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Slow Money: Shared Risk Investment

Slow Money Founder, Author Woody Tasch Discusses Community-Based Economics, Soil as Foundation for Societal Health

Almost a decade ago a book was published that seemed perfectly attuned to its time, as an economic crisis created by Wall Street’s excesses churned the emotions of the entire nation. It was called Inquiries into the Nature of Slow Money: Investing As If Food, Farms, and Fertility Mattered. The title was obviously inspired by the Slow Food movement begun in Italy by Carlo Petrini, who wrote the foreword. The book’s author, Woody Tasch, turned out to have an extensive background in the more idealistic byways of finance capital. He pioneered mission-related investing as a foundation chair in the ’90s and went on to chair a nonprofit network of angel investors who put hundreds of millions into early-stage sustainability-oriented businesses. He was also the founding chairman of another socially responsible project, the Community Development Venture Capital Alliance. Clearly no newcomer to the world of money, Tasch knew well all of its hazards and pathologies, the capital flows racing around the world at the speed of light that can upend a nation’s economy almost overnight, the charitable organizations that devote much of their budgets to swanky New York offices and so on.

Taking a little inspiration from the early New Deal, some more from Petrini, and adding a bit of ’60s rebellion, he came up with Slow Money. Instead of waiting around for government to get a clue and subsidize a way out of the industrial food trap, Tasch and his team would travel around the country, talking and listening and persuading the fortunate among us to invest directly in the work we all care about. And that’s what he’s been doing nonstop since 2010.

Tasch’s new book, available from Acres U.S.A., Soil: Notes Towards the Theory and Practice of Nurture Capital, brings the story up to date with a potpourri of fresh thinking about economics, recent history, personal memories and testimonials from farmers and food business people helped by Slow Money over the years. Produced and designed entirely by Tasch and his team, it looks, feels and reads better than many products of major publishers. Tasch graciously took time to catch up with Acres U.S.A. in Austin, Texas, before heading over to the city’s central library to speak and sign books.

Interviewed by Chris Walters

Slow Money & The Economics of Healthy Soil

ACRES U.S.A. Why is your new book called Soil?

WOODY TASCH. It’s called Soil for two reasons. One is the most obvious, the actual soil. My first book does deal quite a bit with the soil, soil fertility and whatnot, because when I sat down to write that one, I didn’t know it was going to be about slow money per se. But when I got into the question of why we, meaning we as wealthy individuals in the scheme of things, and we as a wealthy society in the greater scheme of things, were having so much trouble steering money away from — you can fill in the blanks, but let’s just say military industrial-Wall Street-extractive globalization run amok — why we couldn’t take more of the wealth we were creating and do the right thing. Which in my case means supporting more of what we want at the community level, the grassroots level and so on, and that’s a long way of saying I got around to the soil. In other words, when you leave all those extractions and you try to get down to what it is we want, it came to me that maybe the ultimate metric was soil fertility. Were we leaving the soil as fertile or more fertile than when we found it? So when I set out to write this book, that’s where I started. I started with the soil. Those are some macro reasons. As fate would have it, our new project in Boulder is called SOIL — Slow Opportunities for Investing Locally. It’s donations and zero percent loans, one person, one vote, very grassroots.

ACRES U.S.A. It’s a new type of investment structure?

TASCH. It’s a new investment tool, because one of the things in the last 10 years of slow money investing is that I mostly see it as beautiful, and then part of me also sees it as frustratingly inefficient. Because it’s very decentralized, a lot of very small-scale investments, no one’s in charge, there’s no fiduciary, no fund manager — and that’s all intriguing and positive and constructive and lots of different things, but it’s not very efficient. I was constantly mulling, isn’t there some way we could create a tiny bit of structure in here just to give people a little easier on-ramp? And this model for SOIL came up. The model is very, very simple. It’s donated capital, meaning people put in whatever they can afford to donate. Their only return is a tax deduction. Donations range in size from $250 on up — I’ll say more about that in a second. Unless you’re a farmer, then you can come in for $25. We’ve been doing this model for four years in Carbondale, Colorado, a smaller market, and we just launched in Boulder. In Boulder we have 75 people who have contributed a total of $235,000 in amounts ranging from $250 to $50,000, and it’s one person, one vote no matter how much you put in. We’re making zero percent loans to local organic farmers and small food businesses. It’s very democratic, very participatory.

