Between Land and Money: An Economic Consideration, Part I

February 14, 2013

This is the first post in a series by John Bloom on money (global) and land-based (local) economic systems. While we are largely accustomed to the former, this historical analysis makes the argument for a new kind of economy, one which raises the profile of land-based systems to benefit and balance the global economy as we know it.

I recently visited the newly created Paterson Great Falls National Historic Park on the Passaic River in northern New Jersey. There stands a sign inscribed with the following: “Alexander Hamilton envisioned the great potential power of these scenic falls for industrial development.” Of course, this is intended as an encomium to the first Secretary of the Treasury of United States, and to the economic vision that he enacted on behalf of the hard-won and newly formed country. The Falls are magnificent, powerful expressions of natural forces. One can feel in the current an energetic transformation of the water as it falls seventy-seven feet, turns frothy white, and sends an uprush of mist and air.

A panorama of Paterson Great Falls. Photo courtesy, John Bloom

The sound the Falls generate is a kind of white noise to the heavy highway traffic flowing by Paterson. Looking up from the effluence to its surroundings brought with it a chilling reminder of fallen industry in a town that the poetry of William Carlos Williams celebrated and economic history left behind.

Hamilton was an economic visionary. He saw nature as an underutilized economic resource and perceived the driving needs and opportunities of young untapped markets. Political revolution and the desire for independence constituted a seedbed for America’s version of the Industrial Revolution. This drive headed the US into the interdependent web of the global marketplace. For Hamilton, fixing the major structural debt problem in post-revolutionary America’s finances by stimulating industrial manufacturing was both motivator and strategy. Paterson, under Hamilton’s guidance, became the first industrial park. This venture was accomplished by the Society for Establishing Useful Manufactures [S.U.M.], a private corporation founded by Hamilton in 1791 with other investors. The success of the venture was supported by a New Jersey governmental decree of local and county tax exemption in perpetuity along with the rights to hold property, re-engineer the natural waterways, and raise additional capital. Not a bad deal—it became the working model for government-driven economic development to this day—except that we are running out of natural resources to exploit. The history of S.U.M. is a bit checkered and instructive. Having supported the engineering and construction of the industrial infrastructure in harnessing the power of the river, they faltered in their actual manufacturing business and five years later became instead property manager and executor of water rights for all the ensuing industrial development. Their work amounted to collecting rents.

While Hamilton operated in the name of public service, and he did much to right the economy, private enterprise was the game. The history of Paterson’s Great Falls was about new industries including textiles (especially silk), handguns, rope, continuous sheet paper, submarines, locomotives and, later, airplane engines. The industrial park along with its surrounding services, shops, and residential quarters became a place of industrial innovation and manufacture, expanding jobs suited to the skills of the influx of new workers from Europe, and was an easy access upriver economic partner to the vibrant marketplace of New York City. Well after Hamilton’s time, this growth also harbored the cross-streams of cultural, economic, and political worldviews that evolved in the later stages of the Industrial Revolution. By then, the human and social consequences of capitalism were in evidence. In 1913 in Paterson, with much wealth created but in private hands, jobs created for many but at the sacrifice of worker well-being, there was a protracted silk factory workers’ strike—it represented the voice of labor striving to find its place in the growing economy. It was an inflection point marking a downturn in Paterson’s economic arc, and a reflection of how disconnected capital could become from public service in the name of profit seeking.

The sub-story to this economic development was the untaxed right granted in perpetuity to industry to use the Great Falls as an energy resource with little regard for the resource itself. With the application of capital and ingenuity, energy was extracted from the water and transformed into power, power into manufacture, manufacture into markets, markets into capital, capital into wealth, and wealth into power. This is a story of economic manifestation in which God-given abundant natural resources are seized and under the control of capital, power, and polity. This disregard for the inherent gift of nature to all and the arrogation of private and privileged rights to determine its use is a one-sided self-interested, and shortsighted economic vision. The widespread implementation of this same vision has brought us to the brink of ecological miscarriage. While the natural gravitational flow of the river is used to generate the currency we call capital or money, nothing of that value is returned to nature itself.

In the story of how natural resources are used for profit, between land [representing all natural resources] and money, is an economic paradigm in need of reassessment and intervention. They are not the same. Their sources are different, their character is different, and to quantify the capacity of the land to support life, even to call it economic, is to sell its sustaining value short. In Paterson, what all that industry returned to the water by way of manufacturing and toxic waste was far from restorative, an insult to the living water and ecosystem. Hamilton’s fundamental economic assumption was an unlimited supply of raw materials and labor, inexpensive transportation and ever expanding markets. It was essentially a materialistic view, one in which man’s role was to dominate nature. His vision lacked any sense of or need for regeneration, and imperiously ignored any wisdom to be found with the processes of nature itself. There was, even until the mid-twentieth century, no need or incentive to consider used nature or waste as an economic resource in need of ingenuity and reinvestment. Paterson’s economy held through World War II but began to fade thereafter as did much of the textile industry and manufacturing in the northeast United States. The money economy and its attendant wealth accumulation sought ever-cheaper labor and production costs, and, tragically, cared little about the waste of people and place it would leave behind.

