Local Investing for a Local Economy

A sustainable community must have a viable local economy—a network of enterprises that make or sell needed goods, provide meaningful employment, and generate resources for municipal and nonprofit services. When economic activity and resources are siphoned off by Wall Street and globalized production, communities and whole regions suffer decline. Rust Belt cities, half-abandoned Midwestern rural towns, and struggling New England villages reflect this process.

Conventional economists shrug off this reality, assuring us that “creative destruction” and “comparative advantage” ultimately produce more overall prosperity. But over the last few decades, the scope of this destruction—hollowed-out communities, permanent unemployment, dramatically widening inequality, degradation of the environment, and the replacement of local economic diversity by homogeneous, distantly-owned corporate chains—has led many serious thinkers to advocate for a “new economy” in which citizens, consumers and investors deliberately strive to place quality of life and community over abstract economic principles or an all-consuming desire for wealth.

“Buy local” campaigns, farmers’ markets, co-ops and other endeavors that encourage us to spend our money locally are now becoming better known. A newer, less familiar approach is the practice of investing locally. We are beginning to better understand that pouring any surplus resources into the stock market, depositing them in megabanks, and generally chasing after the highest possible return contributes to the economic starvation of our local communities.

Many encouraging initiatives have evolved in recent years that help investors put their money to work building vibrant communities and flourishing local economies. The Slow Money movement has funneled millions of dollars into small businesses that are decentralizing the food and agriculture system. Community development loan funds are growing rapidly. And now, the idea of “investment clubs” is enabling people with modest resources to pool their funds in support of local enterprise.

Our friends at BALE (Building a Local Economy) in the White River valley are organizing an investment club that they hope will support community development and long-term resilience. I spoke with Steve Aldrich, who is leading this effort. He said they hope to attract between one and two dozen small investors who, between them, would generate 25-50,000 dollars. If a few individuals with more capacity join the effort, they may raise up to $100,000.

This is not a huge amount of capital, but it is enough, on a local scale, to provide loans and equity to small businesses, coops, and other entrepreneurs that are not available from conventional banks. It encourages new or young entrepreneurs to try out ideas they might otherwise not find viable. A program like this keeps financial resources in the community and builds relationships that are simply not possible at the massive scale of Wall Street. Aldrich points out that local investors “care about their communities and feel that putting money into them is good both for themselves and their communities.”

The financial return on investments like these is lower than one expects from venture capital, the stock market, or hedge funds. But this is more than made up by what we might call a social return; we see that our investment dollars are financing a notably higher quality of life for ourselves and our neighbors, which is ultimately more valuable than paper wealth.

Aldrich told me that the BALE initiative may be open to investors from the Woodstock area. It won’t be up and running for several more months, but anyone who might be interested in participating should contact BALE by emailing info@balevt.org.

I propose, as well, that we start considering our own local fund in the Woodstock area. If you are interested in exploring this, please contact me at rmiller9@sover.net or at (802) 310-2169.

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