I promised to follow up on my story about the recommendations of “slow money” guru Woody Tasch. Tasch says our current economy is precariously based on “money that’s too fast, companies that are too big and finance that is too complex.” He recommends placing 1% of your investments into developing your local food system and protecting healthy soil.
Turns out it’s not that easy.
There are ways to invest locally, and there are ways to make a difference in your local economy. But sophisticated options are in their infancy – if they’ve even been conceived. Which means you can’t – yet – walk up to a counter, or join an open-doored investment club, plunk down a modest sum and leap into the economy of the future.
“Most investing is primarily an intermediary business,” said Joel Solomon, president of Renewal Partners, Vancouver’s leading “slow money” investor. Since 1993, Renewal has invested in more than 75 companies that yield social and environmental benefits as well as financial returns.
“It takes about as much time and effort to do due diligence and research on any investing – regardless of size,” said Solomon. “So only a very small amount of people do direct investing at any scale; the whole universe of investing is done through intermediaries.”
So far, says Solomon, there aren’t intermediaries who have figured out to make a business of helping average folks invest directly in local companies.
This is likely to change. Solomon likens values-based investing today with the organic food movement in the ’60s and ’70s – it was well-established, but still obscure and marginal. Since then, organic food has grown 15%-20% per year and is now an established food industry segment. But until “slow” investing fully takes root, here are some ideas, thanks to Solomon, for playing a role in the local economy. Who knows, you might find some investment gems along the way.
1. Put your money into local credit unions. “Credit unions are effectively based on slow money principles. Their primary business is to lend money to people to buy homes,” said Solomon. “Moving your money from national and international banks into local credit unions is often the closest you can get to putting your financial means into something that stays closer to home.” Vancity, the biggest of the small, has pioneered social investment efforts and innovation in channelling members’ money into a resilient local economy.
2. Ask through professional networks. “There are networks like accountants and lawyers, other professionals and bankers, where it’s worth inquiring about where they see investment opportunities,” said Solomon. When Renewal Partners was launched, Solomon asked the accountants if they knew of any organic, local food companies to invest in. Sure enough, Capers Market was a client of the same firm – and a match was made. However, said Solomon, “It’s all random right now.”
3. Consider your friends and family. Local restaurants, food-service companies and retailers are often backed by “friends and family” networks, said Solomon. “That kind of small business requires local investment and lenders, because investment isn’t going to come from anywhere else, and it often takes more than the entrepreneur has on their own.”
The trouble with this, says Solomon, is that you can’t go and find such opportunities – they usually have to find you. So if asking around about businesses your personal network might be launching doesn’t yield fruit, this avenue might lead to a dead end.
4. Use your spending as an investment. It’s an oldie, but still a goodie: where you spend your money makes a difference. “Spending locally is huge,” said Solomon. “Think about where your money comes from and where each dollar goes – every dollar is a vote. You can make a big difference with those personal consumer choices and personal banking choices.”
If you seek out local businesses that are doing well and building networks of local suppliers and service providers, you might just build the relationships that will lead to an investment opportunity. Meanwhile, you’re creating resilience and local wealth and helping your neighbours put food on the table. Says Solomon, “The more cheques you write to people you care about and believe in, the wealthier you are.”
5. Join or launch a co-op. Co-operatives are a form of investment – when you join, you’re an owner. Food, car or housing co-ops (and of course, credit unions) are ways that people of moderate means pool money to build businesses that reflect their values and strengthen the local economy. Want to start or find one? Check the BC Co-operative Association at www.bcca.coop.
6. Speak up where you already invest. “Every place that you put your money is managed or held by someone,” said Solomon. “It could be your pension fund, your financial institution or an endowment at a university. Try to be very clear and strong in expressing your values about what you think that money should be doing while they’re holding it.”
Consumer demand is changing the face of all sorts of industries, and the socially responsible investing field has similarly gained traction. Start with simple questions about what type of screens or decision-making parameters your money managers have in place; it never hurts to ask.
If this slow road to “slow money” investing looks a bit arduous, don’t give up. Keep an eye on the market – bets are that more vehicles will crop up (slowly!) to meet the demand for investing that is tangible, meaningful and plays out close to home.