The polluted de-natured Passaic flows on as a man-made emblematic shadow of one end of capitalism. When capital or money is extracted from nature without regard for nature’s regeneration, without respect for its living system, nature is left to die. Capital moves freely about the world, across space and time; land and natural resources are rooted in place and geologic time. In a materialistic economy, time is money, and money used in this way sadly has no patience for the evolutionary pace of nature.

John Bloom is Senior Director, Organizational Culture at RSF Social Finance.


Impact Investing: Lessons from the Field

February 4, 2013

This is the second post in a series by Morgan Simon on the trends, challenges and opportunities of impact investment, focusing on an exploration of the mechanisms which allow affected communities to lead and shape investments.

In my first post of this series I explored an idea called Transformative Finance; which sets out basic principles for maximizing the social impact of an investment.  In short, such investments:

  • are primarily designed, managed and owned by those affected by these projects;
  • build local assets that support long-term sustainable development on the community’s own terms;
  • are designed to add, rather than extract value from communities; and
  • balance risk and return between investors, entrepreneurs and communities.

I received a number of comments from investors and social entrepreneurs excited by the concept, and curious if they “qualified” as transformative in their work.  In response, as a way to make the point more explicit, I would like to share examples of a social investment gone wrong, and one gone right, in the same community.

With this case in mind, I invite investors and entrepreneurs to take the “transformative challenge”. Ask yourselves: is the local community included in the design, governance and ownership of the enterprise? If not, what has been lost? Looking at the financial flows of the enterprise, how much is staying in the community vs. being exported out of the region or country?

The point of this framing is not to say that all projects must be alike; innovation is one of the sacred hallmarks of entrepreneurship that we want to embrace and support. It is to say: let us be intentional about our impact, and set some basic ground rules for what we want to promote as an industry. As Andy Lower, executive director of the Eleos Foundation and Toniic board member often says, “Making money off of ‘poor’ people is traditional investing – and investors are welcome to do that if they want. Investing where you receive increased financial returns in correlation with increased impact – now THAT’s impact investing.”

So without any further ado—here is the story of several indigenous communities in the southern state of Oaxaca, Mexico and their experience with two very different impact investment projects.

Impact investing gone wrong

The Isthmus of Tehuantepec is one of the world’s greatest areas for wind energy, a fact not lost on energy companies that have invested over $550M in Latin America’s largest wind project. The project will offset several hundred thousand pounds of carbon, while offering attractive returns to investors and jobs for community members. What’s not to like?

As the Mexican press and numerous community organizations have reported, plenty.

“The creation of the wind corridor in the Isthmus of Tehuantepec, developed mainly by Spanish firms, has almost become the new conquest because the indigenous Zapoteco and Ikoot communities have been basically evicted from 12 thousand hectares through unfair and disadvantageous contracts, in order to generate electric energy with their wind and on their land, in the benefit of private initiative.”[1]

Transnationals out of the country! Completely against the wind corridor in the Isthmus”

Not only has land been taken from communities (for often as little as $50/month in “rent”), but it has been done in an aggressive and violent manner including unlawful detention and physical harm of local protesters speaking out against the project. On November 5th, the Indigenous Peoples’ Assembly of the Isthmus of Tehuantepec noted the following recent actions:

“They fired bullets and discharged pepper spray at women, youth and old people, beating several of those present, including pregnant women. The police detained 9 people, among these 2 women, without giving any information about the charges or where the prisoners would be taken…

No Windpower Project on the Tehuantepec Isthmus

Immediate Liberation of the Detained

Stop the Intimidation, Hostility and Violence Generated by the Wind Power Project[2]

How did this happen? We are used to seeing this sort of thing happen in environmentally exploitative situations, but not from the clean energy community.

In short, it happened because a foreign company developed a project without thinking through its community engagement strategy or making any attempt to share financial returns fairly.  In this instance the concept of “social impact” is undermined and distorted. If is fair to assume that investors in this type of circumstance were told that  they were going to be a major force in spreading renewable energy in Latin America—a seemingly great impact story. This demonstrates the challenges associated with defining impact investing, as addressed in my last post: impact cannot simply be defined by investors and entrepreneurs, beneficiaries must be a part of the process.

