Slow money can jumpstart your resilient investing plan
Did you hear the joke about why the farmer crossed the road? The punchline is that she wanted to go to the bank to ask about getting a loan. Not very funny, except that by the logic of bankers and Wall Street, the idea that a farmer would qualify for financing might elicit a guffaw or two. Small-scale farming is considered a high-risk, low-return activity that any prudent investor should steer clear of.
And yet, wending their way across the highway to the farm, who’s that? Why, it’s a gaggle of Slow Money investors, taking action on their desire to build local food systems. Are they just being charitable, driven by idealism to donate a bit towards keeping a neighborhood farm alive? Not at all—they actually are investors, doing exactly what a traditional investor does. They are considering their own financial situation and how it fits into their overall portfolio. They are asking lots of questions, getting to know the business, assessing the risks, and looking for ways that not only their money, but their expertise, could help assure the success of their investment. And they are negotiating a deal that works for both parties.
Wall Street “professionals” can’t relate to this new breed of more creative and engaged investors because they come through rigid training that relegates all investment to a narrow decision-tree, one that only looks at the financial risks and potential monetary payoffs. This seems logical enough in a global economy that equates quality-of-life with one’s net worth, and a nation’s happiness with its GDP. Many of us, though, are not content to leave essential human and ecological values out of the equation; we know that we must invest in the world we wish to see. Clearly, it’s time for a new framework.
In our new book, The Resilient Investor: A Plan for Your Life, Not Just Your Money, we argue that we need to redefine what it means to be an investor. Investing is not something only done by those with suits amassing hordes of cash. It’s something we all do, and we do it every day, all the time. Whenever we invest our time, our thoughts, our energy into something that we believe will provide some kind of return, we are investing. Directing some time into family, community, yourself(!), the world, are all essential activities, ones in which we exchange something of value for the chance to get a return. Sometimes just getting a smile back from someone we’ve helped is priceless. Of course, investments can be made with money, and these can be especially potent actions when done consciously; for even when investing money, the returns we seek may include benefits to land, community, and the strength of our local economies, not just our own personal financial profit.
It’s quite empowering to know that all our actions, taken with or without money, are part of a life-long series of investments. But what is it that we really want to achieve? In these uncertain times, “resilience” is a worthy beacon to orient to. The popular conception of resilience emphasizes the capacity to bounce back. But it is more than this – it also improves the quality of our lives. Resilience has gained traction today because it applies to our personal situations and also to the state of the world, a world that is unfathomably complex and displays a tendency for sudden, unpredictable change. Since these changes can be both destructive (extreme weather) and generative (Paris climate agreement), we need to be ready for anything. Resilient Investing gives us a framework to make investment decisions (remember, not just money decisions) towards increasing our personal resilience.
We do this by striving to enhance what we call our “total net worth”. This consists of 3 kinds of assets: personal (relationships, community, learning, health, spiritual growth), tangible (home, food, basic necessities, a healthy ecosystem) and financial (income, banking, savings). Resilient Investing also provides three distinct strategies for putting these assets to work: close to home in your family and community, positive engagement with the global economy, and evolutionary tactics that can transform society in fundamental ways. Personal and social resiliency are both fostered as we spread our individual and shared wealth across the entire Resilient Investing Map:
Working with the Resilient Investing Map helps you become aware of the ways you’ve been choosing to invest in and with each of the nine zones on a daily basis, and to start aligning all these investments with your desired goals. It also shows you how to step up to become an active player in making our world more resilient, strengthening the human and natural systems upon which all life depends.
This is obviously a much bigger map than what Wall Street has to work with, one big enough to encompass all of our investment decisions, all of our dreams and aspirations for ourselves and the world. So let’s take this map and see whether Slow Money is still a laughable distraction from “serious” investing, or if it actually is helping to further the short and long-term goals of a new generation of resilient investors.
At first blush, one would assume that Slow Money fits neatly into the first strategy column, Close-To-Home, and the 3rd asset row – financial. Isn’t that what it is, finding a local farm, and putting some money there? Well yes, and no. It’s more than that. In fact, as we’ll see, a single slow money investment can help you diversify into as many as six zones of the RIM!
In 2015, I joined a new slow money investment club called the 2Forks Club. It brings together two watersheds in Western Colorado, one of which is relatively low-income but has a lot of small organic farms, while the other has ranches, but also many motivated investors. It’s an ideal combination to enhance the regional foodshed. We’ve only met a few times, but already there are new friendships and connections being made. We each bring some new perspectives to the table, so there is a rich opportunity to learn from each other. All of these fit nicely into Zone 1 of the RIM. Our investment in joining the club is building up our personal and social assets, and we’re doing it close to home.
