I must confess that when I first heard about ‘slow money’, I was not impressed and only mildly curious. It does not sound particularly appealing or make fiscal sense. If ‘slow money’ is an investment philosophy, why would anyone chose it? I discovered that the answer depends on your value system.
The stock market is where most people build a nest egg for retirement. The stock market is also used by pension funds for investing money, even if their individual employees don’t think of themselves as stock market investors. It is logical that the stocks yielding the highest returns and lowest risks would be the best investments.
Slow money is different in three ways. First, slow money is invested in a local food industry (farms, value-added products, food processing, etc.). Second, the loans are smaller. Third, the return is at a much lower rate (e.g 2-4%).
So I was surprised when I learned that “The Slow Money movement is one of the top five trends in finance”, according to Entrepreneur Magazine. In giving this recognition, the magazine noted that “Woody Tasch, longtime chairman of Investors’ Circle, a hugely successful angel network for socially responsible companies, is spearheading the fledgling slow money movement. Its ambitious aim is ‘a million Americans investing 1% of their assets in local food systems within a decade’.”
In essence, Slow Money combines two goals: investing and promoting food security. Slow Money chapters help lenders who care about sustainable agriculture to provide seed funding for local food businesses in their communities.
Social and environmental advocacy groups warn of the risk of investing in large stock funds, because they can include companies that investors may find socially or environmentally repugnant. Working with Slow Money chapters, lenders can meet with a borrower from a local farm or other local food enterprise to see how the business operates and under what circumstances.
By investing in a local business, a lender can witness a loan’s impact on the community. In Southern Maryland, like-minded lenders might want to loan money to a new farmer who needs to drill a well to raise vegetables. Other lenders might like to help start the first bakery using locally sourced flour in Southern Maryland. Perhaps, a third group might like to loan money to a farmer growing hops to produce beer. These types of ventures may require too little money for big banks to be willing to bother.
The Slow Money Chapter NC is a great example. It has already provided 46 individual loans to food entrepreneurs in North Carolina. Read about their loans, how they make a loan, and how they give out loans, and join in the discussion!
Is there a Slow Money Chapter in our future?