Impact investing done right

In reaction to the trend of destructive development, community members on the Isthmus, declared that they were not against wind energy, but were against corporate control of their lands. They began to consider ways in which they could implement wind energy on their lands on their own terms. Working with Ashoka fellow Sergio Oceransky of Grupo Yansa, they have come up with a model for community-owned wind that will deliver strong returns to investors while equally benefiting the local community. The project plan explained below was approved in the pueblo’s general assembly, its forum for group decisions-making.

Grupo Yansa’s pilot project will take place in the indigenous Zapotec pueblo of Ixtepec, a large community with over 30,000 inhabitants, endowed with a very rich wind resource. The community maintains common ownership and management over their land and resources, dating back for centuries and codified into law after the Mexican revolution of 1917. The communal property status means that the community cannot use its land as collateral. It is therefore very difficult for them to obtain the magnitude of financing required to develop a wind farm.

However, the largest (and only) Mexican utility offers 20 year contracts to energy producers, locking in production at a fixed price. This means that as long as the community can secure the contract (and of course, execute), it will have guaranteed income for the energy it produces, significantly reducing risk to investors. The investment structure works similar to the practice of factoring—while accounts receivable are not directly purchased, they essentially serve as a guarantee on the investment. A debt structure is being offered to ensure community ownership over the project.

The profit that remains each year after debt servicing will be divided on a 50% basis between the Grupo Yansa and the community. The 50% of profits going to the community will be administered by a community trust devoted to strengthening quality of life, economic opportunities and environmental sustainability. One element of that, for instance, has been creating pension funds for elders—a way to prevent young people from having to migrate, and a benefit that can be equally shared by community members as all will eventually be eligible.

The 50% of profits going to Yansa will be used to finance further projects under the same scheme in other communities. Renewable energy projects will, therefore, finance a broad framework of integral and sustainable community development that is partly based on solidarity and sharing between different communities. Yansa’s financial participation in future projects will be the part of the investment most exposed to risk. This will ideally lower the risk profile of future investments and give Yansa access to a wider scope of institutional investors interested in safe returns and high social and environmental impact.

Closing the chasm

Globally, thousands of communities are deeply concerned about “land grabs” in the name of clean energy (see for numerous examples, from Brazil to Japan). Regardless of the industry, basic questions must be considered: what is our responsibility as impact investors to make sure we are accountable to the communities in which we work? How do we, like Grupo Yansa, find ways to make communities front and center in the design, governance, and ownership of the work?

I do not have a single, simple answer to these questions—the same way that the impact investment community is still struggling to define impact assessment, market rate returns, and alternative deal structures. Let us just make sure that community accountability shares the pedestal as a key element of impact investment. These issues need to be debated, discussed and executed as the impact investing industry goes through its growing pains. We need to continue asking the hard questions and continue building effective frameworks and structures that will support the development of truly positive impact investments.

Morgan Simon is the co-founder and CEO of Toniic, a global network of early-stage social investors. Toniic members share deal flow, due diligence and monitoring on global investments in this action-oriented community looking to move $100 million into global social enterprise. She is also the co-founder of Innovacion Investments, the first community development venture capital fund in Texas, and was the Founding Executive Director of the Responsible Endowments Coalition, leveraging the $400B managed by US colleges and universities. In all her work, she emphasizes community empowerment, leadership and ownership.

RSF Social Finance is a proud sponsor and member of Toniic.

Note: The opinions expressed in this article are the authors alone and do not claim to represent the opinions of Toniic at large or any individual Toniic member.


[1] “The dark side of wind energy in Mexico”


Rose Rock School, Seed Fund Grantee

January 23, 2013

In the photo above, a student of Rose Rock School waters the plants that surround her school in the Norman, Oklahoma sunshine. Her school believes that a child’s development is enhanced by taking part in daily tasks and caring for his or her learning space.

The photo captures the spirit of Rose Rock, a school serving 2-6 year olds that strives to offer innovative education in a nurturing environment. A quick glance at the wonderful photos found on Norman resident Sarah Warmker’s photography page provides a glimpse into the caring, safe and creative setting founder Shanah Admadi and her team has created for their young learning community.

“Our long-term goal is to help lead children toward conscious adulthood, in which they respect diversity, interact harmoniously with all people, nurture and protect the natural world, and give joyfully to the communities in which they live.” – Rose Rock School website

Rose Rock School is a Life Ways North America Representative Site. LifeWays Child Care proposes that childcare programs can closely resemble the warm, relaxed atmosphere of a home, and that children can benefit from forming strong bonds with consistent caregivers. An emphasis on creative play rather than structured lessons is a hallmark of the LifeWays school of thought. Every day at Rose Rock the children care for the garden, play outside, and participate in the preparation and clean-up of home cooked organic meals enjoyed family style around a small table or outside on a picnic blanket.

