Sunday, November 8, 2009

Slow Money


There is slow food, slow design, slow cities, and slow photography.

And now? There is Woody Tasch. The former venture capitalist-turned-revolutionary, as he calls himself, is the guru of "slow money" - the name Tasch gives to his philosophy that combines a passion for social enterprise with the benefits of locally-grown food. Cause Global caught up with Tasch at New York University a couple of days ago, where he was speaking to social enterprise students about his new national campaign to persuade at least 1 million Americans to donate between $25 and $1,000 each to help create a grassroots, non-profit seed fund to support and grow local food businesses and family farms.

But it's not just healthier food that Tasch is after. He is traveling the country this fall, warning that money moves way too quickly. Billions and trillions of dollars zip around the globe, he says, as if disembodied from the people who invest it. "Investors don't know anymore where their money goes and more and more, they want to see an impact for what they give in their own lives and own communities," Tasch said. He says he wants to build and test the concept of something he calls "nurture capital" — a healthier and more sustainable alternative to venture capital for funding new businesses. It's time, he says, to shorten the distance between investors and their investments. It's also time, he says, to create new economic models that deliver a return but that also put community, soil fertility, and the environment at the bottom line.

"This is really paradigm-bending stuff," says Gabriel Brodbar, the director of NYU's Reynolds Program for Social Entrepreneurship. "Even the most traditional, free market capitalists like [philanthropist] George Soros and [National Economic Council director] Larry Summers have recently admitted in one way or another that our traditional paradigms have failed us."

Tasch is no out-of-left-field gadfly. He is chairman emeritus of Investor's Circle, the nonprofit network of angel investors, venture capitalists, foundations, and family offices that since 1992 has facilitated the flow of $130 million to 200 early-stage social enterprises dedicated to sustainability. Before that, he was the treasurer of the Jessie Smith Noyes Foundation. Tasch's slow money movement, which was officially kicked off in September during a conference in Santa Fe, is an extension of that work.

"Right now, it's hard to believe that the Whole Foods Market down the street is still able to exist, given the damage we're doing to our soils, and it's hard to believe something bad is going to happen," Tasch told NYU students. "But [our food production system] isn't sustainable. It's time to slow down and start looking up close at what we are doing not just with industrial agriculture but what we're doing to ourselves on the planet in the name of sustaining our standard of living."

With slow money, Tasch is taking a page from the slow food movement, the 23-year-old movement that calls on consumers to treat the act of eating less as a hurried distraction and more like a family ritual that celebrates community and takes time out to reflect upon the labor involved in growing the food that we eat. "Money should move the same way," says Tasch. "This isn't just about finance but the relationship of finance to culture."

In short? Tasch wants to persuade grassroots investors to "take the power back" over their communities and start putting some of their assets into local businesses they can see and watch and [in this case] even taste. He wants them to measure growth not by numbers of dollars so much as the yield of a local crop and the health of a local community. He acknowledges that investing in sustainable local agriculture will yield below-market returns. But he says nobody will lose money; these returns, he says, will be solid - maybe a 3 percent profit or maybe 6 percent one over many years.

But the real dividend of slow money, says Tasch, is social, economic, and biological diversity. In an era of industrial agriculture, when millions of acres are planted with the same variety of corn and when millions of pigs are bred for their yield, small local farms are "the ultimate hedge fund," he says.
"Fix the broken food system, and many other social, economic, and environmental benefits will follow." Tasch adds:

"Genetically-modified plants and organisms [GMOs] are like [financial] derivatives. GMOs are like finance scientists trying to trick the yield on a piece of land. Sure, people will say I don't know what I'm talking about, that these new GMO varieties of plants are crossbred for less risk because every wheat stalk planted is exactly the same genetically. But I don't know. I'm not alone when I say that we headed for a biological correction similar to the financial correction we just had. Why? You can't trick risk. The only way to mitigate risk is with diversity. Biological, cultural and economic diversity is the only answer for risk -- meaning lots of small-scale, diversified things of all kinds coexisting in a healthy relationship. We're talking percolation versus circulation; diversity versus monocultures, fertility versus profitability, and relationships versus transactions."

