Founder of the Slow Money Alliance Tries to Remind Investors of a Place Called “Here”
CONVERSATION: Woody Tasch
Photo courtesy Slow Money Alliance
“Money is like horseshit,” I once heard rabble-rouser Jim Hightower say. “If you pile it up, it stinks. If you spread it out, it makes things grow.” That agriculturally minded metaphor about wealth accumulation would be the perfect bumper sticker for The Slow Money Alliance, a network of investors (some big, some small) committed to supporting sustainable food enterprises in their communities.
You’ve probably heard about Slow Food, and Slow Money is pretty much the same idea, only translated into the world of finance. Global capital markets have grown too big and they move too fast. Their size and speed and disconnection from place are a driving force behind the degradation of ecosystems and the exploitation of communities around the world. But what if investors moved slower, and were willing to commit to long-term (read: sustainable) returns on their investment? What if they put their money in their local communities instead of in abstract securities and derivatives? Chances are we’d have much more vibrant local economies.
So argues Woody Tasch, author of the book Inquiries into the Nature of Slow Money: Investing as if Food, Farms, and Fertility Mattered. Tasch, who is executive director of the Slow Money Alliance, is a veteran of the social enterprise scene. He’s worked as a venture capitalist, foundation treasurer, and entrepreneur, and for years was chairman of Investor’s Circle, a network of angel investors and foundations that, since 1992, has helped direct $130 million into 200 companies and funds dedicated to sustainability. With the Slow Money Alliance, Tasch is trying to focus investment capital into local food systems because, as he says, “if we cannot grow food without leaving the soil as fertile or more fertile than we found it, we are obviously on a dead end.”
He spoke to me recently from his home in northern New Mexico.
A lot of folks are familiar with the idea of Slow Food. What exactly is Slow Money?
Well, if people know about Slow Food, it’s pretty easy to say: fast food, slow food; fast money, slow money. More than a few years ago, if you asked people if there was such a thing as money that was too fast, it might have stumped people a little bit. But I think, given the events of the last several years, up to and including the thousand-point drop on the New York Stock Exchange in 20 minutes, and all kinds of things related to financial excess and volatility, a lot of people now intuitively understand: Yeah, maybe there is such as thing as money that is too fast. So then they can then just as quickly say, “OK, slow money would be the antidote to fast money.”
There are a lot of other ways to talk about it, obviously. You can say, “If you want a Slow Food economy – if you want there to be lots of small, organic farmers and lots of small, organic purveyors of food, and butchers on Main Street, and local grain mills and creameries, and all these different things that are part what Slow Food really stands for at its deepest level – there is going to need to be investment capital to support all of these small food enterprises.” We can’t just do it with our consumer dollars. We also need to bring investment dollars to the table. That would be good way of getting to what’s behind it.
Perhaps it is intuitive in the wake of the financial crisis. But flesh it out for me. What are some of the consequences when money is too fast?
The first Slow Money principle says: We must bring money back down to Earth. And that’s a way of getting at a whole bunch of issues all at the same time. The speed of money. The abstractness of money. The fact that we don’t know where our money is or what it’s invested in. That even the CEOs of the major investment banks (this is one of the symptoms of a broken system) didn’t really understand what their investment banks were doing in many ways, certainly when it came to derivatives. That’s just a function of people, even the architects of the financial system, not really understanding the full consequences of what was going on.
So, to me, one of the fundamental ways to get at that is just through the idea of the speed of money. Social investors for a while have been talking about different ways of trying to get a grip on where your money is to be more responsible for it. Seldom does the idea of the speed of money itself get into focus. So the way I would summarize that: If you have trillions of dollars a day coursing through currency markets and trillions of dollars a day going through bank transfers. (Then you actually have to pause for a second and say, What is a trillion dollars? That is a whole other discussion. How big a trillion really is. We usually don’t even quite figure that out, we get so used to saying the figures billions and trillions.) But with that amount of capital zooming all over the place, it is impossible for anyone to really take full responsibility for it.
The whole issue of short-termism on Wall Street. Warren Buffet and the Aspen Institute convened a bunch of the preeminent financiers on the planet, this was maybe three years ago, and they issued a report with the phrase “short-termism” in the title. And it was decrying all of the financial incentives on Wall Street that are all about short-term gain. And that the idea of building long-term value was no longer being supported by most investors, that there was this inevitable speeding up of turnover on Wall Street, a shortening of time frames. It’s all part of the same thing. All of those issues are symptoms of money zooming around the planet, investing in things that no one is responsible for.