In May 2012, The Rose Rock School Foundation received a grant from the RSF Seed Fund to establish a biodynamic garden and apiary on the school’s new site, a historic home in central Norman. Shanah provided an update on the progress they had made on this project:

“Since Rose Rock School received the grant last May, we have utilized the money to help in us tending our new 4-acre plot of land (in the center of town) with biodynamic field sprays.We have had many Rose Rock community work days, spent trimming trees, removing trash and brush, and envisioning our future at this site. Until the rezoning and construction is finished, the bees we purchased will continue to live at an off-site location outside of town.  We chose to keep them at a quieter location, while they organized themselves and recovered from their journey through the mail.  Since their arrival, they have established a healthy hive, foraged on local wildflowers, and endured their first Oklahoma summer.  We look forward to bringing them to their new home when it is ready.”

Shanah and team plan to build fencing to surround the apiary, for the protection of the children and the bees, while planting a variety of plants on the school grounds to serve as a nectar source. The school will benefit from the produce grown and honey harvested while also facilitating critical learning about the importance and value of sustainable agriculture. Remaining honey will be sold locally, to provide a revenue stream to help support the school.

For more information about the RSF Seed Fund, please visit our website.  To make a donation, please visit our donations page.

Ellie Lanphier is Program Assisstant, Philanthropic Services at RSF Social Finance.

Community Seafood

December 13, 2012

by Ellie Lanphier

Modern consumers want and expect sustainable, local seafood. Restaurants need to be able to tell their customers where their food is coming from and how it got to their plate. Fishermen hope for better prices and more realistic expectations in a volatile, unpredictable industry. Recognizing that all of these parties really desired the same dream, Stephanie Mutz, Sarah Rathbone and Kim Selkoe launched the first season of Community Seafood, a community supported fishery (CSF) in Santa Barbara, California which connects residents directly to the local catch.

This past April, RSF made a grant from the Seed Fund to Commercial Fisherman of Santa Barbara, to launch season one of their CSF. Much like a CSA, a CSF share eliminates the intermediaries between the producer and the consumer, ensuring that the subscriber pays a fair price while their money goes directly to the fishermen that caught their dinner.

Mutz, commercial fisherman and co-founder, caught up with us for an update on their first season and beyond:

“We are now in our second season of our CSF.  Our customers are having a lot of fun knowing where and how their seafood is caught, who caught it and how to prepare it.  We are taking the confusion out of seafood by doing the homework for our customers, and they know they are doing their share in preserving the local marine resource while supporting local fishermen.  We really are accomplishing our goal of building community when our customers start talking to each other when they pick up their seafood, and before you know it, they are inviting each other over for dinner!”

Steve Escobar with a trap of spot prawns

Their subscribers benefit from the plentiful waters of the Santa Barbara Channel, and share in the fluctuations inherent to the trade. They buy a share and receive the “catch of the week,” of whatever is fresh and in season. Increased variety for customers equates to healthier ecosystems, allowing time for species recoup.

California-caught seafood is some of the most environmentally friendly available, due to stringent fishing regulations such as setting aside protected areas and seasonal closures. However, currently 90-95% of local seafood landed in Santa Barbara Harbor is exported overseas, leaving local fishermen at the mercy of volatile foreign markets and bound to the unsustainable practice of catching a lot of one kind of fish to sell at low wholesale prices. The frustration is compounded by local consumers who, at the same time, are demanding sustainable healthy seafood right off the boat.

This small group of fisherman and scientists has been able to see the connection between the wants and needs of the community and those of the producers. While they still have adjustments and improvements to address as they make headway into the second season, Santa Barbara fishermen say Community Seafood provides a connection to their community that they wouldn’t have otherwise, and valuable feedback about their work. Some say it has granted a greater sense of purpose in their day-to-day activities. While it’s yet a small portion of their overall business, all parties involved hope to see it grow.

This grant was made possible by the RSF Seed Fund. Every spring, RSF provides small gifts (between $500 and $5,000) to seed new initiatives that offer innovative solutions in the field of social finance, or address issues in one of our three focus areas (Food & Agriculture, Education & the Arts, and Ecological Stewardship). Individual gifts to the RSF Seed Fund can help germinate the next generation of restorative projects. Click here to donate to the RSF Seed Fund today.

Ellie Lanphier is Program Assistant, Philanthropic Services at RSF Social Finance.

Year-End Giving

December 6, 2012

by Catherine Covington

‘Tis the season for charitable giving!  With only a few weeks left in 2012, it is time to start thinking about what charitable donations you would like to make this year if you have not done so already.  Charitable donations are an excellent way to reduce your tax burden for the year, and what better way to end the year than by making greater good possible.   If you intend to make a donation to RSF, start a donor advised fund, or make an addition to an existing fund, plan on getting those gifts in to RSF by no later than Friday, December 28th as our offices will be closed on Monday, December 31st.

