I know shockingly little about money, especially where it goes once it leaves my fingertips. And each spring, my anxiety spikes with tax time, RRSP deadlines and the like. I am overwhelmed by the amount that I do not understand. I suspect I’m a lot like the majority of people, so ignorant and embarrassed about my financial illiteracy that, every year, I hand over my meagre savings to a financial advisor with a computer and a necktie. I utter vague instructions of not to “lose too much of it, if possible.” He puts my money into mysterious things called the stock market, mutual funds and RRSPs. I end up owning very small pieces of very large companies that I know nothing about. It’s called investing. We’re told that is the right thing to do with our money.
But then I think about my friends, Mary Ellen and Andreas Grueneberg, of Greens, Eggs and Ham, a busy, productive market gardening and mixed-farming business. They’ve been in business for thirteen years. They grow beautiful heritage veggies like baby squash, purple carrots, mustard greens, sorrel, kale, mizuna, potatoes of all colours, and other unusual vegetables on their four hectare mixed farm near Leduc, Alberta. They also raise duck, geese, turkey, Cornish game hen and guinea fowl. They have a line of charcuterie that includes duck prosciutto and they are known for their fresh duck eggs, sought out by cooks, bakers and those with allergies to chicken eggs.
Mary Ellen, Andreas, and their daughter Ariana, who manages the farm, are smart and tireless. But their business has been constrained to the same sales levels for the past decade. They sell about two hundred and twenty thousand dollars per year, but if they could get their hands on some capital to invest back into more flocks of duck, more seeds, and some labour, they figure they could build to one million in sales. Mary Ellen tells me that they leave five to ten thousand dollars worth of vegtables in the ground every year just because seasonal labour rarely sticks around after the September long weekend.
The catch is that banks and other lending institutions don’t lend to artisan farmers and market gardeners, no matter how successful. “Because we’re not commodity farmers, we’re seen as ‘not-viable’,” says Mary Ellen. So instead, the Gruenebergs have decided to appeal to their customers and community for loans. They figure that they can pay a six percent annual return (half in food as it comes out of the ground, half in cash at the end of the year.) They want to find locals to invest directly with their sustainable farm that feeds the local community. They’re done with the banks, so they’ve borrowed a page from Woody Tasch, the founder of the Slow Money movement in the United States and author of Inquiries into the Nature of Slow Money: Investing as if Food, Farms, and Fertility Mattered.
Fed up with lack of access to capital through banks, all sorts of small and medium businesses, not just farms, are going back to the models of co-ops and community-funded investing. Ask your grandparents. It used to be the norm: local investment in local businesses and ideas that bring return on investment into the local community. Dollars spent locally continue to circulate in that community, creating cash flow for local businesses. The 2012 translation? Occupy your assets.
I knew that Mary Ellen and Andreas would be presenting their Slow Money idea at the Local Money Summit in Edmonton, which was being organized by a twenty-nine-year-old writer aspiring to get elected to his credit union’s board of directors. I decided it was time to take my financial education seriously, so I shuffled down to the basement of the downtown library that evening.
Maybe because the examples were real and the stories were being told by the people themselves, I learned more in one evening than I had from all the financial books I’ve ever read, combined. Dan Ohler and Jeff Senger spoke about an idea bearing eye-popping returns on investment and tasty meat products in the small hamlet of Sangudo, Alberta, about an hour’s drive northwest of Edmonton. Ohler and Senger are members of the Sangudo Opportunity Development Co-op (SODC), a multi-project community-based microfinancial co-op investment society. The SODC originally set out to fund arts programs in the hamlet, but it quickly turned its attention to financing business startups; the banks make it difficult for anyone in the community to borrow because projects were going to be deemed too small or risky, or both.
Senger, armed with financial and business experience (as well as with his neighbour Kevin Meier, who had retail meat-cutting qualifications and a wildly optimistic belief in their little community), decided to bid on Sangudo Custom Meat Packers, a business that had been unable to find a buyer after almost four years on the block. Senger and Meier felt strongly that their shrinking hamlet of three hundred and sixty four residents couldn’t take losing another business. They appealed to the banks for a loan, but were turned down, as expected. They recrafted their pitch for the SODC, and within ten minutes had garnered support for a deal in which the SODC would buy the land and the building, and Senger and Meier would upgrade the facilities and run the business, while paying rent and royalties on gross sales. Because the investors in the co-op were shareholders, they supported the business and encouraged their family and friends to do so as well.
Today, in its second year of operation, Sangudo Custom Meat Packers is thriving as a business, with seven full-time employees and seven part-timers when work allows. Over the last twelve months, it averaged thirteen percent gross returns back to the SODC. Senger and Meier are on track to buy the land and building by next year, returning the original investment capital back to the SODC for more entrepreneurs to access.
I also learned at the Local Money Summit that giving, not just investing, is getting a rethink. Nadine Riopel, a former professional charitable fundraiser and now a consultant, made a compelling case that smart philanthropy and charity should consider moving closer to home. Riopel proposed that we consider donations within our own community because we generally understand the issues better and can judge for ourselves whether our dollars are making a difference. “There are very few examples of people in one part of the world solving the problems in another part of the world,” said Riopel. She noted that in the professional fundraising world, the term for long-distance well-intentioned but uninformed givers is “Whites in Shining Armour.” And it’s passé.
And finally Mark Anielski, author of The Economics of Happiness: Building Genuine Wealth, a former senior economic advisor for the Government of Alberta, and now an adjunct professor at the University of Alberta’s School of Business, cut to the heart of the really big questions we should be asking ourselves. What’s an economy for? And how is it that our main progress indicators as a society, such as gross domestic product, don’t actually measure societal well-being and happiness? When we invest our money in traditional banks, that capital flies out to speculative markets on Bay Street and Wall Street, generally to finance Fortune 500 companies and multinational corporations. We end up investing in insurance companies, defense contractors, or big box retailers that enable our overconsumption of cheap, disposable consumer goods. We unwittingly fuel an economy shown time and again to decrease our overall happiness as GDPs rise, when we could finance the next season of delicious purple carrots, heritage salad greens and duck charcuterie.
Anielski finally called out the absurdity of the assumption we’ve all bought into, that a rising GDP tide floats all boats. One of his central questions at the Local Money Summit was “How come I can’t buy a local GIC?” He’s done a back-of-a-napkin calculation about the amount of money invested annually and believes that there is one and a half billion dollars invested in RRSPs in the Edmonton area every year. “Why can’t part of that be local?” he asked. “At five percent of that total, there would be seventy five million into the local economy.”
I called Mary Ellen up a few weeks after the summit to see how they were doing. She was buoyant. They already had eleven (and now have thirteen) out of the required fifteen investors required to start growing Greens, Eggs and Ham beyond current sales. They were even working on a framework to help pair local investors with other local farmers. It seems to be getting some traction.
So maybe I’m not the only one on a financial education journey. Already there has been a grassroots movement of people pulling their business from traditional banks and moving them to the more community-minded co-op credit unions. (November 5, 2011 was “Bank Transfer Day.” Remember?) Perhaps I’m just part of an increasing awareness that every dollar that flies out of our pockets actually goes somewhere. And if I paid just a bit more attention to where those dollars were going, I could be a small agent of change in our community. For now, I’ll start by asking my local banker why I can’t buy a local GIC. And letting him know that I might have to go elsewhere if I can’t.