ACRES U.S.A. Hypothetically, if somebody who believes in what you’re doing wants to put in $10,000, what is the return they see over a period of years?

TASCH. It’s good to ask that. This particular model is whatever you put in stays in. We just passed $65 million into 728 deals since 2010 when the investing started into local groups all over the country. It was mid-2010 when the first dollars started to flow through the network. From then until the end of last year the dollars went into 728 food enterprises and farms scattered around the country. The vast majority of the money — say, 99 percent of it — went from the people who had the money into the deal. There was no structure in there at all. It would be like you and me and some friends get together and say, “We want to loan John the farmer some money because he needs a new barn or tractor or whatever.” A few people formed what we called investment clubs where they formed a legal entity, put some money into the entity and all voted on where the money went. Those were all for-profit investment clubs. Then a few years ago I said we should try this on a nonprofit basis, where people just put in what they can afford to donate and then make zero percent loans to the farmers. This is an intriguing thing because it gets you out of the traditional investor mind-set. There is a Slow Money principle that quotes Paul Newman, and it says, “Life should be more like the farmer who puts into the soil what he takes out.” If you really believe that, if you really believe the ethos is about putting in as much as we take out — or you could say a little more proactively that we want to leave the soil more fertile than when we found it, and put carbon back into the soil — then you have to leave your money in. People in our culture think, that’s nice but we want to make 10 percent.

ACRES U.S.A. What would you say to someone who says they really like what you are doing, but I’m in my 50s and my money is in one of those Vanguard fund sort of things along with my spouse’s money. We’d like to support you, but we want to retire and live on our investments. It’s the quotidian, prosaic concern of millions of people.

TASCH. There is a real simple answer to this. Slow Money can’t be all things to all people. The best single answer to that question is, just see Slow Money as a new little part of your portfolio and put into there what you can afford to put into that part of your portfolio. If I was really having a serious conversation with that person I would ask, “Are you doing any philanthropy? How do you understand the risks of different things?”

ACRES U.S.A. There is a tax advantage for people, though.

TASCH. If you do the model I’ve described, it would come out of your philanthropy allocation. This is not a good thing to do if you are dependent on the income from the investment and you have no risk tolerance. Then this is not a good investment. I hate using the word “risk,” though; I really do. I have to correct myself. Day one of Slow Money, I was interviewed by a reporter up in San Francisco who asked, “How are you ever going to convince people to do such risky investing?” And I said, “Risky compared to what? If you don’t think putting your money into smokestacks in China or Albania or whatever is risky, then do it.” I’m not trying to convince you not to do that.

ACRES U.S.A. Would you agree that the concept of risk is excessively glorified in mainstream finance?

TASCH. You have hit on one of the core issues of finance. One of the bedrocks of modern financial orthodoxy is high risk, high return. It’s called venture capital. You take all these shots on these billion-dollar moonshot, unicorn-type things, a lot of them don’t work, one of them works, you make a couple of thousand percent on your money from that one thing, and you’re a hero because you’ve supported innovation and risk-taking by the entrepreneur and all that. But part of what you’re saying really touches the wound of culture or whatever you want to call it.

ACRES U.S.A. How so?

TASCH. I want to answer with an anecdote. In 2014 we did a big event in Louisville, Kentucky. We had Wendell Berry, Joel Salatin, Vandana Shiva and David Orr and lots of beautiful entrepreneurial people who are not as famous. We haven’t done another one since, partially because I don’t think we can ever do another one as well. As part of the event, we had a workshop the day before for local Slow Money leaders or people who wanted to become leaders. And in that room was a young woman, Kristy Young, and she was exploring Slow Money. She ran a young-farmer NGO up in Toronto, and she had never been to one of our meetings or events before. We had a packed program. The point of the program was to give a local Slow Money leader in one day the whole framework of securities law, due diligence, risk management, how to source a deal, how to host a public meeting, what you are allowed to say in public — there was a lot of stuff. It was very hands-on, very detailed and kind of grueling. About three-quarters through the day, she raises her hand, and says,“I’m troubled by something. We’re spending the whole day, from what I’m hearing, talking about how to minimize risks to the investor. Because there is high risk, high return and the idea here is that we want low risk because we’re not going to have as high a return.” And she says, “But we know that people are only going to invest in this some tiny percentage of their portfolio that they can afford to lose, while the farmers are on the line for 100 percent every day.” Then the words came out of her mouth — “Why aren’t we talking about sharing risk?” Fantastic question. It was like a big epiphany, and everyone went,“Ah!” The next morning was our big public event, and I was going to be up on the stage for 10 minutes introducing Wendell Berry. I had my opening remarks all done, so I went home and stayed up until two in the morning rewriting those 10 minutes around the idea of shared risk because what she said moved me so much. And then when Wendell came out, the first thing out of his mouth was, “I’d like to pick up on that idea of shared risk.” It was really a beautiful thing.

