What if you didn’t send your money to a faceless investment bank, but instead gave it to a local business?

8 posts / 0 new
Last post
Sacramento Dave
Sacramento Dave's picture

What if you didn’t send your money to a faceless investment bank, but instead gave it to a local business? What would the world look like if we invested 50 percent of our assets within 50 miles of where we live? A dollar spent at a local independent business, on average, generates three times more direct local economic benefit than a dollar spent at a corporate-owned chain. Small business owners are having a hard time securing funding from traditional resources and we're seeing an uptick in crowdsourcing. Locavesting drills down even further and refers to people and companies in your community that are willing to lend to you in order to perpetuate local business growth. Author of the book Locavesting: The Revolution in Local Investing and How to Profit From It,  Amy Cortese spoke about about local investing, where people keep their capital within 50 miles of where they live. http://www.fastcoexist.com/1678356/locavesting-investing-in-main-street-... "The crazy thing is it’s easier for most people to invest in a company halfway across the world than in their own backyard," says Amy Cortese, author of the recently published Locavesting: The Revolution in Local Investing and How to Profit From It. Cortese, a former BusinessWeek editor, got her first glimpse of the revolution in 2009, as she witnessed communities swallowed up by the hangover of the economic collapse. "Wall Street rebounded, bonuses were back, everything was looking up, but it was so starkly different on the ground, on Main Street." Cortese spent the next year on a journey to uncover the most innovative experiments in citizen finance around the world, from local stock exchanges to cooperatives and DIY IPOs. Fast Company spoke with Cortese about “locavesting,” the term she dubbed that, similar to the spirit of locavores, describes the movement to rebuild sustainable communities by investing in businesses within 50 miles of where you live. Fast Company: You open the book posing this really interesting question, first posed to you by Woody Tasch, founder of Slow Money: What would the world be like if we invested 50% of our assets within 50 miles of where we live? Can you paint that picture for me? Amy Cortese: Americans have about $26 trillion dollars in investments, and now it's probably closer to $30 trillion. Imagine if half of that, $15 trillion, was invested in local communities rather than multinational conglomerates that are outsourcing jobs and not investing domestically. I think we’d be living in a far different world. That said, it is a little idealistic to think we’ll ever get to 50% any time soon. But even think about 10% or 5% or 1%. One percent of $26 trillion is $260 billion going to the Main Street economy and that’s a lot. A dollar spent at a local independent business, on average, generates three times more direct local economic benefit than a dollar spent at a corporate-owned chain.Small business owners are having a hard time securing funding from traditional resources and we're seeing an uptick in crowdsourcing. Locavesting drills down even further and refers to people and companies in your community that are willing to lend to you in order to perpetuate local business growth. If Americans shifted just 1 percent of their investments to locally owned companies, more than $260 billion would be injected into the Main Street economy - without costing the government a dime! Just 1% of the money flying around the stock market goes to funding businesses through public stock offerings; the rest is trading and speculation. Forty percent of agricultural startups are denied financing, according to the Carrot Project. And more than half of farmers surveyed by the National Young Farmers Coalition cited lack of capital as their biggest obstacle. The median IPO size 20 years ago was $10 million; in 2009, it was $140 million. The IPO market is effectively closed to 80% of companies that need it. http://www.newsreview.com/sacramento/think-globally-invest-locally/conte... On her website, Cortese notes: “A dollar spent at a local independent business, on average, generates three times more local economic benefit than a dollar spent at a corporate-owned chain. … Just 1 percent of the money flying around the stock market goes to funding businesses through public-stock offerings; the rest is trading and speculation. … If Americans shifted just 1 percent of their investments to locally owned companies, more than $260 billion would be injected into the Main Street economy—without costing the government a dime!” (And never mind how skilled the members of the Fortune 500 are at not paying taxes, a nimbleness Auntie Ruth imagines only the very rich can afford. Even if most governments can’t.) The concept has a lovely regional manifestation. Solar Mosaic, a Berkeley-based company, crowd sources investors in support of worthy solar projects: a panel of solar panels on the roof of St. Vincent de Paul in Oakland (where hot meals and job training are provided to those in need), the People’s Grocery and the Asian Resource Center, also in Oakland. (And, OK—beyond these three local ventures, they’ve invested in a couple of nonlocal, if irresistible, projects like the Murdoch Community Center in Flagstaff, Ariz. Purity is for the politically uncertain.) What’s the return like? While, according to Bloomberg, Warren Buffet and Google are gobbling up solar-energy development, attracted to the 15 percent returns, Solar Mosaic will offer investments this summer that S.M. president Billy Parish estimates will pay 5 to 10 percent returns. Think globally, invest locally. Helluva idea. How can you capitalize on locavesting? Check out sites like profounder.com, kickstarter.com, microventures.com to see if you can raise some money through your community. The above content was gleaned from the following webpages: http://www.fastcoexist.com/1678356/locavesting-investing-in-main-street-... http://www.newsreview.com/sacramento/think-globally-invest-locally/conte... http://www.chic-ceo.com/content/locavesting-local-investing

