A new style of financial investing emphasizes community values over a fast buck
IF you happen to be ambling down Main Street in Barre, Vermont, a quaint green-and-red storefront might catch your eye; the aroma of fresh-cooked bacon or burgers and fries might attract your nose. Welcome to Farmer's Diner, Tod Murphy's locally owned restaurant. It's not only a great place to eat but also a showcase of many folks' commitment to revive rural economies by promoting locally grown food.
'We are shortening the road from the farm field to the diner plate,' reads the diner's mission statement. What makes that possible is support from investors willing to earn a lower rate of return in order to nurture community-based businesses. Though that may not be the kind of sales pitch your average venture capitalist expects, businesses like the Farmer's Diner are exactly where social venture capitalists like Woody Tasch and Cathy Sutton are looking to put their money.
Tasch, chairman and CEO of the socially responsible business network Investor's Circle (IC), and Sutton are champions of what they call 'slow money.' The idea grew from Tasch's interest in 'slow food,' a movement originating in Italy that combines ecologically sound food production and support of local farming with a commitment to the finest traditions of cooking. 'The spirit of slow food,' says Tasch, 'should be applied to financial markets.'
'Slow money' investments are practiced on a smaller scale -- involving thousands of dollars rather than tens of millions -- and they use creative investment vehicles instead of relying solely on stock deals. From a venture capitalist standpoint, investing in slow-to-grow companies like a Main Street diner is risky, but it's what Sutton calls rational. Because Farmer's Diner owner Tod Murphy is commited to staying local, his transport and handling costs are minimal. While the business may not produce a high rate of return, it produces reasonable profits that circulate more widely throughout the community. 'It's a self-fulfilling process,' Sutton says. 'If [you] are buying locally, the locals will support you, so you are breaking even and making money.'
A Web search or a trip to your local business library may not produce much information on 'slow money' (at least not yet), but this hybrid of philanthropy and investment is showing up in more and more business discussions. The Business Alliance for Local Living Economies (BALLE; www.livingeconomies.org) is a collaboration of business networks working together to 'equitably increase prosperity, strengthen community, and ensure healthy local environments' by investing in local communities and the people who live there. The Slow Money movement and BALLE share a common bottom line: invest over time in small, sustainable businesses that feed and support the local community. Investors like Tasch and Sutton think such an approach will provide fruitful returns of more than just the financial sort.