Want to make a donation but having trouble deciding to which organization?  Let us help you decide!  We are always looking for additional support for the RSF Seed Fund, which makes small grants annually to support new initiatives that fall within RSF’s mission statement and focus areas.  If interested, please visit our donations page where you can easily make a credit card donation or contact me directly with any questions!

In 2012 Bikes Not Bombs received a Seed Fund grant to support its youth created and run mobile bike shop and mechanics training center.

Another worthwhile organization to consider is the Organic Farming Research Foundation (OFRF) located in Santa Cruz, CA.   OFRF is not only an RSF grantee but is also a Social Investment Fund investor!  OFRF cultivates organic research, education, and federal policy that brings more farmers and acreage into organic production.  Since its founding in 1990, OFRF has been a leading champion for American organic family farmers and envisions that one day, organic farming will be the leading form of agriculture in America.

One of OFRF’s four areas of focus is Education.  OFRF believes that improving organic education for all ages is critical if America is to transition to an organic farming majority.   An area of particular emphasis for OFRF is America’s universities.  The organic food industry has experienced more than quadruple growth in the last decade, and OFRF constantly assesses and reports how agricultural universities are helping meet organic consumer demand by training organic farmers, conducting useful research, and organizing effective outreach.

OFRF is currently Raising an Organic Barn to provide stronger structure to increase organic acreage and farmers in our country. Learn more here:

Catherine Covington is Senior Program Associate, Philanthropic Services at RSF Social Finance.

Impact Investing for All

December 4, 2012

Earlier this year, Mark Finser, RSF Board Chair, had a lively conversation with Chris Mann, Guayaki CEO, and Matt Reynolds, Indigenous Designs President. Matt and Chris were energized about the RSF pricing meeting in which they had just participated and were enthused by the community spirit. They started asking several questions including: How can RSF borrowers better acknowledge their relationship with RSF? In what ways can the borrowers cross-promote their brands and support one another? How can the borrowers leverage their communities to raise more awareness about RSF and the Social Investment Fund, which allows individuals to make a return on their investment while providing loan funds to phenomenal social enterprises?

Chris and Matt’s spirited energy is something we always see following the RSF quarterly pricing meetings and community receptions.

There’s no question that RSF’s pricing meetings are unique. The three stakeholder groups in the RSF Social Investment Fund—investors, borrowers and RSF staff—come together to discuss the interest rate for the upcoming calendar quarter. As far as we know, this process is unprecedented in the world of financial services. What bank is out there asking investors what rate they should receive or inquiring of borrowers what a fair loan rate would be? But, it’s not just the discussion of price that makes the pricing meetings so revolutionary. It’s what happens during the meetings while the participants are sharing their needs and motivations. It’s the stories they tell about what led them to become an RSF investor or, as a borrower, what the RSF loan has allowed their social enterprise to accomplish. It’s community building around financial transactions. Through our expanding and engaged community, amplified by the impact of our borrowers, we’re building the next economy—one that considers everyone’s needs and restores trust in financial relationships.

After several discussions and brainstorms following up on Mark, Chris, and Matt’s enthusiastic conversation, we launched a Facebook campaign: Impact Investing for All. Along with Guayaki and Indigenous Designs, we’ve been joined by additional RSF borrowers: gDiapers, Happy Family, Late July, Mary’s Gone Crackers, and Nutiva.

Impact Investing for All highlights the RSF Social Investment Fund (SIF), in which anyone can become an impact investor with a minimum of $1000. All of the money in SIF is loaned to path-breaking social enterprises. If you open an account, you know where your money is working while you receive a financial return! (And, you’ll be invited to participate in the quarterly pricing meetings.) For the duration of the campaign, the borrowers will be promoting each other and highlighting this incredible community of social enterprises.

These participating social enterprises are passionate, inspiring, dedicated, and making a world of difference. We are honored to have them as part of our borrower community and we are all lucky to have such committed, mission-driven businesses in the marketplace.

Wondering if you should participate in the Impact Investing for All campaign by opening an SIF account?

Are you a mom or dad in love with the Happy Family lines which offer delicious and nutritious food for your kids? Or, are you a gMum or gDad, committed to your baby’s comfort and a healthier environment by going with disposable gDiapers?

Perhaps you’re gluten free and can’t get enough of Mary’s Gone Crackers? Or are superfoods your thing and Nutiva products a dietary staple? Do you appreciate delicious organic snacks and reach for Late July when you need a treat?

