RSF’s purpose is “to transform the way the world works with money,” but what exactly does that mean? In pondering this question, I recalled time spent outdoors exploring a particular creek. I realized there was a metaphor in the story of that creek for a transformed financial system.
Last summer, with my family, I visited Filigreen Farm, a diverse Demeter certified Biodynamic fruit farm in Mendocino County. One morning, my mother-in-law, Joellen, and I set out to tromp through the creek that bisects the farm. This creek, the Anderson Creek, is a major tributary feeding into the Navarro River and to the Pacific Ocean twenty miles away.
In the year that had passed since my last visit, the creek had changed. The water was deeper in some places, but there were also more sandbars. Standing up to our knees in cool, clear and slow moving water we marveled at dark pools of circling fry, audible frogs, and lush vegetation. We lingered in shallow water searching for captivating treasures.
By the time the sun was directly over our heads, we were ready to head back to the cool shade of the house, but with willows, shrubs, and grasses crowding the creek banks and islands, we could see no obvious path to the farm on the other side.
When we finally emerged, we ran into Stephanie Tebbutt, one of Filigreen’s managers. We thanked our host, and Joellen commented on what great fun she had in the creek. This creek, Joellen said, struck her as particularly beautiful; she had not seen a stream as clear as this one since she was a child on her family’s farm in Nebraska.
When Stephanie and her husband Chris, both landscape designers, first came to Anderson Valley in 1982, “the stream looked nothing like its present self: curving, clear, and about twenty feet further back from its former location,” Stephanie said. “It looked like others up and down the Anderson Valley: straight, denuded of vegetation. The landowner at that time had bulldozed the creek each autumn to straighten it, clearing any vegetation brave enough to rear its head along the way. What little survived was grazed down by the cattle.” The practice had eroded the farm land, sending topsoil down to the sea, creating a steep cut bank, and facilitating spring flooding.
Lush landscape and Filigreen Fram
Together the Tebbutts set out to stabilize the creek bank. Bringing the natural rhythm and energy back to the water would be the key to the riparian restoration. “Water is not meant to flow in a straight line,” Stephanie said. “There are unintentional consequences to forcing water in that way: flooding, bank erosion, and a wider, shallower summer creek bed with higher water temperatures unsuitable for nurturing new life.”
They began by planting willows and cottonwoods along the banks, and over a period of 18 years, experimented with an array of engineering techniques to stabilize what was considered one of the worst erosion problems in the county. Many of those early efforts failed, but eventually, Chris came up with a system to build jetties, or “nick points” to slow the creek in flood. The jetties were planted in fast-growing riparian trees and formed the basis for what would eventually become the flowform structure that enabled meander to return to the creek. Now the water would hit a berm, follow the curve, hit another berm, and follow the curve, depositing silt and topsoil from upstream at the back of the jetties, and scouring out deep pools in front, effectively changing the flow of the water back to that of a healthy creek.
In time, silt and soil built up along the banks and native weeds and woody plants moved in to capitalize on the new territory, thus providing habitat for the life we witnessed. Now this half-mile stretch of Anderson Creek is monitored by county and state agencies for its remarkable come-back.
As Stephanie explained this, I exclaimed “That’s what RSF is trying to do with money! We are trying to change the flow of capital so that it flows to the businesses and organizations that are creating a deep, positive social impact.”
With our current financial system, if we speak of the flow of water as the flow of capital, we could say the flow has been interrupted; it has been bulldozed and channeled straight. As a result, the flow is muddy and opaque and the wealth is removed from its origins and deposited far downstream. When bad news hits, businesses lacking deep roots in the community are wiped out in a flash flood. As aggradation, or the displacement of sediments caused by repeat floods, alters geography resulting in shallow and dispersed water flow, a financial crisis erodes capital from communities and displaces it to far off investors resulting in less capital for local initiatives.
A healthy financial system can be seen as a healthy stream with its meander restored by the actions of the social finance community. Through direct lending, investing, and giving, RSF can contribute to restoring the natural flow of capital to businesses and organizations that encourage a healthy economy, environment, and people.
