In January I had the privilege of visiting with one of the micro-credit lenders that Natural Investments clients help to fund. We had a trip planned to Panama, so I decided to take the opportunity to meet with PROCAJA, the on-the-ground lending agency that chooses recipients for small loans funded through Envest Microfinance which some of our clients are invested in.
I met the PROCAJA team in the small town of Ocu. The people at the branch were very gracious as they got us up to speed on how they are structured and the types of clients they serve. As with most Envest-funded programs, loans are generally under $1000 and are targeted to individuals who are starting or growing a small business.
Also in keeping with other micro-credit programs, they’re very successful in getting these loans repaid. Unlike many banks, they use a very hands-on approach. In addition to the standard visit with the person requesting the loan, to assess their current business and their plans, the recipients needs to get neighbors to vouch for them; this creates a natural community of support and accountability. After the loan is made, regular follow up visits track how things are going and identify ways to improve. All this ongoing support, including financial training if needed, leads to the failure rate being much lower then at most banks, which often provide no follow up or support.
After this overview at the branch of office we went to visit four people who are currently using microcredit loans to build nancial stability.
Now that the 2016 presidential election is in the history books with a shocking outcome that few foresaw, the rough outlines of the next few years are starting to become a little clearer. We can reasonably expect a federal government with less interest in protecting voting rights, reproductive rights, and civil rights of historically disadvantaged and targeted communities such as immigrants, Muslims, LBGT people, disabled people, and people of color. We can also expect more interest in increasing fossil fuel production and distribution, stirring up international geopolitical conflicts over trade, territory, and resources, and lowering corporate taxes, among many other priorities. With our values and ideals—and for some, our lives—under what’s likely to feel like a constant siege, it’s natural to react emotionally with outrage or despair. And while it’s important to vent, we must not allow ourselves to be paralyzed into inaction or satisfied with mere talk! This is a moment that calls for us to activate our resources and engage our communities, not just to defend against potential losses, but to build on the gains of the last eight (and more) years. You, dear investor, are in the advantageous position of having resources that can be mobilized to help catalyze much-needed outcomes. With that in mind, here is your action guide for the next administration.
Step One: Lift up communities by investing in them. Lend your money to Community Development Financial Institutions (CDFIs) that specialize in redistributing access to wealth to vital projects in vulnerable communities. For example, investors nationwide can open a High Impact CD at Hope Credit Union, which serves formerly under-banked communities of color in the Mississippi Delta region. While the Standing Rock Sioux blockade of the Dakota Access Pipeline highlights the myriad of challenges that Native Americans face, First Nations Oweesta CDFI is actively redeploying investor capital to create jobs, grow businesses, and secure ancestral lands across Indian Country. The Calvert Foundation offers two initiatives that invest in specific constituencies targeted by the incoming president: Latinos (the Raíces Investment Initiative) and women (the Women Investing in Women Initiative: WIN-WIN). Self-Help Credit Union and Beneficial State Bank take federally insured deposits and reinvest them in affordable housing and small business loans in low-income neighborhoods that are otherwise unlikely to benefit from the new regime. Seek out CDFIs doing similar work in your city or region. And help build a thriving economy right where you live by buying local and investing in local small businesses and nonprofits that you know.
Step Two: Fight climate change by investing in the ongoing green revolution.
In mid-September, I travelled to San Francisco to participate in the annual Social Capital Markets conference known as SoCap. In its ninth year, SoCap describes itself as the place “where the global community using business as a force for social change gathers to listen to each other, and to learn, and to get things done.” I last attended SoCap three years ago, and was pleased to see how much the event has grown and evolved in that span of time. There were over 2500 people in attendance, from 60 different countries. They represented impact investment funds, international community development organizations, regenerative agriculture projects, and social enterprises, all focused on addressing critical issues like global poverty alleviation, social justice, and climate change, and the conversations were inspiring. Important questions were asked, and moving calls to action were made.
As we’ve seen Impact Investing begin to move dramatically into the mainstream, I was heartened to hear SoCap bring to the fore the priority of ensuring that the social and environmental goals at the heart of Impact Investing don’t become overshadowed by the drive of the extractive economic model currently dominating our financial system. With a huge focus on inclusive strategies for investing, there was deep attention given to addressing racial and gender inequities within our capital system, and how to transition from an Extractive Economy to a Regenerative one.
It’s us. We’re responsible. Well, not us directly exactly, but our internal combustion engines and our land clearing and the flatulent animals we love to eat and our need to be somewhere other than where we are right now. I’m talking about the most important issue of our time of course, the intractable and undeniable problem of climate change. The scientists call it anthropogenic climate change; ACC in Acronym.