Maybe you’re a Guayaki yerba mate aficionado (we have a few on staff!)?

Is fair trade fashion a passion and Indigenous Designs a trusted purveyor?

Or are there other borrowers in our community you know and love?

If you’re interested in participating in building the next economy and know that direct, transparent and personal transactions are necessary for a resilient financial system, become an investor at RSF. All of the participating borrowers have offered generous discounts, so we have gift packages for those who open a Social Investment Fund account before Dec 31, 2012. The gift includes a $50 Indigenous Designs gift card, a $25 Happy Family basket, and much more! The gifts are limited – get yours today!

To learn more about the participating borrowers, check out the campaign page: here

To open an account, contact Mark Herrera at or 415.561.6160.


From Fragile to Resilient: Libor to RSF Prime

November 28, 2012

by Don Shaffer

Let’s recognize the historic opportunity we have to change the current culture of money!

We know, for example, that big banks like Barclays pushed the adoption of Libor over another benchmark—a comparatively simple cost-of-funds index that many observers now say was better for borrowers and much less volatile. The switch was made for one reason: to increase short-term profits for the banks. The foundation of trust in Wall Street has been completely undermined as a result of this and other recent scandals.

Based on our core principles, RSF is taking small steps to create a fundamental transformation in the way the world works with money. A great example is RSF Prime. We developed RSF Prime to create community among the participants in our flagship loan fund, the RSF Social Investment Fund.

For many years, we based our investors’ return rate on the 13-week U.S. Treasury Bill. Each quarter we recalibrated the rate based on this well-publicized benchmark. In 2006, we shifted to Libor because it represented the most commonly accepted barometer for short-term interest rates worldwide.

But as the first wave of the financial crisis unfolded in 2008, we became increasingly uncomfortable with this approach. We realized that pricing to meet the needs of our stakeholders could most productively be determined by the community of stakeholders itself. So we began hosting face-to-face meetings at our offices in San Francisco with representatives of the three stakeholder groups of our RSF Social Investment Fund: investors, borrowers and RSF staff. In October 2009, we adopted a customized interest rate collaboratively recommended by these stakeholders each quarter. We dubbed this new base rate for borrowers “RSF Prime”.

We believe this is the first time that a lending institution has facilitated meetings between investors and borrowers to determine loan pricing. With RSF staff at the table facilitating the conversations, all three stakeholders are visible to each other and engage in a direct and transparent exchange to understand intentions, motivations, and needs. We feel that other financial institutions such as community banks and credit unions have similar stakeholder groups that could be engaged in this way.

The loan-pricing meeting is one step towards modeling a more resilient financial system. At its heart is building community, which RSF also holds in how it works with borrowers by bringing them together to share wisdom and resources, and in its innovative grantmaking through Shared Gifting. A web of trusting relationships and a spirit of collaboration are foundational to a resilient economy. We have observed that by bringing all the stakeholders together, there is more engagement, fulfillment, and accountability.

Just as an organic or biodynamic farm relies on far fewer external inputs than a conventional farm, we are eliminating our reliance on Wall Street rate-setting, going “off-the-grid” as much as possible, so that we can be more resilient based on the strength of our investor-borrower community.

We invite you to share other ideas with us—either suggestions for what we can do at RSF, or ways you think other institutions can change to make our financial system more transparent and trustworthy. You can ask your bank about how they set their interest rates, for example.

Ultimately, we have to “be the change”, as Gandhi said. In our view, energy spent modeling a new way of working with money will have much more positive, transformative, and long-term effects than trying to change the existing system from within through regulation.

Let us know what you think!

Don Shaffer is President & CEO at RSF Social Finance.

stone circles, Seed Fund Grantee

November 8, 2012

By Catherine Covington

What does it mean to live sustainably, particularly in regards to stewardship of land?  2012 RSF Seed Fund Grantee stone circles has made this question central to its work.  stone circles, located in the small town of Mebane, NC, has a mission to strengthen and sustain people committed to transformation and justice, and its mission comes alive through spiritual practice and principles, a sustainable relationship with the land, radical hospitality, and strategic collaboration.

Photo courtesy: stone circles

stone circles was founded in 1995 and has continually been  at the forefront of the national movement to transform social change work by creating strong and explicit links between individual and social transformation.  It does so by working at the local, statewide, and national level and provides trainings, workshops and retreats that offer transformative experiences that link commitment to sustainability and practice with frameworks for strategic action.