With a transformed financial system, we will directly invest in businesses and organizations with deep social impacts that encourage and support their communities. There will be diversity among these businesses and they will add value to their community by investing in people and practices that are good for society and the planet. The flow of capital will be patient and will settle into areas suitable for sparking new opportunities that, in turn, contribute back to the greater flow. More people will have access to and benefit from this flow, increasing the diversity of businesses and organizations. When bad news hits, it will not be a tragedy because our businesses and organizations will have established deep, healthy, community-based roots.
Now I ask you to ponder: What does it mean to you to transform the way the world works with money? How would that world be different than it is today? What needs to happen to make that change? And what can you do to contribute to it?
Tammy Childers is Loan Servicing Manager at RSF Social Finance.
This is the second 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.
In my last post, I described the development of Paterson Great Falls into the first industrial park under the leadership of Alexander Hamilton.
Hamilton’s economic vision became essentially the American version of economic life. Consistent with the pattern of the wider Industrial Revolution beginning in England, his approach created the conditions that drew labor from the countryside to urban industry while diminishing the agrarian foundation that had sustained the American colonists. But, there was another imagination articulated and fought for by Thomas Jefferson as Hamilton was carrying the day. That vision was less sympathetic to the manufacturing and money economy than it was to the deep value of agriculture as the primary driver for American economic life. Jefferson’s view was grounded in an ever-expanding land base that could support regional economic subsistence and produce plant-based products such as tobacco and cotton for foreign markets, especially Europe. Jefferson, a farmer himself, reaped economic benefit from agriculture aided by slave labor, and also celebrated the pedagogical value of tillage for the development of character. He understood that a good farmer is also a land steward; soil fertility and economic productivity are entwined.
Jefferson saw the expansion of the American land base as essential for more farming and agricultural product growth, access to markets, and ever-wider distribution—thus the Louisiana Purchase and the implementation of the doctrine of manifest destiny. This “destiny” was used to justify the merciless destruction of the Native American peoples, and their way of life that was reverently open land based. When the US government granted significant land tracts to soldiers who had fought in the Revolutionary war in lieu of pay (the government had no money), that land had to be parceled into ownership, measured, fenced, and priced—anathema to the ethos of land as shared commons. Those fences enclosed land and brought an end to the dynamic, reciprocal flow between man and nature that had long marked the economic life of Native America.
Both Hamilton and Jefferson knew the need for natural resources of all kinds would increase continually to support economic and national development. From their place in time, both could see no limits to the kind of economic growth they were imagining. And both contributed to what would become the industrialization of everything, including agriculture. The value of a human being would be measured by his or her capacity to produce economically; land itself became a store of value as well as a source of production. Land and labor were commoditized in a way that was material to all economic matters. In essence, with the emergence of property rights granted to individuals and corporations by the government, the mutuality of “ownership” in common gave way to the self-interest described so ably by Adam Smith in The Wealth of Nations, first published 1776, the same year as the Declaration of Independence was signed.
Nothing in Adam Smith’s text would have predicted the level of greed and manipulation that have pervaded our current financial system. Smith assumed a standard of morality in the economic sphere that was guided by the dominant religious principles of his time. But much has changed in the human psyche since then. Wealth has become a game of never enough, of winners and losers. Greed is not a modern invention, it is one of the seven deadly sins; neither is manipulation of the market for private benefit. But the scale and affects of recent events indicate an extreme disconnect between money and land to the extent that land itself accrued economic value as a store-place for money. Land is a treasury unto itself measured in ever-rising prices, which, in turn, present insurmountable barriers to access, especially for farmers.
John Bloom is Senior Director, Organizational Culture at RSF Social Finance.
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.
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 www.viacampesina.org 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” http://www.renewableenergymexico.com/?p=205
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.
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.
“What we are founding here is a seed—the seed of a living organism. The organism is essentially threefold—pedagogical, artistic, and agricultural—as reflections of thought, feeling and will. Each needs the others if the whole is to flourish. All are interrelated… for young and old alike, this work together will create a place in which to become, in the true sense, a full human being.”
~Karl Ege, Hawthorne Valley Founder
On July 30, 2012, Hawthorne Valley Association marked the 40th anniversary of working the soil of agri-culture on its land in the Hudson Valley of New York. In all that time it has been Hawthorne Valley’s mission to inspire by example social and cultural renewal through the integration of education, agriculture, and the arts. The significance of place and the ability to connect intimately to and through place provide compelling evidence as to why our localized agriculture can be understood as a foundational activity upon which all humanity depends—not just for producing food.