ACRES U.S.A. How does that echo in what you say now?

TASCH. When someone asks, “What is Slow Money?” and they know what a CSA is, I say, “We’re the CSA of investing. We’re informal groups of people coming together to — and you can fill in the blank a bunch of different ways. One of the ways to say it is, “to share risk both amongst ourselves and with the people that we’re giving the money to.” And that is kind of what a CSA is — it’s a shared-risk model, which I think makes it very beautiful and very important.

ACRES U.S.A. How do you describe — especially to a skeptic — the intangible returns of investing this way?

TASCH. A lot of different ways. It’s a core issue, and it comes up all the time. I don’t consider it persuasion. It’s more or less a call to reconnect with what you already believe and act in concert with our beliefs. Having said that, we have to acknowledge that there are, let’s say 320 million Americans who have never heard of Wendell Berry. This book is not really for them. This book is for the 10 or 20 million Americans who know who Wendell is and believe in their hearts that he’s pointing in the right direction. And whose money, coming back to your earlier question, is sitting in investments that are antithetical to those values just so they have money to live on when they retire. That is a profound case of cognitive dissonance. If you are in that situation, and you believe in your heart that Wendell Berry inspired you — in my case, more than inspired me, I thought “this is the truth as I understand it” and I wish to live in accord with that — then I can’t leave my money invested in, just fill in the blank: you could say military contractors, you could say nuclear, whatever seems important to you. If you believe in something other than globalization and derivatives and inequality of wealth and the destruction of rural communities, and of course you are concerned about climate change and all the environmental damage that comes in the wake of economic growth, then there is a strong impulse to find an alternative. I don’t view what I do as persuasion. It’s more like, “Here is what I believe, and here’s what I am trying to do about it. If it makes sense to you, then come join us and do it.” I would never try to persuade a dyed-in-the-wool venture capitalist or banker that what we’re doing makes sense in terms of their kind of arithmetic.

ACRES U.S.A. There is a nice anecdote in your book where you’re talking to someone named Tommy, and he tells you that what you are talking about is preposterous because without the conventional yardsticks he and his partners could never agree on evaluating the investments. Then you write that although having the discussion is worthwhile, you and this man were pretty much talking past each other. What it brings up, though, is the macro idea that also gets right into the soil and our cells, that human life is all about increase. We have the greatest difficulty liberating ourselves from the idea of increase, biologically and economically. Yet it is also clear that our planet has limits, and growth can’t go on like this forever.

TASCH. Any deep or structural environmental thinker is dealing with that conundrum — actually it’s not a conundrum, I think it’s both a physical and spiritual law, like Edward Abbey talking about the ideology of the cancer cell. But like E. F. Schumacher, who imprinted me about the same time as Wendell, in the ’70s. In Small Is Beautiful his first axiom is, “Unlimited growth on a finite planet is an impossibility,” and that axiom is still not believed by 99 percent of economists. Economists believe that you can keep having economic growth just off innovation. They don’t go to the next level that all economic growth is ultimately rooted in things that are extracted.

ACRES U.S.A. Do you agree that the operating fantasy is that innovation will produce forms of growth without consequence in the physical world, nearly frictionless? Is that why they love their derivatives market, because it just makes money off of nothing?

TASCH. Of course. Exactly. I want to circle back to E. F. Schumacher. His second tenet is that increased consumption is not synonymous with improved well-being. That brings the big macro idea down to the personal. When I talk to groups of people, I say the first one and ask how many people in the room disagree. I always try to empower people to disagree. Some people raise their hands, but most people believe small is beautiful. I say, “Great. The limits to growth is a big, complicated topic, and we can disagree on that. It is difficult to wrap your heads around in a finite way — when are we going to run out of this? Which system is going to break down first? That’s complicated. The second one, that increased consumption is not synonymous with increased well-being, that is a personal thing that you know in your experience is true.” Everyone nods yes when you say that. No one says, “Oh, I think if I just keep consuming more I’ll be way better off.” No one tries to defend that.