Since 2008, stone circles has been working to create a more equitable and just food system in central North Carolina. In 2011 the organization began researching ways to directly support local sustainable agriculture. One major discovery was the barriers that young adults of color face when trying to enter the farming profession.   In addition to training and mentoring, farmers of color oftentimes lack the access to the resources and the decision-making groups that are fueling the growing movement around local food sustainability.  The RSF Seed Fund grant is specifically intended to support a 10-day residential training program for young farmers of color at The Stone House, stone circles’ 70-acre rural retreat and training center.  The program will include practical farm skills training in organic agriculture practices, food systems education, and personal practices for self-renewal that focus on the experience of deeply resting and replenishing the body and spirit.

Photo courtesy: stone circles

In preparation for the upcoming training, stone circles has put on a number of food justice workshops.  According to evaluation summaries, beyond increasing their knowledge of food justice, participants also reported a deepened ability to relate across lines of difference. One of the highlights for many people was the opportunity to share personal stories of  race, ethnicity, and class backgrounds, as it connected them to each other and to the larger framework being presented.

To learn more about the RSF Seed Fund and how you can help support new and inspirational projects like this one, click here.

Catherine Covington is Senior Program Associate, Philanthropic Services at RSF Social Finance.

Impact Investing: the Benefits and Challenges of an Emerging Field

October 19, 2012

This is the first post in a series by Morgan Simon on the trends, challenges and opportunities of impact investment, focusing on an exploration of the mechanisms which allow affected communities to lead and shape investments.

The concept of impact investment that has the explicit purpose of supporting economic and community development is receiving a growing amount of attention from an increasingly diverse set of financial players. This emerging trend is one of the most exciting, and potentially problematic, trends I’ve seen over the last decade. As with any new field, impact investing raises consequential questions and issues with the answers and intended results remaining up for grabs. Let’s consider the following questions to start:

1. How is impact being defined, and by whom?

2. How are strategic opportunities being identified and defined, and by whom? How will impact capital be deployed, with what objectives, and toward what ends?

3. Under what conditions shall profits be made from impact investment? Who should govern the agreements about use and distribution of the profits?

I am concerned that in a drive for global scale in impact investment, we will lose the voices that should matter the most—the billions of people who will be affected by social enterprises funded by our investments. I am advocating for the establishment of effective mechanisms to empower “beneficiaries” to be actively involved in the planning, execution, governance, and ownership of enterprises, and in the flows of capital connected with them. This is a topic we recently covered in a panel at SoCap called “Creative Financing for Community Wealth,” the main points of which I’d love to share for you in this post.

Current problematic trends in impact investment

There are several dynamics at play in the current impact investment market:

Investors and entrepreneurs profit at the expense of communities.

The goal of impact investment for many is to have a social impact while being able to make the same kind of investment returns that conventional markets have provided. If that remains the case, and if the ownership of social enterprises remains limited to the privileged, then it is difficult to imagine that impact investments will ultimately benefit communities, or facilitate any sort of resource transfer from the global north to the global south (or in the US context, from the rich to poor). If ownership structures are not addressed, then by definition, these investments must then be extracting value, thus repeating the cycle of exploitation that we have seen under so many different names over the decades. This is particularly apparent in the context of projects that see poor communities singularly as consumers rather than as participants in all aspects of the economy. There is an implicit, yet often unacknowledged, tension in impact investment between how producers are paid, how steeply consumers pay for products, and how much entrepreneurs and investors can make or expect to make over time.

Impact is being defined by investors and entrepreneurs instead of beneficiaries.

Some of the large financial institutions jumping on the impact bandwagon have made public statements defining impact as simply any investment made in a developing country. The many communities who have suffered from natural resource extraction, displacement and poor labor conditions know this is not the case, but they are not being consulted in the process of defining goals for impact investment projects. Similarly, well-meaning entrepreneurs tend to define community involvement as product research, such as holding marketing-based focus groups, rather than creating infrastructure for long-term engagement and community leadership development. This is largely due to the fact that impact investment has evolved as a “top down” industry—with investors setting the criteria for impact and returns with the consequences filtered down from social entrepreneurs to communities. In this approach there is no room for letting community needs guide the field.

There is a major “capital gap” for community-run projects.

Although many investment projects are executed in the global south, they are generally run by the privileged—these entrepreneurs and their investors are the ones who will receive the $183-$667 billion in profit that J.P. Morgan projects. It is, at this point, exceptionally rare to impossible for communities, organizations or individuals from the global south to receive access to funds if they do not speak English and have advanced degrees. Communities are simply the resource base for projects; or, moreover, their involvement is generally limited to the consumption of specific products like solar lanterns.

Capacity-building is lacking.

