Slow Money

= a term inspired by the Slow Food Movement: Basically, slow money is about slowing the velocity of money: having it passed around a few times in the community before it is used to buy iron from China or coffee from Venezuela. [1]

Description

1.

"Just as people now question the traceability of their food, in a similar way, so are they more concerned about how and where the money they invest is being used By investing in ‘Slow Money’ as opposed to ‘Fast Money’ – synonymous with the anonymous world of global finance, investors may have to commit their funds for lower returns, but they will know where their money is going, how it is being used and will experience both a financial and social return – known in financial terms as ‘Blended Value’." (http://www.wessexrt.co.uk/nfm.html)

2.

Marcia Stepanek:

"With slow money, Tasch is taking a page from the slow food movement, the 23-year-old movement that calls on consumers to treat the act of eating less as a hurried distraction and more like a family ritual that celebrates community and takes time out to reflect upon the labor involved in growing the food that we eat. "Money should move the same way," says Tasch. "This isn't just about finance but the relationship of finance to culture."

In short? Tasch wants to persuade grassroots investors to "take the power back" over their communities and start putting some of their assets into local businesses they can see and watch and [in this case] even taste. He wants them to measure growth not by numbers of dollars so much as the yield of a local crop and the health of a local community. He acknowledges that investing in sustainable local agriculture will yield below-market returns. But he says nobody will lose money; these returns, he says, will be solid - maybe a 3 percent profit or maybe 6 percent one over many years.

But the real dividend of slow money, says Tasch, is social, economic, and biological diversity. In an era of industrial agriculture, when millions of acres are planted with the same variety of corn and when millions of pigs are bred for their yield, small local farms are "the ultimate hedge fund," he says. "Fix the broken food system, and many other social, economic, and environmental benefits will follow."

So far, Tasch says, his slow money movement has 700 members, including about 50 people who have sent in $1,000 checks over the Internet and small local enterprises such as Vermont's Butterworks Farm, a $1 million annual yogurt business, as well as Let's Be Frank, a Berkeley, Calif.-based hotdog company, and Sky Vegetables and Local Harvest. At the Sante Fe slow money convention in September, there were 450 attendees from 34 states and six countries, he said. "Now we're trying to get 1 million people to sign the slow money principles and from that, build capacity."

He admits that early investors may not be "big money people" but instead, small money investors who are "frustrated with philanthropic foundations [that can sometimes invest their endowments into places that don't help the environment] and frustrated as philanthropists." Says Tasch: "We must bring money back down to the Earth. It's time to restore a bit of reality back into all of our lives." (http://causeglobal.blogspot.com/2009/11/slow-money_08.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot%2Fcnbv+%28Cause+Global%29&utm_content=Bloglines)

3. Barbara Bedway:

"“Right now, money goes zooming around the planet, invested in distant, large-scale, complicated things,” he says. “You can add four layers of noncorrelating razzmatazz to securities, they’re still just money circulating between different classes of investors.” Slow Money, he asserts, is a kind of antidote; investing in things close to home that you can understand.

At the first Slow Money conference last year in Santa Fe, four companies received a total of $265,000 from a group of individual investors. Among the recipients: the Carrot Project, which makes loans to small organic farmers in New England; and Gather, an organic restaurant of locally sourced foods, where the banquettes are covered with recycled leather belts.

If all goes well, Tasch believes such investments would deliver returns in the low single digits over a number of years. But these investments would offer the added dividend of what Tasch calls “true diversity” — diversity that comes from promoting small local farms and related businesses, as an alternative to industrial agriculture's millions of acres of single-variety corn and soybeans, for example.

The expected low single-digit returns, however, may not cut it for most investors who expect their money to work harder than a certificate of deposit. Slow Money is still a few years away from directly funding anything (currently membership is about 1,100, with 180 founding members who have contributed $1,000 each), so time will tell if investors accept social good as sufficient dividend.

What’s more, investing in small companies can be risky. “The risk with a small local company is disproportionate to any potential return,” says Matt McGrath, a financial planner with Evensky & Katz in Coral Gables, Fla. “There’s a greater chance the company could go under.” (http://trustcurrency.blogspot.com/2010/06/slow-money-new-community-movement-is.html)=

Principles

Woody Tasch:

"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 Slow Money Principles:

I. We must bring money back down to earth.

II. There is such a thing as money that is too fast, companies that are too big, finance that is too complex. Therefore, we must slow our money down – not all of it, of course, but enough to matter.