What are some of the environmental consequences of that, of money moving too fast?
Well, all of the long term social and environmental impacts, which are often referred to as externalities by economists, they get pushed outside the transaction analysis in order to maximize “the efficient flow of capital.” If you are optimizing for efficiency and you are saying the best thing we can do as investors is grow the economy as fast as we can, increase consumption as much as possible, and facilitate the unfettered flow of capital because free markets are blah-blah-blah. What you end up doing is externalizing, you kind of force out of your framework the long-term consequences. And guess what? Those longer-term consequences are: Main Streets dying, aquifers being depleted, and carbon in the atmosphere, and soil fertility being degraded, and endocrine disruptors.
Almost all of those things find their manifestation in the food system. And that is one of many reasons why I think focusing on food and the soil is so important. It’s very tangible. It covers everything from personal health to community health, mental health, culture and tradition, biodiversity. Everything is kind of woven into the food system in a very, very immediate way – people eat three times a day. They don’t all think about carbon in the atmosphere three times a day. As they should, of course. But being realistic, people need something they can relate to in and very immediate and tangible way. Food is a very powerful organizing tool in that way.
And that’s why you’re focusing the power of your investors on the food system, and encouraging them to invest there.
Yeah, for the things that we do together in Slow Money, and the network of investors. We’ve been talking about the idea of Slow Money, but it’s an emerging network of entrepreneurs and investors who are working together to increase investment in local food systems. And that action is the concrete manifestation of all these broader concerns that I’ve just been mentioning. I do happen to think that
soil fertility itself, as a metric, is one of the most incontrovertibly important metrics. Everyone is talking about how to measure the impact of investing – double bottomline and triple bottomline, et cetera. To me, if we cannot grow food without leaving the soil as fertile or more fertile than we found it, we are obviously on a dead end as an economy and as a culture and as a civilization.
That’s a very abstract thing, to say it that way. But you know that when we are losing soil at the rate of half a percent or one percent a year, we are losing arable land around the planet to soil erosion. There are some very, very clear metrics in terms of a crisis of the soil that are already starting to unfold. So, yes, when we say let’s bring money back down to Earth, we actually mean Earth literally, as the planet but also as the place where your food is grown in your community.
When you talk with investors, what is the biggest obstacle to getting people to go from the big and fast paradigm to slow and steady? What are the objections you run into?
Well, if I stand up in a room and say, “I have an entire new economic philosophy that represents a revolutionary leap forward from Adam Smith, Milton Friedman, Alan Greenspan, Bill Gates,” no one will listen to me or the next thing that comes out of my mouth. There’s a couple of different ways to get at this, but I think the short way is to say: I don’t view us as trying to convince anyone of anything or sell any kind of economic theory. I have learned, from these last three years of traveling around the country talking about Slow Money, that there a few million people (that number is soft, it is my guestimate, but I am pretty confident in it) out there who believe, feel or know that things are deeply broken. And that the benefits of economic growth and consumerism are being outweighed by these long-term externalities. We are starting to see, courtesy of climate change and related systemic problems, that the long-term is not even that long-term anymore. To say it simply: Sometime in this century we are likely to face very bad systemic breakdowns of various kinds that could happen on a planetary level, they could happen on a political level, a social level.
So if you really believe that, then you go to the next step, which is to say: Well, what do I do with the wealth that has been created from these broken systems that I have benefited from? Don’t I have an obligation to start to do something different with it? I am telling you: There are a few million people who feel that way. It’s just been hard to figure out what to do. The system is still screaming in the other direction, the system has a lot of embedded momentum.
So it’s not a matter of convincing people about a new system. It’s just a matter of saying, “If you believe this, and if the way we’re talking about this resonates with you, come join the conversation.” And what we’ve found is a lot of people joining the conversation very readily. And then, I don’t want to minimize it, the actual writing of checks, that is a tricky thing. It doesn’t happen overnight. But I am happy to say that after our first 18 months of investing, over $11 million has changed hands. Many, many scores of small transactions in more than a dozen communities across the United States. This to me is the tip of people showing that they are ready to do something different.
That’s a long answer to your question. But I think it’s important. Because we are not trying to sell a whole new major economic theory. But we are articulating a different value system.
One of those values is, Invest Close to Home. Why is that important?