ACRES U.S.A. These are huge topics, how would you bring them down to earth?

TASCH. I can only tell you what I believe, and I know what I believe is reflected in the views of some number of millions of people because I’ve been talking to people nonstop for the past 10 years. The benefits of economic innovation of the type we’re talking about, like derivatives, are now being undermined in a frightening way by the long-term costs and the volatility and the structural problems. Inequality of wealth is one of those problems. Carbon in the atmosphere is another one of those problems. The destruction of rural economies is one of those problems. You could say the destruction of democracy is one of those problems, though we’re getting pretty far afield here. So when we say we must bring some of our money back down to earth, I say that is a very simple, commonsense, radical idea in the sense of being a radically obvious way of pulling some of our energy out of that system and putting it to work near where we live.

ACRES U.S.A. Does a certain moment from all the talking with people stand out?

TASCH. I’ve had a number of aha moments, and I’ve learned a lot talking with people through the years, or tried to learn a lot. One of the real learning moments for me came when I was talking to the Minnesota Sustainable Farming Association at their 20th anniversary meeting, and I found myself saying, “We’re giving our money to people we don’t know very well, to invest in things they don’t understand very well, halfway around the planet to places none of us will ever visit. Does this sound like the recipe for a healthy future?” This has become part of my stump speech. Everybody said no. So I said, “What’s an answer?” Not the answer, just something we can do. Let’s take some of our money and invest in things we can understand, near where we live, starting with food. Now, the “starting with food” part — someone could say invest in health care or education, but in our case, because of our affinity for Wendell Berry and for E.F. Schumacher, and when we say “invest in things near where we live,” that means connecting to place, and the ultimate connection to place is the actual land, it’s the soil. There’s nothing more basic than that.

ACRES U.S.A. Also, it reflects our love of eating.

TASCH. It’s no joke! Listen, if I was a clever strategist, which I’m not, I might have figured out that the place to create social change was with food. We all love to eat. People, if they are lucky, eat three times a day. Let me state it in activist terms. If you are taking communion three times a day at the altar of industrial food, meaning you are putting into your body highly processed, chemical-laden food of questionable nutritional density, you are going to have one relationship to food. If you put in your body food that is grown down the street by a farmer you know in a completely different way — organic, biodiverse, keeping water in the soil, all these different things — you are going to have a different relationship to food. We have a beautiful video of a woman in Carbondale, Colorado, saying, “Well, I’m participating in this because I view the young farmers as leading the way forward in our culture, and I love them,” and then she says, “I get a lot of really great food, too.” It’s not a joke. It’s so obvious. I’m working closely with Brian Coppom, who is executive director of Boulder County Farmers Markets. It’s a substantial operation with four farmers’ markets, quite high-functioning and among the more active farmers’ markets in the country. We get together about once a week because we’re collaborating on our soil project. A lot of times we get to the end of our meeting and say, “Isn’t it crazy? Look how hard we’re working just to get people to have fun!” The only part that isn’t fun is that mental hurdle you have to get over to say, “Okay, I’m going to do something pretty different with my money.” That’s why this new book is all about imagination. I came up with a term after I finished the book as I wrote the afterword — the words “lively serious” occurred to me as the opposite of “deadly serious.” Economics is deadly serious, that’s why it was called the dismal science. There’s nothing more lifeless than a bunch of arithmetic on a page trying to tell people they’re rational actors acting in their own best interest and that everybody acting in their own best interest helps everybody. That’s about the dullest and most stupefying view of human nature possible. So, at the end of this you get food. Food from people you might love — you’d definitely like them. It’s the social capital of tithes that Adam Smith called the moral sentiments — this is real culture, connection between people. You’re getting all that, plus good food, and all you have to do is risk a little money, share a little of the risk a different way with a group of people. When you’re sitting by yourself buying Alibaba stock at two in the morning, you can make believe you don’t have that risk, you can ignore it, play with your computer, and you feel worse. There is a psychological barrier to doing something that actually makes you feel better. But you do have to get over the conventional wisdom we’ve been taught. One of the Slow Money Principles, after all, refers to making a living rather than making a killing.

Get more information about Slow Money.

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