"Slow Money" a concept with more than local appeal!

Roger Bass, a Transition Hendersonville member, has shared the book "Slow Money" by Woody Tasch, as widely as he can! Go, Roger!  Roger presented a summery of the ideas behind 'slow money' and then some further thoughts about slow money in the WNC region. 

SLOW MONEY – 

Book:  “Inquiries Into The Nature Of Slow Money” by Woody Tasch

Web site: www.slowmoney.org

What if you had to invest 50% of your assets within 50 miles of where you lived?

Money that is too fast is money that has become so detached from people, place, and the activities that it is financing that not even the experts understand it fully.

The problems that we face with respect to soil fertility, biodiversity, food quality, and local economies are not primarily problems of technology.  They are problems of finance and culture.

The solution is to slow money down by connecting it to a place and a personal relationship.   This will improve the health of soil, the food system and the community.

At the base of the economy is soil fertility.  Along with the erosion of soil, in our economy we are eroding social capital, community, and understanding of place.

Slow Money is dedicated to helping money flow to enterprises that support soil fertility and local food communities.

We need to connect investors to that in which they are investing, and make relationships visible.  The ultimate goal is to empower investors, entrepreneurs, and farmers as agents of restoration and preservation in their local communities.

Slow Money is developing ways for people to invest in local businesses and people that support the local food economy and help build soil.   This should be done in ways that lower the risk of investing in new, small, food businesses.    Pooling local investor’s funds together so even a small investment is spread over a number of different loans is one way to reduce risk.    Making these loans and relationships visible allows everyone in the community to see how the growing small food economy benefits the community.   Cooperation can begin to replace competition.

OPTIONS for a Slow Money Fund in WNC:

1.  Slow Money NC

  Slow Money NC is a community investment and loan vehicle sponsored by The Abundance                  

Foundation which is a 501©3 focused on local food, renewable fuel, and building community.                   

They are based in Pittsboro, NC and are also currently operating Slow Money groups in Chatham                  

and Durham.

   They are a membership organization with dues from $10.00 to $100.00 per year.  Members with                  

available capital may invest a minimum of $1,000.00, and in $500.00 increments, to fund                  

specific loans and ear a 2% rate of interest on these loans.  Their capital will be lent to                  

worthwhile projects that reflect the mission of the project at a 3% interest rate.  1% will be used                  

for administrative costs.   Investors/lenders are matched directly with an individual borrower.                    

Together they sign a Promissory Note detailing the amount of the loan, the payback period and                  

the interest rate.  An amortization schedule is printed an attached to the note.  A copy is given                 

  to the lender, anther to the borrower, and the third is filed in the Abundance Foundation office.                    

Each month the lender writes a check directly to the borrower.

   Advantages – easy, an up and running model to follow, could partner with the existing Slow                  

Money NC., no risk to the organization that starts and runs it.

  Disadvantages – no diversification, if the loan is not repaid then the investor loses all of their                  

investment.

2.  Start a local L3C corporation, raise funds, then loan those funds out.

       Form an L3c corporation.   Pursue foundation grants and accept memberships from the public.                    

Make a private placement offering of securities under SEC Regulation D.  There are several                  

options but the simplest is using Rule 504.  This is limited to $1 million in a 12 month period but                  

there can be no advertising of any kind to find investors.  A Form D must be filed with the SEC                 

  and a filing may be required by the state’ Blue Sky laws.

                  If 5 – 6% interest were charged on loans, then 3 – 4 % interest could be offered to investors, if                  

all loans were repaid in full.

   Advantages – could be completely local, provides diversification for investors reducing risk.

  Disadvantages – complicated, lots of work, lots of risk, not enough money (profit) to pay for                 

  people or office.

  3.  Use a web based approach.

                  a) use an existing entity

 1) Lending Club – person to person lending website that is registered with the SEC. 

It focuses on high credit worthy borrowers and declines 90% of loan applications.

 Lending Club obtains a credit report and other information on borrowers and assigns a                                                      

credit grade (A – G) and an interest rate.   They charge borrowers an originator fee                                                      

based on the credit grade, 2% on A loans and 5% on D loans.

 For lenders, the minimum investment is $25.00 and they charge 1% of all the money the                                   

  borrower repays.

  Advantages – allows for investing in a pool of investments for diversification.

 Disadvantage – restricted to high credit worthy borrowers.

2) Profounder – crowd funding/community funding web site.

 The entrepreneur fills out a planning worksheet and they advise of any compliance rules                                    

and documents that must be filed with the various states.  The entrepreneur tells their                                                      

story, no business plan needed, just forecast revenue and costs.   Then the entrepreneur                                    

sets the investment terms either based on a share of a percentage of the revenue (over                                                      

no more than 5  years) or equity.  Profounder creates a fundraising webpage then the                                                      

entrepreneur invites friends, family and others to view the website and invest.   Pledges                                                      

are received on the web site and are normally limited to 45 (depends on the state).                                                         

When there are enough pledges, Profounder gets e signatures, keeps track of                                                                        

compliance requirements and filing fees.  Each quarter the entrepreneur reports their                                                      

revenue and Profunder creates a chart showing what everyone is owed.

       Advantages- is locally based, the web site handles most of the details

      Disadvantages – vague, no diversification.

                  b) start a new entity doing  just what we want

                  c) Question: how do we get diversification?