|Woody Tasch talked about the emerging Slow Money organization and its potential to help fund local farmers. English photo.|
Woody Tasch, founder of the Slow Money movement, author of Inquiries into the Nature of Slow Money and resident of New Mexico, presented the keynote speech at the Common Ground Country Fair on Saturday, September 25, 2010.
“It’s one thing to use your consumer dollars better,” said Tasch; “it’s another thing to use your investment dollars better.”
Too Big to Work
Tasch described a New Yorker cartoon from some 40 years ago in which some middle aged men in business suits were looking over a field, one of them pointing. The caption read: “Business leaders gathered recently in a field in Darien, Connecticut, where one of them claims to have seen the invisible hand of the marketplace.”
The cartoon is not that funny anymore, said Tasch. “Slow money is not just a new way to do social investing, but starting from a bigger question: How did we get so far out of whack?”
Tasch noted David Brooks’ observation about the economy in The New York Times: “No one’s accountable to anyone else, because the whole thing’s so big, there’s no one to be accountable to.”
Regulations have too many words, Tasch added. “If it’s federal government and it’s being regulated from the top down, it is going to be a mess. It’s too big to manage.”
Tasch read from his book: “This kind of befuddlement [about the credit crisis] is what arises when the relationships among capital, community and bioregion are broken.”
Likewise, he said, an article in the Small Farmer’s Journal noted that conventional agriculture’s loss of biodiversity, additions of toxic substances, problems with water, etc., are bad, “but maybe the most potentially deadly side effects of large scale industrial agriculture – a studied remoteness from the customer and a lack of accountability that might be seen as indifference.”
Local Investment Solutions
Slow Money aims to bring economics back to a manageable, local, ecological scale, “to rebuild a sector of the economy around stuff like we’re here to celebrate,” said Tasch.
Philanthropic foundations are not the entire solution, he continued. Professionally managed foundations in the United States give only $50 million – 0.01 percent – of their $500 billion in assets to sustainable agriculture groups, said Tasch. And that requires “NGOs running around 80 hours a week begging for money. It’s not sustainable.”
Instead, slow money is “going to have to come from millions of people taking a little of our money and putting it to work directly, buying farms and building processing plants and supporting restaurants that are sourcing locally, and training new farmers, and seed companies, and all the things that we know we want to see in our local economy. We need billions of dollars a year.”
Given that some 60 to 70 million Americans have money in the stock market, Tasch asked, what if 1 million of those invested 1 percent of their money in local, small food enterprises?
“Slow Money is about catalyzing that process – a series of products, services, networks that will make it easy for millions of Americans to invest a little of their money directly in local food systems within a decade.” Tasch noted that American individuals give $230 billion, or 1.5 to 2 percent, of our $15 trillion Gross Domestic Product to local charities each year – “not a lot.”
Now in its second year, Slow Money has 1,200 members, and 12,000 people have signed its Slow Money principles. About a dozen local and regional Slow Money groups are self-organizing now, including Slow Money Maine. These are not controlled by the central office.
After meeting with leaders – 600 individuals, investment fund managers, small food enterprises and others – at Shelburne Farms, Vermont, in June to figure out how to generate “a pool of nonprofit dollars that can be focused on the food system and would not have to go back to shareholders even with low returns,” Slow Money formed The Soil Trust, which will be funded by donations from individuals and would then provide investment capital in collaboration with local investors around the country.
For example, if Slow Money Maine wanted to start a Slow Money fund for Maine, the Soil Trust might be able to provide half a million or a million dollars from its national pool, created by lots of small donations, to guarantee the first 10 or 20 percent of investors’ losses. “Guarantees can be a very powerful way of getting the flow of capital to start in a new sector,” said Tasch.
The ultimate objective is for all this to happen at the local level. “If you live someplace and know something that needs to happen there, you know that you can participate directly in it and get a 1 percent per annum return, or whatever the return is, you can save that farm or build that processing plant, and you are receiving other benefits that no expert has to explain to you.”
After a couple of hundred years of “invisible hand” thinking, Tasch says that that logic has been exhausted, but no alternative is in place yet. “This is the beginning of trying to step outside of that paradigm.”