Comments

tayl44
tayl44's picture
Dave,a very good idea on

Dave,a very good idea on keeping money in the community.Another good idea would be to invest in a bank to keep the money in the community.But the best investment that will make the others work,is invest in the "land to make it Community Own".They who own the land own the people.Private special interests ownership of land will always cause "inflation and social ills",Logic say the land should belong to the creator and all other creators should own the fruits of their labor from the land. 

Eastern Washington
Eastern Washington's picture
I want to buy local, but I

I want to buy local, but I think the opportunity to do that is going away, except in tourist areas. Being a sixty-something I'm used to to meeting face to face with the people I do business with. I like local small businesses best because they are unique. But that's not how my kids shop. They go to the computer, order online, wait for the package to show up, and if they don't like the product, ship it back. This is a huge change in the way that people shop.

tayl44
tayl44's picture
Our needs and wants aren`t

Our needs and wants aren`t intune.We have a system that make greed good and hide the negative effects of this mindset.When people see the effects of their wants/greed, they will change. Life is base on recycle,if you recycle everything out,you stop the recycle for everything "local".

Bush_Wacker
Bush_Wacker's picture
It's not only products. 

It's not only products.  Think about how much local money leaves the area when eating at MCD's or Wimpy's.  When you get your carpet cleaned by the big yellow truck.  Pest control the termenex or the arking's of the world.  (misspelled on purpose).  Some of that money stays local but huge portions are travelling across the country and in some cases out of the U.S.  We do a terrible job of supporting locally owned businesses without realizing it sometimes. 

dlmilli
dlmilli's picture
    Here is a great example

 

 

Here is a great example of locavesting: Quimper Mercantile raised $500K, on their way towards $950K, from town residents and opened a community-owned retail shop in Port Townsend, WA.  

 

Learn more about this pioneering locavesting program (and consider investing if you are a Washington State resident) at invest.QuimperMerc.com

 

captbebops
captbebops's picture
If the economy totally

If the economy totally crashes you'll probably ONLY be able to support local businesses. Abandoned Walmarts will turn into local bazaars.

Of course it depends on what you buy.  A lot of things really can't be made locally.  And we've had many discussions here about having slacker Jimmy down the street who doesn't care build your product versus some foreign worker whose culture demands they always care and do a good job.  We forget that such a "slack" attitude also contributed to jobs being moved offshore.  And these days with our technology many of these tedious jobs that no human should be doing can be automated.

And Dave, is your "Enter" key broken?  You might want to break that very long wall of words into several paragraphs for readability.

 

pshakkottai
pshakkottai's picture
State owned banks can also do

State owned banks can also do similar things. For example, The State Bank of North Dakota at

http://banknd.nd.gov/about_BND/pdfs/faqs.pdf

BND is involved in two types of lending: direct lending and participation loans.

BND by statute can do anything any other bank can do, unless restricted by statute. Mostly by practice we do not make direct loans. However, legislative action has given express lending authority to BND for:

  • The purchase or acquisition of bank stock or the formation of a bank holding company.
  • The acquisition or refinancing of farm real estate by qualified individuals.
  • Assistance with post secondary educational costs (i.e., student loans).

All other lending by BND is through participation with a lead financial institution. This lead lender can be any qualified financial institution - most notably a bank, savings and loan, credit union or Farm Credit Services.