III. The 20th Century was the era of Buy Low/Sell High and Wealth Now/Philanthropy Later—what one venture capitalist called “the largest legal accumulation of wealth in history.” The 21st Century will be the era of nurture capital, built around principles of carrying capacity, care of the commons, sense of place and non-violence.

IV. We must learn to invest as if food, farms and fertility mattered. We must connect investors to the places where they live, creating vital relationships and new sources of capital for small food enterprises.

V. Let us celebrate the new generation of entrepreneurs, consumers and investors who are showing the way from Making A Killing to Making a Living.

VI. Paul Newman said, “I just happen to think that in life we need to be a little like the farmer who puts back into the soil what he takes out.”

Recognizing the wisdom of these words, let us begin rebuilding our 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?"

(http://catalystsdr.com/wp-content/uploads/2012/04/Catalyst_Issue10_031412_WEB.pdf)

Status

"Through Slow Money national gatherings, regional events and local activities, more than $20 million has been invested in 170 small food enterprises around the United States over the past two years. Fourteen local Slow Money chapters and six investment clubs have formed. Slow Money events have attracted thousands of people from 36 states and 9 countries. Almost 24,000 people have signed the Slow Money Principles. The first international Slow Money investment—a $20,000 loan to a solar dairy in Switzerland—has been made. Slow Money France is in the early stages of organizing, and inquiries about chapter formation have been received from Canada, Australia and Japan.

In October 2012, the Soil Trust was launched, making it possible for individuals to put their money to work in small food enterprises via small donations." (http://slowmoney.com/)

Discussion 1

What we need: Designing for a Restorative Economy

Woody Tasch:

"What is needed is a new form of financial mediation- intermediation whose ultimate goal is to empower investors, entrepreneurs, and farmers as agents of restoration and preservation in their local communities.

It will require experimentation with portfolio design: For instance, can the risks of investing in small food enterprises be mitigated by investing in farmland? What about sustainably managed timberland in the region? What are by traditional investment criteria disparate sectors become elements of an integral strategy for investing, or, what Paul Muller calls “reinvesting”- in fertility and health.

We are turning a compost pile.

The following design questions are emerging:

Can we design ways for regional investors to invest in regional food enterprises? Could there even be Slow Money Bonds, similar to municipal bonds, but investing in local food systems?
Can portfolios of SFEs deliver positive rates of return to investors? Is public or private subsidy required?
What is the difference between “local” and “regional”?
If Denmark has a single CSA that is as large as all of those in the United States combined, what does this say about the entrepreneurial opportunities to connect U.S. farmers and U.S. consumers?

It falls to us to undertake a new project of system design: the creation of new forms of intermediation that can catalyze the transition from a commerce of extraction and consumption to a commerce of preservation and restoration.

Within and beyond the world of food, there is an increasingly robust wave of entrepreneurial activity around such principles and concerns. Hundreds of mission-driven early-stage companies every year seek capital through the Investors’ Circle (www.investorscircle. net). Scores of cities are organizing chapters of the Business Alliance for Local, Living Economies (www.balle.org); BALLE is incubating the concept of local stock exchanges. B Lab is incubating legal guidelines for B corporations and formulating an entrepreneurial strategy for accelerating the growth of a B sector (www.Bcorporation.net). The Fourth Sector Network is exploring the development of “for-benefit” organizational forms and governance structures." (http://catalystsdr.com/wp-content/uploads/2012/04/Catalyst_Issue10_031412_WEB.pdf)

Discussion 2

Stowe Boyd

"I maintain it [slow money] is more grounded: the aware customer wants to know where the milk in the chocolate is from, or whether the company takes back its empties, or whether local manufacturers create the packaging. Once people buy into the logic of local, they want the money to go around the community in as many cycles as possible before leaving, because those economic cycles mean social capital is built up, and local resilience is increased.

It's a slow money movement, where the outputs of one local economic transaction is the input for another local economic transaction, binding the parts closely together, and making the whole stronger, and the local environment richer.

It's not just comfort, Jeff: it's tribalism. We want to keep the money close to home, as long as possible, because the people closest to us are the ones most likely to care about us, and to take us into their circles.

