Alternative Investment Methods

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From an overview by the Maryknoll Office for Global Concerns:

"Many small and medium-sized businesses have a difcult time raising money, as they are too small to attract large investors, yet also too big for other sources such as family and friends. The Small Business Administration (SBA) estimates that the aggregate amount needed by businesses seeking between $250,000 and $5 million to be $60 billion. The problem is so common that the SBA created a term, “capital chasm” to describe it. Increasingly, these businesses are using the Internet to sell shares of ownership directly to investors without the aid of an investment bank or broker that charge massive fees and are rarely interested in financing smaller enterprises. For investors, a direct public ofering means that more of their investment goes directly to the business instead of being siphoned of by an investment bank and as they are buying public shares, they can pull out of the investment at any time by selling their shares. Cutting Edge Capital lists a number of entities that facilitate direct public oferings.

Evergreen Direct Investment Method

Capital Institute founder John Fullerton, the former JP Morgan executive, notes that conscientious investors in the responsible investing movement “seeking to embed environmental, social and governance values (ESG) into their investment decisionmaking are hamstrung by the investment method chosen. Specifically, trying to apply ESG to what is inherently a speculative stock valuations game often feels like pushing on a string. Without conscious awareness, we have confused speculation for investment.”

The Capital Institute proposes the Evergreen Direct Investment Method in which institutional investors like foundations and pension funds can build long-term relationships with enterprises that express their values and “can achieve attractive and resilient long-term financial returns that match their liabilities, while directly embedding ESG values into negotiated investment partnerships.” The method envisions, “stewardship-minded investors negotiating direct relationships with corporate management with an explicit requirement to build long-term environmental, social and governance values and parameters into the enterprise capital investment process, even if it entailed some short-term negative consequences.” The advantage is that investors can have a real say in the actions of a company while providing “stable cash flows of mature, slow- or no-growth business enterprises that the valuationsgame-driven speculators leave on the trash heap.”

Slow Money

Slow Money is a movement that aims to “bring money back down to earth” by helping investors to “invest as if food, farms and fertility mattered.” They do this by connecting investors to small food enterprises throughout the U.S. From farm cooperatives to urban agriculture enterprises to manure farms and more, Slow Money has helped funnel over $40 million into more than 400 small farm eforts around the country.

Community and faith-based development investing

Another alternative to placing valued savings into the financial markets is to invest in community and faith-based development organizations that support local eforts to provide afordable housing, jobs and economic development, especially in low-income communities. These forms of investments provide an alternative rooted in the social justice values promoted by faith traditions.

The Mennonite Church USA established a stewardship agency called Everence that provides financial products and services that are aligned with their founding values. They have developed two programs for community investing: mPower, which provides funding for international microfinance organizations; and nSpire, which supports faithbased community development projects throughout the United States. The World Council of Churches established Oikocredit in 1968 to provide an ethical investment channel for churches and related organizations to provide credit to enterprises that support the disadvantaged. The Slow Money movement kindly provides a list of other community investment opportunities as an alternative to large financial institutions.

Church P2P lending

Some churches are helping their members dig themselves out of debt through lowinterest loans. The United Methodist Church created the Jubilee Assistance Fund especially to help people unable to pay the exorbitant interest rates of payday lenders and others who take advantage of people with low incomes. By providing much lower interest loans, churches help their members avoid evictions, bankruptcies and other financial woes. This fund is grounded in the scriptural text that the fiftieth year should be a jubilee year when all debts are forgiven." (