Well, that’s actually one of the other things that you come to once you get through the speed issue and the abstractness issue: Another really, really important aspect is place. Sense of place. Connection to place. Why? I’ll answer it with the example of a CSA, you know, Community Supported Agriculture. I sometimes refer to Slow Money as the CSA of investing. What we’ve lost in our pursuit of abstract economic growth and abstract wealth creation and abstract metrics like standard of living is connection to each other and to our communities.
If you look back at the birth of modern environmentalism – which I’m too poor of an historian to say that was exactly – but I would posit that in the late sixties and the early seventies, when the picture came out of Earth over the moon, and the idea suggested itself that there was no “away,” we are all here on this planet. Well, if the modern environmental movement got people to think that there was no such place as “away,” the modern investor thinks there’s no such place as “here.” You’re taught to invest in asset classes and securities and risk-return parameters – place is invisible, like the invisible hand of the market. It has nothing to do with the place that you live; it has to do with arithmetic and asset classes. So we shouldn’t be surprised that the places we live are being degraded by that economy, because all of our wealth is moving away from the places we live toward that abstract economy.
Now, in reality, because of globalization, where money is going for the highest return, money tends to get sucked toward the places where labor is cheapest. You know all the rest of that – I don’t have to do the litany of the underbelly of globalization. So our money is getting sucked out from where we live to abstract categories and distant places. That’s why we’re reconnecting to our places. If we want to rebuild economies, if we want to rebuild soil, we have to be connected to it.
The local part of this is extremely important. Once you slow money down, part of the benefit is that it’s able to come back into your household and back into your community.
I’m sure you love all your children equally, but what is one of your favorite success stories from the $11 million that’s been invested so far?
Oh, Lord, that is really hard. Maybe I’ll just talk about range of things that are happening. It would be hard to pick one, it really would. I would encourage people to go and poke around the websites of our emerging chapters, like Slow Money-North Carolina. In North Carolina, our chapter leader there, Carol Peppe-Hewitt – who is just a wonderful, energetic, extremely talented leader and organizer – has been facilitating the flow of money from a small group of investors to small food enterprises a few thousand dollars at a time. Almost down at the continuum of micro-loans, so it’s like an organic baker who needs a new piece of equipment, and it’s really just a few people providing a few thousand dollars to a small organic food entrepreneur.
Then we have Slow Money-Maine, which is doing some of that as well, which has an investment club called “No Small Potatoes,” which is 20 people each contributing $5,000 into this investment club to make loans available to small farmers and small organic producers. But the larger chapter in Maine has hundreds of people coming to meetings, and they have facilitated the flow of a few million dollars over the last year to scores of things. Including things like a distribution business where a new company has started up to do minimal processing of produce from farmers to commercial outlets. An organic grain mill has been started up to support the re-emergence of the wheat industry in Maine. Maine used to grow a lot of wheat 150 years ago. Now it’s starting to come back in a small way, and the organic grain mill has been supported by some of our people in Maine.
And then if I just leap to the other end of the continuum, one of our founding members lives outside of Portland, Oregon and he’s investing a few million of his own dollars – this is a so-called angel investor – to develop a 60-acre farm 15 miles from downtown Portland as an incubator for new organic farmers. It’s called Community by Design. He’s using permaculture principles to create the infrastructure that will new organic farmers to learn their craft and to go into business for themselves.
That’s a pretty broad range, right. What I’ve just described is everything from a few thousand dollars, to people collaborating with $5,000 with a few dozen people in a club, to investing in distribution businesses, all the way up to this angel investor’s incubator idea. There’s organic restaurants that source locally, there’s home delivery – Greenling in Austin, Texas that delivers organic produce directly from individual farms to individual consumers.
Not to stretch the metaphor, but it’s a truly diverse ecosystem.
Absolutely. What we’re doing is really interesting because it’s focused on one sector – the food system and small food enterprises. That could be called a narrow focus. But if you look at the kinds of investments, the kinds of enterprises – whether they be very tiny loans, equity investments, we’re doing grants even – it’s providing capital at a whole range of scales and ways that are just responsive to the needs of the local level, for people in those locales. And then the people themselves range all the way from very sophisticated wealthy people, all the way to just regular folks with a few thousand bucks who want to do something good in their community. We are the process of designing something called The Soil Trust that will use a Kiva-like platform, a way that lots of people can do very small donations – $25, $50 – and we will aggregate them and then we will put that money to work alongside the Slow Money investors around the country, and the return on those investments will stay in the trust. The Soil Trust – it’s a non-profit – and the idea would be to make it easy for lots of small players to jump into this even if they don’t have the time, energy, or wherewithal to put a few thousand dollars into small food enterprises.