It’s Happening Right Now

By Don Shaffer

Mortimer Zuckerman, editor in chief of U.S. News & World Report, wrote an opinion piece in The Wall Street Journal three weeks ago (July 14, 2009) entitled “The Economy Is Even Worse Than You Think.”

Mr. Zuckerman outlines 10 reasons why we are “in even more trouble than the 9.5% unemployment rate indicates.”  He states that job losses are now equal to the net job gains over the previous nine years, making this the only recession since the Great Depression to wipe out all job growth from the previous expansion.

We can read accounts like this and crawl into a shell; we can hope for the best.  Or we can apply as much ingenuity as we possibly can to address the root causes of our present crisis.

I’d like to propose a “What if” exercise.

What if we create a groundswell around the country where each of us shifts 50% of our investments to within 50 miles of where we live?  This is a challenge introduced by Woody Tasch in his recent book, Inquiries into the Nature of Slow Money.  It’s a provocative idea.

What would be the effect on job creation?  What long-term financial returns would be generated?  How much risk would be involved?  If all the companies and organizations receiving investments used triple-bottom-line standards to measure their success, what would be the effect on community health and ecological well-being?  Is this just a romantic throwback to a previous era?  Would it crimp our global competitiveness?

Picture a regional economy like the San Francisco Bay Area.  What if we stitched together a set of financial vehicles designed to match investors from the Bay Area with small- and medium-sized, privately held, triple-bottom-line, community-based enterprises in the Bay Area?

What if you believed you could earn a consistent rate of return (e.g. 5%) on your portfolio investments, with relatively low volatility, while keeping a much more significant percentage of your money circulating in the regional economy?  What if you lived in the San Francisco Bay Area and you had access to all of the following options addressing the full range of investing, lending, giving, and day-to-day purchasing?

• Community banks and credit unions (for checking/savings accounts, CD’s, etc): New Resource Bank, OneCalifornia Bank, and Exchange Bank are a few examples based in the Bay Area
• Direct lending models (for making direct loans to small companies), such as a regional version of Kiva
• Community credit and loyalty cards (for supporting local merchants and nonprofits) like the following which have implemented in several regions:  GoLocal Rewards and Locals Care
• Angel networks (for regionally-based, triple-bottom-line equity investing) that might operate like regional versions of  Investors’ Circle or Golden Seeds
• Direct philanthropic models (for making gifts to local nonprofits) similar to DonorsChoose.org or Portland’s ChangeXchange
• Community development venture capital funds (for early-stage equity investing) like Pacific Community Ventures
• Regional stock exchanges (for investing in mature, community-based businesses), such as a regional version of the Social Stock Exchange being developed in the U.K.
• Regionally-focused holding companies (for helping mature, community-based businesses with leadership succession and liquidity) like Upstream 21
• Complementary currencies (for encouraging local purchasing) like Time Banks or the BerkShares system in Massachusetts.

Imagine this is possible, because it’s happening right now.  In sectors like sustainable agriculture, renewable energy, zero-waste manufacturing, independent retail, and green building, there are a growing number of excellent companies in which to invest.  With financial vehicles like those listed above, there are more and more viable ways to keep your money closer to home, supporting your neighbors while they support you.

Instead of having all your money tied up in a financial system that has become increasingly complex, opaque, and anonymous, based on short–term outcomes, you can now help create an alternative that is direct, transparent, and personal, based on long-term relationships.

Here at RSF, we are finding ourselves at the center of these developments.  Please contact me to learn more about what you can do to get involved.

Don Shaffer is President & CEO of RSF Social Finance.