June 30, 2011

Commons-Based Community Investment Strategies

Designing a framework for investing in local food systems

At On the Commons, we’re currently working to design innovative community investment strategies that would both provide investors at all levels a connection to the land, and inspire a new way of thinking about security. Read on to learn about the commons-based framework we’re developing to help guide our thinking.

There is an exciting trend underway: Investors are supporting social and ecological initiatives through investments with lower annual returns now more than ever. They’re also increasingly willing to explore innovative approaches for financing the local food movement. Yet most of these new investment strategies are available only to large, accredited investors. At On the Commons, we believe that many more individuals want the same ability to invest in their local food system as they invest in their futures.

And that’s exactly where we come in. On the Commons is among a growing number of organizations and individuals who believe that by repurposing funds currently locked up in retirement accounts, stocks, and bonds for commons-based investment strategies, we will not only develop a healthy relationship to the food we consume and the land we live on, but also improve the vitality of our local food systems.

With that in mind, we’re currently working to design community investment strategies that could help investors at all levels develop a connection to their local food systems, while inspiring a new way of thinking about security at the same time. Why? There are a number of alternative financing options out there, from local food funds to self-directed IRAs, and from online crowd funding platforms (like kickstarter) to land rent vouchers—but most are very confusing. And some just haven’t been fully developed, including a compelling community investment strategy.

So what might this kind of strategy look like? As you may know, a commons-based approach uses the value of social equity, the practice of environmental protection, and the process of participatory governance to manage shared resources like land and food. Under this framework, On the Commons plans to research, develop, and pilot promising community investment strategies with the help of a highly skilled team of individuals and organizations. Here are a few models we plan to explore:

Local investment clubs: By setting up local investment clubs, we hope to make capital available to local entrepreneurs who might otherwise be excluded from funding opportunities. In this model, individual investors would each contribute between $1 and $5,000 to the group investment.

The Starbucks model: Through a new initiative called Create Jobs for USA, Starbucks is pooling $5 donations from customers and employees and partnering with CDFIs to make funds available to community businesses in underserved communities. We’ve been inspired by this initiative and plan to explore similar models with food co-ops.

Revolving loan fund: Our goal is to make it easier for farmers and small business owners with modest collateral to secure loans through a revolving loan fund. We’re currently exploring partnerships with independent philanthropic organizations such as the Minnesota Initiative Foundations and the Northwest Area Foundation, as well as other accredited investors to kick start this funding model.

Financing Farm to Fork Conference: We plan to organize and host a Financing Farm to Fork Conference in Minnesota, modeled after FamilyFarmed’s highly successful annual conference in Chicago.

Throughout our research and piloting, we will listen to the prospective needs of new and established farmers, market gardeners, small businesses, individuals, and communities in an attempt to align their investment dollars with the values they abide by.

For an example of this collaboration in action, don’t miss our feature on the 2011 Farmland Commons Gathering, a national gathering of farmers, investors, and sustainable agriculture and land trust leaders. And if you’re curious about the work of other groups focusing on alternative investment strategies, we recommend that you read The Food Commons, which describes a possible new financial framework for local food systems, and this report from Slow Money, which provides the executive summaries from studies of three regional food economies. These two document provided On the Commons with vision and were among the many influences that inspired us to take action.