Hawthorne Valley does produce its share of food. Situated on 400 acres and leasing another 400 from neighboring landowners, Hawthorne Valley Farm is a diversified biodynamic farm with dairy herd, on-site dairy processing and creamery, 14-acres of vegetables, four CSA groups, five Greenmarkets, an organic bakery, a vegetable processing kitchen, and the Farm Store, which is a full-line organic grocery store featuring Hawthorne Valley products along with many local and regional artisanal food and value-added offerings.
Acknowledging the challenges facing small independent farms in the late 1960s and early 70s, a group of pioneering biodynamic farmers in the U.S. were looking for a viable way to keep land in agriculture without having to rely on family succession as the sole alternative to a monolithic agri-business model. Valuing land as more than commodity and de-coupling it from market forces that clamor for “best use” (i.e. most profitable) was viewed as a healthy and necessary step towards reshaping the future of farming.
Fortunately, a group of Waldorf teachers spent summer vacations on one of these biodynamic farms. They were concerned about children’s meaningful interaction
with the natural world. As the forces of materialism, mechanization, and technology infiltrated childhood at increasingly earlier stages of development, they wanted to be sure the possibility would remain for these young people to form a living connection to the earth they would one day be called upon to steward.
Hawthorne Valley came into being as a response to these emerging issues. By purchasing property with the intention of making it a viable, working biodynamic farm providing hands-on, practical learning opportunities for children and adults, the founders of Hawthorne Valley set the stage for what would develop over the next forty years, touching the lives of thousands along the way.
The natural landscape at Hawthorne Valley has provided a living classroom for the numerous agricultural, educational, and cultural offerings that take place on the farm. The Farm Learning Center administers training and education for biodynamic farmers, including a two week biodynamic intensive and an apprenticeship program. Just across the road, in the heart of Harlemville, sits Hawthorne Valley Waldorf School, an independent day school serving students from pre-K through Grade 12. The Alkion Center for Adult Education provides Foundation Studies in Anthroposophy, Waldorf Teacher Training, and intensives in the arts. It is the integration of these initiatives (and more) under one umbrella that contributes to the vitality of the Association. The humble seed planted 40 years ago has now grown to 160 co-workers manifesting a common vision through this variety of activities.
Hawthorne Valley Association’s service is to a broader constituency than local residents. Visitors come from across the region to experience Hawthorne Valley Farm. In the fall of 1972, the first group of visiting students came from the Rudolf Steiner School in New York City. Since then, over 600 children each year have spent a week or more on the farm as visiting students or summer campers. Comments like “Wow, food comes out of the ground?!” are not uncommon when children set to work in the fields. The joy and satisfaction with which a nine-year old mucks out a cow stall is always gratifying to witness. And, to see the reverence with which a child carries a warm egg in the palm of their hand, as if they had just wrested the golden egg from the giant’s goose, is telling of the deep resonance we can all feel when connecting with the source of life.
This connecting, or re-membering, is at the heart and soul of Hawthorne Valley’s work. Restoring the possibility of nourishing relationships is essential to our mission of social and cultural renewal. By engaging with the natural environment and all that it provides, students, co-workers, and visitors can explore critical pathways toward connecting with each other in new social forms, and at the same time for each one to sense her or his own purpose and highest sense of self. Through direct experience with nature we are given an open invitation to reclaiming our full humanity. The resulting wholeness is the foundation of health, both individually and societally. By honoring the interdependence of all, we build the bridge to a consciousness which includes the well-being of everyone.
With many activities and initiatives, Hawthorne Valley Association is a constant work in progress as it responds to the needs of the community and region. What began with a gift from three individuals to purchase the land has grown into an economic enterprise rooted in place. From the beginning, as cows were introduced and milk began to flow, the possibility was there for economic relationships to develop—one could ladle milk into one’s own bottle or slice off a piece of cheese. Direct sales and on-farm value-added processing immediately emerged as the center of Hawthorne Valley’s financial stability. Since the early days, the farm and the Association have largely operated on an earned income model. This has made it possible for the delivery of goods, education, and other cultural experiences to grow with the broader community.