So when we make economic choices, it's no longer just cost, or convenience. Just as we have rejected the ease and convenience of littering -- which was commonplace in my childhood -- we need to move past the superficial benefits of cheap goods distributed by global corporations. Even when the products are equal, the impacts of having the money stay local create an exponential impact. The local accountant gets work, the local marketing firm, the local packaging plant, the local farmer: all are benefited. And it comes back to us, in a richer and more dynamic local environment. We get the second and third order benefits.

The alternative is that local economies become thin, like soil that has had decades of pesticides and inorganic fertilizers piled on it: the microorganic life that makes soil rich is all gone. Then, without the enormous inputs of fertilizers and pesticides, there is no crop. If we let the organic richness of local business die off, we will be a fragile as overfarmed pasture, and what is left could blow away after a single season of drought." (http://www.stoweboyd.com/ground/2009/02/a-depression-era-deflation-remedy-the-money-go-round-the-economist.html)

John Robb

Reproduced from John Robb in Global Guerillas:

“Within a successful transition to a resilient community, one of the earliest signs of progress will be a radical decrease in the community’s monetary velocity. Essentially, this means that an ever increasing share of the money that flows into your community, stays within your community. Money, otherwise destined for big corporate retailers, the international banking system, and Asian exporters (the essence of global velocity), stays in the community. This in turn enables the investment flows require for the construction of community platforms (local systems that simplify and accelerate critical activities) that both guard against dislocation/failure in the short term and mint/drive wealth in the long term.

The short term shift to slow money won’t be made due to the desire for a lifestyle change or because it is the trendy “eco” thing to do. Some improvements in food quality or a diffuse feeling of fuzzy warmth won’t suffice to drive these changes. Instead, it will be driven by a hard edged need to enhance the long term economic and physical security of you and your family. Drivers include:

Cost reduction. A substitution of time for money. Repair over new. Savings growth.
Mutual support. The local sourcing of goods and services. Strong local relationships/networks vs. arms length/anonymous relationships with global retailers/service firms/banks. A strong hedge against dislocation or an inability to access global supplies/services. Increased flexibility though an ability to negotiate or a potential for barter.
New sources of income. Local production of goods and services. Sales of excess food, energy, and services. A slow discarding of “global consumer” (a slur…) status in favor of “local producer.”

(http://globalguerrillas.typepad.com/globalguerrillas/2008/11/slow-money.html)

Stowe Boyd has a very similar message:

“It’s a slow money movement, where the outputs of one local economic transaction is the input for another local economic transaction, binding the parts closely together, and making the whole stronger, and the local environment richer.

… We want to keep the money close to home, as long as possible, because the people closest to us are the ones most likely to care about us, and to take us into their circles.

So when we make economic choices, it’s no longer just cost, or convenience. Just as we have rejected the ease and convenience of littering — which was commonplace in my childhood — we need to move past the superficial benefits of cheap goods distributed by global corporations. Even when the products are equal, the impacts of having the money stay local create an exponential impact. The local accountant gets work, the local marketing firm, the local packaging plant, the local farmer: all are benefited. And it comes back to us, in a richer and more dynamic local environment. We get the second and third order benefits.

The alternative is that local economies become thin, like soil that has had decades of pesticides and inorganic fertilizers piled on it: the microorganic life that makes soil rich is all gone. Then, without the enormous inputs of fertilizers and pesticides, there is no crop. If we let the organic richness of local business die off, we will be a fragile as overfarmed pasture, and what is left could blow away after a single season of drought.

And we are headed into a bad patch, where the downturn could crush small business everywhere. So we need to redouble our efforts to act local, even as we are aware of the global problems. Think Slow Money.” (http://www.stoweboyd.com/ground/2008/11/small-is-the-ne.html)

Martien van Steenbergen

The local force can be a way to keep money streaming locally when you have a local or community currency. The local force is the percentage of purchasing power you gain when exchanging foreign money for local money. For example, when you have a local currency, the ƒ (florin), say, and ƒ1 equals €1, a local force of 5% means that you only have to pay €95 to get ƒ100 purchasing power in the local community. This process is symmetric: exchanging ƒ for € you pay ƒ100 and receive €95.

This does not slow down money, but tends to attract foreign money and keep it local (hence local force), so it may create local wealth and prosperity.