships the cost could be low. Sometimes the parties share the same attorney.

 Jeff Cyr observed: “Indigenous people are on a journey together. Money is love. Money is medicine. These enterprises are cultural capital. We want to undertake these entrepreneurial deals as native American activities overseen by the Bureau of Indian Affairs. This regenerative agricultural enterprise is taking back the Buffalo, our relatives, the bringing the people back their health.”

Dawn Sherman elevated again the critical need to work with all our relations: “Mitakuye Oyasin—We are all related.” “We need to work as partners and face the storm together.”

Jeff Cyr enjoined the audience to work on restorative enterprises. “We need an economics that works for the world, not for economic exclusion.  All my relations, create an economics for the world.”

Article by Theo Ferguson, CEO and founder of Healing Living Systems, Inc., a CA Social Purpose Corporation. Theo has been Focused on Food, Farming and Finance Infrastructure and Social Justice, and Advocacy since 2004.

Footnotes: Find all the footnotes details here as well as some additional useful information.

Note to Readers – Read Dawn Sherman’s full article on “Regenerating the Land and Native Communities with Bison” she wrote for GreenMoney in 2020.

(above) Dorothy Suput, The Carrot Project’s Executive Director (left), with farmer Tyler Sage of Sage Farm (Bernardston, MA) and his pasture-raised heritage pigs. Photo by Genevieve Goldleaf.

During the pandemic, farmers and food producers selling locally showed their strength, as the weaknesses of our global food supply chain were exposed. Farmers relying on wholesale distribution systems, such as dairies, were dumping product because of a breakdown in supply chains. Meat processing plants slowed operations, negatively impacting supply. Meanwhile, local producers ramped up production, updated their online systems, or pivoted from institutional buyers to grocery stores and direct-to-consumer sales. Thriving local farms not only came through with good food, but continued to steward the land and give back to their communities. Our local food ecosystem’s resilience results from the incredible work ethic of farmers, buoyed by collaboration with business development programs and the help of state and federal governments, philanthropy and the growing role of private investors.

Heart Beets Farm, Steve Murray’s diversified vegetable farm in southeastern Massachusetts, shows how farmers serving local markets reacted to the pandemic. When demand for safe and local food exploded in spring 2020, Steve was able to make a rapid, confident pivot. To protect themselves and their customers, he made the risky decision to drop their farmers’ market, and close their farm stand. Instead, Heart Beets almost doubled the number of farm shares offered from 120 to 210 — and sold out.

This huge decision was possible because Steve tracks his numbers carefully; thanks to business support from The Carrot Project, he knew exactly which parts of his farm were most profitable. He was able to analyze his enterprises and assess a path toward profitability and stability in this tumultuous year. Shifting to online-only CSA sales worked so well he plans to retain it for the foreseeable future. Steve’s farm grew to its current state with the help of a Carrot loan to invest in equipment, backed by social impact investors and matched by a state program for beginning farms.

Investing in local and sustainable farms and food businesses strengthens communities, especially in the wake of this pandemic. “We’re all going to have some collective trauma to work through,” said Janet Steward, co-owner of Greenfield Highland Beef in Greensboro Bend, VT, and an early Carrot loan recipient. “As farmers, we have a special role in healing and care. Farmers have the gift of being able to care for their communities with food.”

Opportunities to invest in local food are expanding. For example, after developing their business skills with The Carrot Project, farmers can now move on and seek other types of investments from capital providers that work with private investors, such as the PVGrows Investment Fund and Dirt Capital Partners. Three former Carrot clients have secured farmland with Dirt Capital Partners.

How did we arrive at this growing ecosystem of capital providers for local, sustainable agriculture? It didn’t happen overnight. Before banks consolidated, a trend that escalated in the 1990s, small farms could usually access capital easily. When The Carrot Project started in 2006, there was little recognition that the banking sector no longer met the needs of the small, but growing, local agricultural movement. Capital providers tended to assume that when a farmer was unable to secure capital, it was the farmer’s fault, thinking the farmer had a poor business or wouldn’t do the work to meet the needs of the lender.

This vacuum of capital for farmers led to funds working with private investors. Over the last fifteen years, the availability of capital has transformed. In addition to the funds mentioned above, private investors started Slow Money and investments took off through state, regional, and local chapters. Most New England states’ community loan funds or CDFIs, who already work with private investors, added programs to support local sustainable food and agriculture. New too are social impact funds that include food and agriculture among a broader array of opportunities, such as Vermont’s Flexible Capital Fund. In the Northeast, the newest entries include The Maine Harvest Federal Credit Union, launched in 2020, and the Hudson Valley Agribusiness Development Center, which recently became a CDFI and anticipates working with private investors.

Another major shift is an increasing awareness of the critical role of business development services, which mitigate risk and support long-term viability. After The Vermont Farm and Forest Viability Program and The Carrot Project documented the critical impact of business technical assistance, and capital became more widely available than when we started, The Carrot Project’s focus shifted from providing loans to offering business technical assistance, particularly helping farmers manage their finances. Recognizing the importance of business development services also led to starting the Agricultural Viability Alliance. The Alliance’s goal is to increase the number and economic viability of farm and food businesses, by bringing together business assistant providers and organizations from across New England and New York’s Hudson Valley to address shared challenges, facilitate more uniform high-quality coverage, and share and expand limited resources.

As the landscape changes, so do the opportunities for social impact investors. Some local farm and food businesses are looking for ways to grow or scale; others are looking to build stronger community connections; and still others want to keep their businesses small and financially sustainable. The average farmers’ age in the US is 57; opportunities to invest in farmland succession, transfer, and access will continue to be important to support the massive transition of land anticipated by 2040. New funds, such as the Black Farmers Fund, and new investment opportunities to help with mitigation and adaptation to climate change are on the horizon. Others are starting to research and organize asset classes and figure out what it will take to make investing in local sustainable agriculture and food systems more readily available. These developing opportunities, combined with those that have emerged over the last 15 years, provide investors with options to join this crucial and hopeful sector that is growing good food, stewarding the land, and giving back to communities.

Article by Dorothy Suput, founder and executive director of The Carrot Project. Dorothy’s commitment to a sustainable food system grew out of the incredible contrasts between Midwestern agriculture, with which she grew up, and the locally focused food and farming system in Switzerland, where she lived after graduating with a BS from Purdue University. Dorothy formalized her commitment when she returned to the U.S. to complete her Masters degree, from Tufts University’s Urban and Environmental Policy and Planning program, by focusing on sustainable agriculture and non-profit management. Following graduate school, she worked as the first regional organizer on the 1995 Farm Bill for the Northeast Sustainable Agriculture Working Group under the auspices of the Campaign for Sustainable Agriculture, and subsequently, as a consultant for the Hartford Food System, Red Tomato, and The Food Project. Dorothy serves on the Board of Managers for the Vermont Sustainable Jobs Fund Flexible Capital Fund and the Advisory Committee for the PVGrows Investment Fund.