The surrounding area of Columbia County, which was once one of the poorest in New York State, is growing into a vibrant local living economy. Most notably, a number of the 60 new farms that have started up in the county in the last decade can trace their lineage to Hawthorne Valley, along with cultural initiatives like the Nature Institute. Although tucked away in a little hamlet in upstate New York, Hawthorne Valley recognizes its work in a larger context and is connected to many individuals and organizations nationally and globally. We feel an especially deep affinity for RSF Social finance, which was housed on the northern edge of Hawthorne Valley Farm until 1998. While the focus of our work may be local, the consequences of our actions can be global.
Hawthorne Valley is called an Association because of the intention to consciously weave the very distinct yet integral parts of agriculture, education, and the arts into a holistic thriving organism. This means that a governing board of trustees stays in close touch with the varying needs of each of the Association member organizations as well as understands what and how each participant contributes to the health of the others. From an operational standpoint for example, a transactional value chain is created as the farm sells fresh milk to creamery for processing. Through a number of other transfers, the cheese arrives at the Farm Store, to be purchased by the local community or denizens of New York City in the case of the Greenmarkets. This creates one beneficial financial cycle that supports the larger associative economy.
Through this diversity of activities, and through conscious collaboration with the wider community, Hawthorne Valley hopes to expand its contribution as a farm and food hub, and generative cultural engine, towards co-creating a resilient, local living economy. Though it can often be a challenge to balance the more commercially-oriented production enterprises with the learning and research programming, this inherent tension zone, when navigated gracefully and with good will, provides the creative spark that enlivens the being of Hawthorne Valley and spawns the experiences that comprise her rich biography.
It is a high honor and privilege to walk to work each morning to a learning community that is committed to creating a place in which it is possible to become, in a true sense, a full human being. Where people heal through the experience of working with land and each other, working with animals, preparing meals together, hearing the joyful noise of a thriving school community, all in this very special place. That is the primary intention of the Hawthorne Valley Association—to participate in the birth of a new consciousness story, one that tells the human story and the earth’s story in a way that strives to set an example of some of the highest ideals of community.
Martin Ping is the Executive Director of Hawthorne Valley Association and has been there for than 20 years. During that time he has taught practical arts in the High School served as director of facilities at Hawthorne Valley Waldorf School, and served as project manager on several million dollars of new construction projects. For the past nine years as Executive Director, he has focused his attention on developing the working relationships amongst the Association’s diverse enterprises, the 160 co-workers, and the broader community in the Upper Hudson/Berkshire region. He has been instrumental in initiating several new programs at Hawthorne Valley and supporting similar initiatives nationally and globally.
This article was originally published in the Fall 2012 RSF Quarterly.
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.
You’ve probably heard of the “new economy,” which often refers to social media, sharing-based businesses, and sometimes socially responsible businesses. RSF Social Finance is working to build the next economy: one that’s rooted in community, considers everyone’s needs, and restores trust in financial relationships through transactions that are direct, transparent and personal.
Through our innovative investing, lending, and giving programs, RSF provides critical access to capital for path-breaking social enterprises working in Food & Agriculture, Education & the Arts, and Ecological Stewardship. We collaborate with like-minded organizations to create a financial infrastructure that will support the next economy. And we’ve democratized impact investing with our Social Investment Fund (SIF), which allows anyone with a $1,000 minimum investment to participate in building the next economy.
This is incredibly ambitious. We’re asking you to help spread the word as we promote our “building the next economy” stories on our website, Facebook, Twitter (#nexteconomy) and elsewhere. We’re focusing on these points:
RSF provides critical access to capital for path-breaking social enterprises.
RSF collaborates with like-minded organizations to create a financial infrastructure for the next economy.
RSF has democratized impact investing with the Social Investment Fund, which allows anyone with a $1,000 minimum investment to participate in building the next economy. More information on opening an account: here
Read our latest borrower stories on the Reimagine Money Blog:
Seventeen years ago, Indigenous co-founders Scott Leonard and Matt Reynolds were picking burs out of hand-knit South American sweaters before delivering them to The Nature Company. Today, their company produces a full line of premium fashion knits sold online and at 500 independent stores, as well as clothing for major brands and private labels hanging on racks at the likes of Bloomingdales, Neiman Marcus, and Nordstrom.