For years many of us have been thinking and writing and doing what we can to reduce emissions of greenhouse gases: eating local food, driving less while driving an efficient car, making our homes more energy efficient. Ten years ago I even wrote in this newsletter about how we could store all of that extra atmospheric carbon in the soil and how good that would be for agriculture and ecosystems and water as well as bringing the climate back to what our grandparents knew. Collectively all these ideas are known as “mitigation.”
But a new strategy has emerged, recognizing that all of those years of thinking and writing didn’t actually generate much doing. So now it’s time to consider “adaptation.” How can we adapt? Thankfully someone has been working on this, and I’m delighted that it’s happening right in my backyard.
This article from NI’s Andy Loving was originally published in the February 2015 edition of the Green Money Journal. It offers some much-needed perspective on the recent surge of mainstream investment interest in ESG measures, which is often celebrated as being synonymous with SRI and its historic goals. Andy begs to differ.
I have spent my 20-year career as a financial advisor working with people who want their faith and their values to be reflected in their use and investment of their money. From the beginning, I have been a socially responsible investing advisor to organize money for social change, while serving the needs and commitments of my clients.
But today’s social investing marketplace is increasingly driven by ESG (Environmental, Social, Governance) investments. The social investing “tent” has indeed gotten much bigger and, in the process, many strongly held values that my clients and I have seen as so important now seem unimportant, or at least less important, to many in the industry. Growth often results in increasing diversity, which can be a good thing. But in the changes in the social investing industry, certain values and priorities have been de-emphasized to the point that the character of the industry is significantly changed.
Information in the recently published 10th edition of the US SIF Trends Report on SRI documents concerns. The headline news of the Trends Report is, of course, the 76 percent increase over two years of U.S.-domiciled assets under management using SRI strategies. The jump from $3.74 trillion in 2012 to $6.57 trillion in 2014 was startling, encouraging and almost unbelievable. But of that more recent number, $6.2 trillion were assets where ESG factors only were being incorporated into investment decisions. There was no involvement in shareholder activism and community/impact investing.
These numbers indicate that many mainline money managers now believe ESG factors can and do influence the financial bottom line, making ESG material to profit maximization. The mainline Wall Street firms are finally believing what the SRI industry has been saying for decades.
The report also contains information about two other important areas of activity – shareholder advocacy and community investing/impact investing – where the news is not quite so encouraging.
Financial Advisor magazine recently ran an in-depth article on Slow Money, the nationwide network that channels capital into local food systems. We’ve featured the Slow Money movement in our newsletter and on this blog since its inception, and several Natural Investments advisors have been enthusiastic supporters of its national and regional groups, so it was no surprise to see two of our team featured in this article.
Carrie vanWinkle helped form Slow Food Kentucky, where over 80 members now meet three times a year to connect small food operations with potential investors. After building a personal relationship, members arrange loans directly with the farmers, at interest rates of 3-5%.
“I think people sometimes come into Slow Money––or local investing more broadly––with the right intentions, but they get caught up in financial return rather than the whole return, which is financial-plus,” Carrie says. The 3% to 5% loan rate “seems to be a pretty fair rate of return in today’s environment.”
The national Slow Money network also helps those with no local group to find avenues to do “regenerative investing” (see this recent post for more on this emerging high-impact field). NI’s Malaika Maphalala did just that for a client in Vermont who made a significant loan at 5% interest to Coyote Creek Farm, a grass-fed beef and chicken/egg operation in Texas. As reported by Financial Advisor:
Coyote Creek would be part of the regenerative portfolio, and Maphalala took it upon herself to do due diligence on its expansion plans. “It took years to come to fruition, but I followed the process on my clients’ behalf to make sure it was investment ready,” says Maphalala, who’s been active in the Slow Money Northwest chapter in Portland. . . . “The couple is dependent on earnings from their investments,” Maphalala says. “Because they’re retirees, in the impact sector it’s very important that investments be real safe regarding reliable annual returns.”
In addition to investments in the form of direct loans, Slow Money is also creating a parallel model that leverages philanthropic donations to grow local food systems. Woody Tasch, Slow Money founder, notes that this “would relax some of our transaction mentality and build on the idea that we’re trying to build something over 25 years. . . . Instead of thinking about this as return-agnostic investing, you can think about this as super-positive return philanthropy.”
Read the whole article here.