Slow Money is also exploring with socially responsible mutual funds Portfolio 21, Calvert, RSF Social Finance, “how can we set up new Slow Money products that we would help brand and market, that would make it possible to use existing markets? For example, what if there was a mutual fund right now that we could all invest in called the Portfolio 21 Slow Money Fund, that had maybe 20 companies in it, all public companies, each of which had demonstrated some kind of leadership to organics in some way? It’s going to be very imperfect … but every investor chips in a little bit of the proceeds into the Soil Trust. This is a permanent, nonprofit investment pool that we hope will have billions of dollars in it a generation from now. It’s investment capitalized with contributions, so all the money stays in it, and it’s continually reinvested for the benefit of future generations.”
Tasch said that the Carrot Project and other entities are making small loans to organic farmers already. “You can give money to that right now. There just aren’t enough of these projects. We’re going to make it easy for large numbers of investors to invest this way.”
Tasch ended by reading the first Slow Money principle: “We must bring money back down to earth.” And he read part of sixth: “What would our world be like if we invested 50 percent of our money within 50 miles of where we live? If companies gave away 50 percent of their profits? If we had 50 percent more organic matter in our soils 50 years from now? Recognizing that we have to reconnect money to the soil if we’re going to survive.”
Q & A
Tasch was asked how much donated money goes to operate Slow Money and how much the highest-paid person makes. The new executive director, he said, “will make, when we have enough money to pay him his full salary, $125,000 a year. He’s making $75,000 now. This year we’ll probably spend about $600,000 for our whole operation. We’re hoping next year it will be $1.5 million. We don’t have money under management yet. The Soil Trust is just starting. None of the Soil Trust money will fund the NGO. All of it will be investment capital. We probably have to get at least $1 million in the Soil Trust before we can start deploying interest because of the cost of deploying the money.”
Another fairgoer mentioned moveyourmoney.org, which Tasch said is “another beautiful, sister grassroots thing. Moving money to local banks.”
CR Lawn asked, “You talk about an invisible hand, but isn’t it true that the hand is anything but invisible? You’re talking about financial institutions that overextended credit, about political and financial institutions that ensure a maldistribution of income.”
Tasch said he doesn’t think scapegoating is the answer. “That just makes us like those other people that a lot of us don’t like. Very few people that I know wake up in the morning saying I want to take advantage of other people today. I don’t believe that most of the people on Wall Street are evil and corrupt people. Most people are just caught up in a bad system. To me, the most fundamental structural problem of the system is this disconnect of our money from where we live.” (See Lawn’s response in our Letters section.)
A farmer noted that some years, when crops do poorly, investors wouldn’t do well. “We’re not going to make very much money,” said Tasch. “I’d say low, single-digit returns. And if you invest in any one thing, it’s going to be risky. If we invest in 10 farms …”
Nancy Chandler suggested that people look into local credit unions. “They already invest locally,” she said.
Bob St. Peter of Food for Maine’s Future asked, “Why not advocate for a redistribution of wealth and income so that farmers don’t need an investor class to live off the land?”
Tasch said that the New Economics Institute (formerly the Schumacher Society) advocates for this “on a pretty massive scale. I like to keep it simple. The thing that I like about investing in small food enterprises, whether a farm or a company like High Mowing Seeds or Organic Valley, you’re investing in an enterprise directly and sort of betting on the entrepreneur to help fix the system, and I like the idea of betting on tens of thousands of entrepreneurs rather than trying to get politicians to change big structural things.”
For more information, see www.slowmoney.org.
Slow Money Maine
Since January 2010, a small group of mostly Maine leaders in nonprofit, financial and business sectors has been meeting monthly to identify regional food system needs and potential investors to help meet those needs. Participants have included Coastal Enterprises Inc., MOFGA, Clean Yield Asset Management, Maine Farmland Trust, The Carrot Project, MOO Milk Co., Maine Rural Partners, Crown O’ Maine Organic Cooperative and Ameriprise Financial Services. Bonnie Rukin, who facilitates these meetings, says, “We’ve continued to experience growing interest from individuals and groups statewide and are exploring connections for effective and satisfying collaborations.” For more information, visit www.slowmoneymaine.org or contact Rukin at [email protected].
– Jean English