The shift from a growth economy to economic contraction has turned our concepts of “profit” and “income” upside down.The idea of “investment” has similarly been radically altered.
In the old paradigm, when we thought about “investments,” it meant turning our money over to some mega-institution for them to “invest” for us.We expected interest or dividend income in return for the use of our money.If you have checked any financial institutions lately, those concepts come from a bygone era.Interest income rates are now next-to-nothing, and people no longer reap dividend income.They gain only from adjustment in the market value (i.e. the “popularity contest”) of stocks.Mere slowdown in economic growth has completely altered investment horizons, and ongoing economic contraction will assure that this change is semi-permanent.
Additionally, as we have all learned, the purposes to which those investment funds were being put by those mega-institutions were far from environmentally conscious, socially just, or resilience-building. Meanwhile, here in our hometowns, we have very worthy and necessary resilience-building projects which are desperately in need of funding.
Within a Transition context, the need for community-based investment arises because the infrastructure we currently have (massive freeways, sewer systems, etc.) doesn’t match what we’re going to need for a post-petroleum, climate-altered, economically lean future. Things like local water cisterns, community gardens and acquisition of land for urban agriculture, bike share programs, localized businesses in core / survival industries, local powerdown manufacturing of basic goods.
The idea of community-based investment is to retain what investment funds you do have within the community, and put them to work on resilience-building projects locally within your community.In Totnes, they are pooling their investment funds to build community-owned wind farms.In Marin, California, people pooled their funds to buy options on farmland to keep it out of the hands of suburban developers.In Washington state, L.I.O.N. investors provide seed money for Transition-type small businesses.
As your local community begins to examine what resilience-oriented infrastructure you already have, versus what you need to create or install, these needs will begin to present themselves.Community-based investment is a very solid and logical way to finance those projects.It is also a way to finance the start up of resilience-building businesses (Practical Tool #4).
From the investor’s side of things, community-based investment is a way to put your money to work where it is needed most.In my opinion we haven’t seen the last of the “too big to fail” banking industry disintegration.(Stoneleigh forecasts it quite clearly)Putting your investment locally, where you can see it, with local people who you’re growing to trust through local community gatherings might be the wisest course available to you.
In these times of market contraction consider this very practical observation:if everyone around you is losing investment valuation, the way to “get ahead” is to lose less quickly and less severely than everyone around you.
In a talk in Totnes, Devon, UK, Tim Jackson emphasizes that at this point in history, rather than seeking “rate of return,” people with money to invest should shop for local investments which might help secure our collective future and help preserve peace and safety within the local community. In other words, in the new paradigm, security, peace, and safety are so dear that they are worth “investing” in, with hopes to preserve them.
Charles Eisenstein would argue that such investments should rightly be zero interest, zero rate of return.In Sacred Economics, “Robbing Peter to Pay Paul,” he gives a detailed example of how “the goal of paying interest or dividends to investors, to give them a positive rate of return, conflicts with the goal that makes the company socially or environmentally ‘conscious.’”
So then, what do you get in return?The primary “investment income” is the security, peace, and safety of your hometown, the place where you are living and raising your family. Additionally, you will own pieces of your hometown future, pieces of the essential infrastructure of the new future.
Eisenstein expands upon this: “It apparently goes against rational self-interest to lend money at no interest, or to give it away. That, however, is a very shortsighted self-interest because while the present money system may easily disintegrate in the next few years, the ties of gratitude that gifts create will persist through any social tumult. … the best security you can have is to ensconce yourself in a gift network. Start being a giver now.”
Totnes, Devon, UK: Totnes Community Wind Farm and Totnes Anaerobic Digestion Partnership and http://transitionculture.org/2010/09/13/the-launch-of-the-totnes-renewable-energy-society/
Further details at p. 139 of Transition In Action, the Totnes Energy Descent Action Plan
Agricultural land trusts (Marin, California http://www.malt.org/ )
Mendo Food Futures, Mendocino County, California http://campfire.theoildrum.com/node/5158
Of all the approaches listed in this booklet, community-based investment is perhaps the most under-developed, here in the U.S. The types of things we’re seeing being done within Transition Initiatives in the UK – investment in local power companies, community-owned bakeries — may be a bit cutting-edge for us here. Here in the U.S., many of these would require financial and legal sophistication to set up formally — issuing a Prospectus and public investment legalities and such. If you have old-paradigm investment professionals within your Transition initiative or within your community LETS network, perhaps they could lead the way.
Pre-existing financial entities where your community might be able to create a fund (probably in exchange for a fee)
Community Investing http://www.communityinvest.org/overview/what.cfm
Community Foundations http://www.communityfoundations.net/page14088.html
A very simplistic setup for much smaller funding amounts: ChipIn or PayPal widgets on your website
Other variations on the concept:
Citizens Land Bank http://www.cesj.org/homestead/strategies/community/cic-full-nk.html
The “Town Banks” concept mentioned in this article http://sustainableindustries.com/articles/2008/12/banks-new-economy
Create something similar to The Community Foundation www.nlacf.org
Take the ideas of the “Declaration of Interdependence” of the B Corporations and go local. www.bcorporation.net
Minimize your participation in the conventional Big Bank system
Independent Community Bankers of America (see Practical Tool #5)
Local credit unions sound like a good deal, but do your homework. The ones I researched in my own neighborhood were federal credit unions and they invested in things like car loans and other non-sustainable and un-resilient stuff.