Capacity building programs for social entrepreneurs to receive training and access to funding are plentiful, but similarly limited to a global elite. Further, there has been no effort to engage these programs in a broader conversation about the structuring of opportunities that would create access for people without a university education. Additionally, there is a need to explore methodologies that will respect and fit community leadership models already in place, rather than asking communities more accustomed to these collective structures to adopt Western business models. Finally, there is an urgent need for capacity-building programs working in developed countries to integrate a broader understanding of community organizing in their work in order to balance out the traditional business education social entrepreneurs tend to receive with a deep understanding of what community engagement looks like. The social entrepreneur indeed has a crucial role to play, but ideally would do more leading from behind than carrying the torch his or herself.

Signs of hope—innovative impact investment that ensures assets stay in communities.

At the same time that I see the potential greenwashing in the impact investment industry, I am deeply encouraged by the emerging group of entrepreneurs and investors that is finding ways of placing community needs first. Reflecting broader trends in the establishment of the solidarity economy globally, I see the emergence of what I call transformative finance, or what Marjorie Kelly refers to as stakeholder finance in her recent (and highly recommended) book, Owning our Future: The Emerging Ownership Revolution.

Transformative Finance provides resources to projects that:

  •  are primarily designed, managed and owned by those affected by these projects
  •  build local assets that support long-term sustainable development on the community’s own terms
  • are designed to add, rather than extract value from communities; and
  • balance risk and return between investors, entrepreneurs and communities.

Transformative finance projects are thoughtful about how to engage communities not just as producers or consumers, but as leaders and change agents. They create explicit ownership structures that reflect this appreciation and intention. In their structural makeup, they create mechanisms of direct accountability to the communities they serve. They also ensure that productive assets remain community-owned and that the use of those assets is determined by the community for continued community development. These enterprises are still often led by dynamic social entrepreneurs, but in these cases they see their role as community organizers rather than top-down leaders.

One such leader is Brendan Martin, who shared the stage with me at SoCap. He is the founder of The Working World, an organization based in Argentina, Nicaragua, and New York. The Working World provides innovative financing for worker-owned co-ops based on a co-determined business plan and revenue share that ensures value created stays primarily within the community. Over the past five years they have recycled $3M over 80 times into 600 investments, with a 98% repayment rate. Recently, The Working World raised capital from a number of investors (including a Toniic member) to finance a sustainable green windows cooperative in Chicago. More information can be found here:

I look forward to sharing with you a number of models on community-centered financing models from within and beyond the Toniic network through the next few posts, and further exploring some of the questions and challenges articulated above.

What are your views on these topics? How do you achieve community accountability in your investment activity? Feel free to post any comments here, or to reach me at

Morgan Simon is the co-founder and CEO of Toniic, a global network of early-stage social investors. Toniic members share deal flow, due diligence and monitoring on global investments in this action-oriented community looking to move $100 million into global social enterprise. She is also the co-founder of Innovacion Investments, the first community development venture capital fund in Texas, and was the Founding Executive Director of the Responsible Endowments Coalition, leveraging the $400B managed by US colleges and universities. In all her work, she emphasizes community empowerment, leadership and ownership.

RSF Social Finance is a proud sponsor and member of Toniic.

Note: The opinions expressed in this article are the authors alone and do not claim to represent the opinions of Toniic at large or any individual Toniic member.

Bikes Not Bombs: 2012 Seed Fund Grantee

October 14, 2012

by Ellie Lanphier

Bikes Not Bombs uses the bicycle as a powerful vehicle and tool for social change. Each year, Bikes Not Bombs (BNB) takes in 5-6,000 donated bicycles and gives them new life through one of their many youth programs, international development projects, and retail shop/vocational training center.

A 27 year old community organization in Jamaica Plain, MA, BNB received a RSF Seed Fund grant in spring of this year to support Chain Reaction, its youth-created and run mobile bicycle shop and mechanics training center. BNB sought funding to cover the cost of parts needed to repair and refurbish donated bicycles in order to provide transportation to low-income communities as well as keep those bicycles out of the solid waste stream. Chain Reaction fixes and re-sells bikes priced between $50 and $75 and offers free bike mechanics lessons. Realizing that in low income neighborhoods people had less accessibility to bike supplies and repair shops, a key component of Chain Reaction is the capability to travel where people need them most.

Stephane Alexandre, one of BNB’s Youth Employees explained her participation in the program: “giving back feels good because I am actively making a difference in one person’s life.  If I can just help one person see, I mean really understand, the possibilities that a simple bicycle can bring, then I would have done my job that day.”

Through Chain Reaction, BNB seeks to reinforce academic learning, build critical thinking skills, provide unemployment training, and cultivate leadership while solidifying a lifelong commitment to environmental and social justice.

For more information call Sarah at Bikes Not Bombs at 617-522-0222 x104, email or visit If you would like to find out more about the RSF Seed Fund, please visit
Ellie Lanphier is Program Assistant, Philanthropic Services at RSF Social Finance.

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