Moving down to Zone 4, which is on the tangible assets row, it’s clear that slow money investors place a primary importance here. It’s hard to get any more tangible than a farm – where our very sustenance emerges from the earth. Assuring that our basic needs can be met, even if there is a disruption to the global economy that stops the just-in-time food trucks from rolling, might be one of the highest priority investments any of us can make. And speaking of trucks, the first 2Forks loan financed a used refrigerator truck to help a small family farm keep their products fresh as they travel to regional markets.
What about Zone 7, the close to home financial box? Remember, the RIM is a personal map, one that shows us how we are investing in each zone. At this juncture, many slow money investors are not structuring these investments as a vehicle to achieve high financial returns. They represent only a small portion of their overall portfolio, so they are happy to accept minimal returns as long as it furthers their nonfinancial goals. Our 2Forks Club has dispensed with the idea of making money altogether – we’re the first club that was set up as a nonprofit to make zero-interest loans.
But this is not to say that there are no opportunities for investors to make financially-profitable investments here. According to slowmoney.org over $45 million has been invested in over 450 small food enterprises. Given the low returns, high risk, and unethical behavior that Wall Street exhibits these days, slow money investments backed by the full faith and credit of your neighbors with even modest returns start looking pretty good!
Turning our attention back to the RIM, we’re going to skip over the Sustainable Global Economy column. For while farms, and all of us, are of course part of the larger economy, the intent of slow money investing is to create and strengthen crucial aspects of the real world that are neglected by the global economy. There are many essential efforts going on to reform the global economy and move it in a more sustainable path, but slow money is about building new structures and systems that can support local food networks, not just tweaking what we have so that it works a little better.
While the local impact of slow money is what it’s best known for, resilient investors also appreciate how brightly it lights up our 3rd column, Evolutionary Investing. Slow money offers some of the most inspired examples of evolution-in-action, of people looking deeply into our current situation and coming up with out-of-the-box ideas. Founder Woody Tasch embodies this evolutionary spirit—schooled in the ways of Wall Street he now inspires people with the idea of “fixing the economy from the ground up.”
In Zone 3 of the RIM, we grow personally and interpersonally, through participating in evolutionary change. I’ve been to many Slow Money gatherings, where farmers, nonprofit/citizen advocates, and investors all comingle to see what might be created. These are ingredients for a hearty evolutionary stew! Freed from the shackles of conventional thinking, the ideas that percolate at these gatherings inspire many to go back into their communities and experiment. For those who wish to participate directly in evolutionary change, slow money provides a welcoming, stimulating opportunity to try something new. The healthy vibrancy of the people I’ve met, young and old, is a testimony to how making that kind of investment—using one’s energy, wisdom and intention—offers a huge payoff.
Zone 6 is one of the most crucial realms to focus on, the one where people transform their relationship with the physical world. Indeed, given the alarming evidence that human activity is endangering the prospects for continued life on our planet, investing here may be the most essential action we can take. But it is also a difficult zone to find investments in. Many exciting “regenerative investing” opportunities, such as buying up farm and ranchland for conversion to sustainable agriculture, are only available to accredited (i.e. wealthy) investors, and while ideas like the “circular economy” and “biomimicry” hold great potential for changing the way we manufacture goods, opportunities to participate directly are few.
However, slow money investments are directed towards farmers who, as compared with the industrial agriculture model, are indeed reinventing the relationship between humans and soil. Microorganisms and diversity are encouraged rather than poisoned out of existence. The multitude of small organic farms that slow money aims to encourage can be thought of as a giant, dispersed laboratory for figuring out what works, not just for food production, but for the long-term health and regeneration of the earth. Indeed, “carbon farming”, in which carbon is sequestered through using agroecology techniques, is now being recognized by scientists as a cornerstone of any serious effort to limit the damage from global warming.
Finally we arrive at Zone 9, the place where evolutionary financial models are developed. Slow money from its inception was designed as an alternative to the “show me the money” mentality that dominates Wall Street. It has an entirely different perspective on risk, and as we’ve just seen, the rewards are spread around in many zones of the RIM. But it took some time to figure out exactly how to facilitate money flow from willing investors to worthy farms. It has drawn on some time-tested innovations such as investment clubs and community loan funds, and newer models such as LION (local investment opportunity networks). But it is also blazing its own path, incorporating elements of both nonprofit and for-profit investing, and melding them with the latest innovations in crowdsourcing. Slow money is attracting innovative thinkers and creating new templates that are enabling capital to serve a higher purpose, that of fostering and linking local food systems into a force that starts to heal our relationship with the planet.
So there you have it: a single slow money investment can help you diversify into up to six zones of the Resilient Investing Map. It is not merely a financial investment, but holds the potential to enhance your personal and social capital, and your tangible wealth. And while it does this close to home, it also moves the evolutionary ball forward, demonstrating successful models of farming and investing that are so needed in these crisis-filled times. Let the bankers and brokers continue to smirk, but the next time you see a farmer crossing the road, meet them halfway!
This article first appeared in the Fall 2015 edition of Slow Money’s magazine, Local Food Shift