So far, Tasch says, his slow money movement has 700 members, including about 50 people who have sent in $1,000 checks over the Internet and small local enterprises such as Vermont's Butterworks Farm, a $1 million annual yogurt business, as well as Let's Be Frank, a Berkeley, Calif.-based hotdog company, and Sky Vegetables and Local Harvest. At the Sante Fe slow money convention in September, there were 450 attendees from 34 states and six countries, he said. "Now we're trying to get 1 million people to sign the slow money principles and from that, build capacity."

He admits that early investors may not be "big money people" but instead, small money investors who are "frustrated with philanthropic foundations [that can sometimes invest their endowments into places that don't help the environment] and frustrated as philanthropists." Says Tasch: "We must bring money back down to the Earth. It's time to restore a bit of reality back into all of our lives."

For a copy of Tasch's petition of Slow Money principles, click here. For more on Tasch's slow money philosophy, see his March 2009 YouTube video.
(For more on the "slow movement" in general, see multimedia artist Douglas Gayeton talk about his new book, Slow, and the flat film techniques he uses to capture the stories of a village in Tuscany.)

— Marcia Stepanek


(Photo: Flickr)

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2 Comments:

Blogger Marcia Stepanek said...

From Rodney North:

At Equal Exchange we’re familiar with both Woody’s work, and Investors Circle (in fact last month they named us 1 of the 20 “most impactful” enterprises they’ve ever help fund).

But I’d add that for any “Slow Money” seed funds (like Woody is trying to raise) to nurture small, sustainable businesses into larger, more impactful, yet still sustainable enterprises then you have to look at not just what the business does (say grow organic food for local consumption) but also how ownership is structured.
For example, many (maybe even most) “successful” organic food start-ups end up having to cede control sooner or later to venture capitalists, other outside investors or simply selling their company to large corporations like Mars, Kellogg’s or Hershey’s.

Does the Slow Money approach ensure that will not/could not happen for the recipient of the slow money investments?

I read the Slow Money principles and the Slow Money blog and couldn’t find anything on this (but I could’ve missed it.)

Regardless, whenever people think about this we’d like to encourage them to look at the co-operative model which we think offers many of the same benefits, and maybe more:

*Organic Valley and Deep Root are just two farmer co-ops that are doing great work to restore our soils, provide great, safe, organic foods, and are structurally protected against selling out.

*Our own 23-year old worker co-operative is already putting about $8 million of equity investments to work through our ever-growing Fair Trade partnerships with co-ops of small-scale organic farmers in 20+ countries.
*Hundreds of consumer food co-ops nationwide (who not coincidentally are among the original pioneers of the whole food, local & organic food movements) already represent the highest ideal in putting your investment money to work in supporting a sustainable, connected food system + they each constitute an investment that will stay in your community and that will not sell out 5 or 10 years down the road.

Right now we’re working with the National Cooperative Business Association (www.NCBA.coop ) to create a model mutual fund where folks could buy shares knowing that their money would only be used by co-operatives. Stay tuned for that.

Rodney North
Equal Exchange
West Bridgewater, MA

November 10, 2009 at 9:39 AM  
Anonymous FredF said...

Putting assets into local businesses may be a wise decision. However, before investing, determine whether locals patronize such businesses. Unfortunately, in an urban setting, i have seen locals prefer to take their dollars to the Downtown area or the suburb malls. Thus, locals need to change their habits or at least patronize the local businesses during the holiday season.
If one wants to see local agriculture grow, first determine if farming appeals to young people. Isn't the trend of farmer's children to leave the farm and head to the city?
On a lighter note, let's add music to the "Slow movement". Let's junk the electric guitar and return to the eco-friendly acoustic instruments. Instead of amplifiers, add more musicians.

November 24, 2009 at 9:31 PM  

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