That might not sound like lightning progress, but consider this: Indigenous works with a supply chain of more than 1,500 artisans from small knitting groups around the world; pays fair living wages; and uses organically grown fibers, low-impact dyes, and handmade fabrics. They pioneered Fair Trade certification for apparel and developed the Fair Trace Tool™, which lets consumers see their clothing’s supply chain. And they’ve done all this in an industry where labor conditions cause ongoing protests and “organic” often translates to “unfashionable” or “unaffordable.” Viewed in that light, Indigenous looks like a revolution.
INSPIRATION
The spark was Leonard’s travels in Ecuador. “I had seen firsthand that women were not necessarily being honored for their weaving and knitting skills,” says the Indigenous CEO. “They weren’t being paid the wages that they could have been, or they didn’t have the opportunity to apply those skills to the marketplace.
“We really wanted to make a difference in the world with women in economically marginalized communities,” Leonard says. “We thought that bringing in fair wages and technical assistance, and marrying environmentally friendly fibers with more sophisticated designs, was a way to do that.”
INNOVATION
Indigenous had two major problems: quality control and financing. “How do you elevate a cottage industry’s quality control? When you’re dealing with 1,500 artisans and they’re in pockets of three to 30, how do you aggregate their work and have continuity and consistency that’s truly premium? There were a lot of quality-control glitches, from fibers to knitting, to consistency of sizing and fit, to timing of delivery,” says Leonard, a serial entrepreneur whose past businesses include an environmentally friendly surf shop.
Indigenous President Reynolds, who is a store buyer and has a background in developmental economics, adds that systems integration was a major issue. “We’re dealing with a unique production model—it’s diversified, it’s spread out—and we had to create a new systems model,” he says. “That took a lot of time and collaboration and money.”
Financing was a huge obstacle. “It’s not just that we were a start-up, visionary company trying to do something no one else had done,” Leonard says. “But once we collect an order and give it to an artisan, how does that artisan pay for the fibers, and if they’re the lead, how do they pay the other people in the group? They don’t want terms. They do the work and they want to be paid.”
Looking for a better way to finance its supply chain, Indigenous began engaging with RSF around 2001. “Conventional banking was just not going to work. That our balance sheet was not looking so great was a difficult hurdle,” says Leonard. “RSF provided working capital, helped us to formalize our financial strategies, and helped us attract other socially minded investors.”
RSF encouraged Indigenous to include a section on social returns in the business plan for its Series A funding round. That ended up being the aspect some investors were most impressed with, Reynolds says, adding, “RSF has been a pioneer and supportive spirit in trying to push the social and environmental return aspect into financials and into evaluating the success of a business.”
In 2010, RSF provided Indigenous with a PRI Fund loan to assist in creating standards and procedures for the Fair Trade apparel pilot program and to develop the Fair Trace Tool, which allows shoppers to scan a hang tag QR code to find out where the garment originated, who made it, how the fibers were raised, and what the social impact was.
“We hope that by educating people to actually look into things, they’ll see how clothing can be made responsibly,” Reynolds says.
IMPACT
Indigenous has worked with its longtime suppliers in South America to obtain Fair Trade certification, and the company was the only clothing manufacturer certified in South America as of mid-2012. On top of that, the Fair Trace tool is a breakthrough that could change how organizations verify supply chains and microfinance results, Leonard believes.
Indigenous now runs at a profit and has invested in RSF’s Social Investment Fund as a way to help other social enterprises grow (and earn a competitive return, Reynolds points out). In addition, Leonard and Reynolds have created a donor-advised fund with RSF to support their artisans’ communities through grants.
“We are proud to say that we are now hanging next to mainstream, high-end fashion design brands in stores across the country, and we were able to do that without sacrificing values,” Reynolds says. “The other thing is that even though we still are a small business, we’ve put over $20 million into the artisan and organic supply chain, and that has really affected lives.”
VITALS
Company name INDIGENOUS Impact area Food and agriculture RSF relationship Former working capital borrower, current PRI Fund loan recipient, Social Investment Fund investor, donor-advised fund advisor HQ Santa Rosa, CA Revenue About $6 million annually Employees 15 Communities served Weavers and knitters in South America and elsewhere; U.S. consumers
Morgan Simon is the co-founder and CEO of 
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 
You’ve probably heard of the “new economy,” which often refers to social media, sharing-based businesses, and sometimes socially responsible businesses. RSF Social Finance is working to build the next economy: one that’s rooted in community, considers everyone’s needs, and restores trust in financial relationships through transactions that are direct, transparent and personal.