Sometimes we just want to roll up our sleeves and get our hands dirty. Or at least invest in people who are! Some of the most forward-looking innovations in what we call “evolutionary investing” are taking place in very down-to-earth ways, working with “tangible assets” as familiar as life itself: trees, livestock, soil, and grass. Re-envisioning our relationship with nature and the flow of materials and energy, activities in this area are creating innovative on-the-ground (and in-the-ground!) solutions and opportunities. Interdependency, holism, reciprocity, and restoration are informing a redesign of human systems, reconfigured to foster cyclical processes and regeneration, as well as the primal generative powers of life itself. This is a radical return to the foundation of all wealth.Without fresh water, breathable air, and healthy soil, the financial economy has nothing to stand on. No food, no finance!
Let’s take a look at some of the most exciting of these adventures in regenerative investing.
Digging into Regenerative Agriculture
Regenerative agriculture is a concept so obvious that it’s shocking we’ve hade to “rediscover” it in the modern age! In addition to enhancing living systems, part of the aim of regenerative agriculture is to align with the amazing fecundity of nature and build a human system around this abundance that benefits people and planet, while also turning a profit (even farmers have to make a living!). As Slow Money author Woody Tasch describes it, “we can bring money back down to earth.” A few regenerative agriculture champions:
This January, I spoke at La’akea Permaculture Community about new models of green business and finance, and as always, included a brief history of international microfinance as developed by Muhammad Yunus and Grameen Bank. After my talk, one of the attendees told me that she herself had been a microloan success story, and I’m honored to share her story here with you.
In 1991, Donna Fischer was a poor single mother living in Taos, New Mexico and looking for work. She suffered from health problems and low self-esteem and never imagined that she would one day single handedly found a flourishing solar power installation company.
She benefited first from a job training program that paid half her wages as an electrician’s apprentice; here, she first discovered her deep interest in solar power to meet people’s home energy needs. She then had the good fortune to join a local women’s economic opportunity development program that used a comprehensive microloan program based on Grameen’s highly successful model. She became part of a small group of eight women, all hoping to gain skills to build businesses as a way to improve their economic conditions.
Our friends at BALLE gathered together a range of responses to the SEC’s proposed rules to govern direct investment in companies via crowdfunding platforms. We’ve been touting this change for several months, and are excited about the potentials here, especially for facilitating investment in small local companies. However, as is often the case as good ideas wend their way through the regulatory maze, what comes out the other end is not always quite what we may have hoped or imagined it would be.
Currently, companies seeking public investment must be registered with the SEC, a costly and involved prospect, but one that originated in response to the bad old days when fraudsters bilked hard-working Americans out of their life savings via investment opportunities in baldly invented companies (ah, for the simplicity of making up a company for Aunt Dee to purchase shares of in her living room, rather than having to employ the sharpest minds of a generation to invent convoluted new investment instruments traded among giant banks!). The very rich are already allowed to invest in small privately-held companies; this “venture capital” avenue provides initial seed funding for new companies, the majority of which end up failing, with a few succeeding wildly enough to keep venture capitalists in the black. Opening the door to allow those with moderate incomes to invest in smaller or start-up companies carries many risks, along with many opportunities. The SEC proposal aims to limit such speculative investment to a small portion of any individual’s annual income, and to create some oversight by channeling investment through new and existing crowdfunding portals, which themselves must be SEC-registered. Not surprisingly, many observers are not impressed by the ways the SEC proposal balances these risks and benefits.
Click on through for our brief summary of the key points made by the five commentators that BALLE points to.
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By Malaika Maphalala
Out on the edges of Portland, in a pretty suburb called Sherwood, my friend Narendra Varma has established a noteworthy new model of community-based sustainable agriculture. It’s an interesting, well thought out project that began with the lovely name “Community by Design.” Having been a founding member of an intentional community, I was very curious to hear the details of the organizational infrastructure that is designed to foster the growth of a land-based, cooperative economic and social system.
I came to know Narendra through Slow Money, a national movement to catalyze investment into sustainable regional food systems. Narendra, inspired by the movement, decided to invest his personal assets into creating a model that could benefit his own family, local farmers, and the greater community. Based on 58 acres of farmland with a pond and year round creek, Narendra’s project is just two years old. The vision is supported by a constellation of three entities: the Community by Design LLC, a not-for profit land trust that owns the land; a member-owned cooperative of farmers, producers, and local customers called Our Table, which leases the land and manages an integrated organic food production business; and the Manav Foundation, a 501c3 educational non-profit dedicated to promoting a locally adapted culture and economy.
Narendra gathered a great team of people together and drew from several key resources in fleshing out his vision. The project is based on permaculture and biodynamic principles of farming and land stewardship, and a design team that included permaculture greats Jenny Pell and Doug Bullock of Permaculture Now! were integral in the initial planning stages. The Northwest Cooperative Development Center helped draft their articles of incorporation and provided valuable advice along the way.
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