Innovative Community Investment

Online Trading

noreply@blogger.com (Ryan Brown) — Fri, 11 Dec 2009 08:44:00 +0000

It's almost like a game. I'm on Kapitall.com playing around with $100,000 dollars and investing in everything I would ever want to. This seems like a great way to get people involved in being active investors because it is fun! I am a big proponent of making the right things fun to do, I think that's what sustainability is ultimately all about. Here's a screenshot:

The little stacks of cards are the available portfolios that others have created. There is a ticker at the bottom, your portfolio value at the top left, and many other cool tools that help you make informed investment decisions.

I would love to adapt an investment trading platform like this as a local community investment tool. The businesses from the area could report some metrics about their revenue generation, employment, environmental performance, and social justice impact to a database that would feed into a graphic user interface. Users could then get on there to "buy" and trade businesses in their neighborhood and local community. Over time these citizen-investors could see how well their community was doing and how well their specific portfolio was doing when marked against their peers. The development of something like this would certainly be long and costly, but imagine how cool it could be...

Debt as a tool for community development

noreply@blogger.com (Ryan Brown) — Fri, 11 Dec 2009 05:38:00 +0000

I have been particularly interested in the prospect of debt (or credit) as a tool for community development. While we tend to think of debt in terms of our credit cards, there are ways to structure debt in order to have the impact we collectively desire. The microfinance movement started by Mr. Yunus and his Grameen Bank is currently the most popular version of "debt for development" and for good reason. Grameen has had unprecedented success and growth in developing nations based on their social capital model that targets women and other groups that have little to no access to capital. This model has worked very well in villages and countries where people have little else to rely on but their immediate community, and is even being applied in the United States by groups such as the Washington Community Alliance for Self Help (WA CA$H). This is all exciting, but I have recently been attracted to a more democratized model.

The Calvert Foundation has pioneered a community investment model that seems to be working very well. The main point of attraction that I feel towards this investment option is that there is so much choice involved. People can obviously choose the amount they would like to invest, but beyond that there are options to select the region of the US that your money will be invested in and you can even set your own interest rate (from 0-3%). These dollars then go to non-profits, community development groups, and social enterprises working to alleviate poverty.

This democratization of investment is really inspiring to me because it allows for individuals to make choices about where their money has impact. Additionally, an investment with the Calvert Foundation seems very secure given their SRI industry clout and the diversification that they employ. Once I get some extra cash it will most definitely be invested in the Calvert Foundation.

Debrief of local investing creative session

noreply@blogger.com (Ryan Brown) — Thu, 26 Nov 2009 22:35:00 +0000

The following are the results of my creative session mentioned in my last post. The question was "In what ways might we further connect local investors with local entrepreneurs?" There were many interesting ideas that came out of this, but only the top 5 made it into this post. Enjoy!

The Briefing Document:

Below is the invitation that I sent out to the participants.

Criteria

Must Criteria:

The investor and entrepreneur are in the same city/region
Maintains an attractive level of risk
Provides some financial return / has a payback mechanism

Desirable Criteria:

Inspires/encourages aspiring entrepreneurs to take action
Creates new aspiring entrepreneurs
Remains within the bounds of the current SEC regulations

The staffing

I was disappointed to receive two cancellations the day before the session and was not able to get new people on such short notice. This left the session at three participants plus me. Although this is not the optimal number, I feel strongly that those that showed up were exactly the people that needed to be there. The participants were as follows:

Rob Salvino: President, Terra Preta Sales, LLC.

Rob has worked in variety of fields but has recently established himself as a successful food broker in Seattle. His company works with producers on their sales and marketing efforts as well as filling a more general business consulting role as needed.

Ryan Jones-Casey: Financial Services Specialist, Goodfunds Wealth Management

Ryan has a background in the banking industry which has led him to now be at Goodfunds where he helps people manage sustainable and responsible investment portfolios. Ryan is also a large social justice advocate which informs his sharp critical thinking ability.

Alex Moore: Program Manager, Cascade Harvest Coalition

Alex is now coordinating CHC’s Eat Local for Thanksgiving campaign. He has previously been Director of Operations for eCycle Group, Manager of Southern California operations for a farm-to-school distributor. His passions revolve around green energy, agriculture, and private equity.

Summary of Processes Used

Welcome and introductions (10 mins)

Since we were such a small group I allowed for about 15 minutes of unstructured dialogue to get everyone comfortable in the room.

Creative orientation (10mins)

Once I took over control of the conversation I gave the participants a brief roadmap for the session and talked about the groundrules. The rules that I used were to suspend judgment of ideas that were coming out, wacky ideas were encouraged, and I told them that they were to write down their ideas on the cards.

Silent, rapid idea generation (5 mins)

On the suggestion of my roommate Caitlin I had some background music going as the participants entered the room up through the dump. I think this served to both relax the participants and to help them feel like it was an artful or creative space. During this portion I wrote down some of my own ideas, but I was carefully watching the rate at which ideas were being written down and I encouraged quantity and silly ideas rather than great solutions.

Round robin of favorite ideas (10 mins)

When it came time to share our ideas I turned the music down very low so that the focus would be on the speaker. I noticed quickly that Alex had a lot that he wanted to say and that I would have to work to keep the idea sharing near equal in the group. I did this through some “forceful acknowledgment,” but in a group of this size I found it easier to just directly ask the introverts for their thoughts.

Open brainstorming (25 mins)

I do believe that I employed both of the methods for spurring creativity from my session plan in the actual session.

The escape method : At a certain point it seemed that we were getting bogged down in the reality of the legal regulations on securities so I asked them first where they would invest their money (assuming they had some) if returns didn’t matter. This got the participants to discuss some of their values and things they care about, ultimately leading to a more creative conversation about what could be, regardless of the constraints that currently exist.

The stepping-stone method: At one point the idea was shared that we could create trading cards for local businesses. This got a little chuckle from everyone and seemed to have some energy behind it so I asked the question, “what is it that we like about that idea?” This led us into a conversation about communication with and engagement of the public in investing locally, which was where I thought the ideas were the most exciting.

Debrief and Adjourning (10 mins)

We ran for just under 2 hours and the time flew by, but I was able to cut off the new idea generation and ask the participants to tell us which idea excited them the most from the evening and why. I then thanked them for coming and we adjourned.

Best Ideas

1. Create an equity bank (or some other institution)

Best part about the idea: quarterly mock exchange to determine businesses that get capital:

Get an amount proportional to your percentage ownership
Or you could have voting classes
Or you could give everyone an equal amount (it could even roll over and you’d get more next time if you picked winners
Have an actual exchange floor
Let the good businesses float to the top

2. Create a Seattle mutual fund

Structure like the equity bank

3. Due diligence firm, clearinghouse

Publish risk factors for local businesses

4. Credit card where when you buy you’re investing (spending = equity)

“Keep the change” type debit or credit card that bought into your investment fund

5. Bring business “playing cards” to venture capital and angel investor meetings

6. Publication focused on new/exciting businesses in WA state – with profiles

Local investment opportunities newsletter

Reflection on experience/Lessons Learned

This was a really fun process! I had really high hopes for the session when I got some initial RSVPs from my bell cows, but was then disappointed when they both cancelled the day before the session. No matter, we got some great ideas anyway! I have combined many of the similar ideas and color-coded them by broad category below. I decided to leave them in the order in which they came out in the session because it allows me to see where a shift happened near the end to a discussion that was more about possibilities and less about barriers. I think there were things I did well and things I should work on for next time (yes I plan on doing this again very soon!)

Things I did well	Areas for improvement
I was able to use my creativity prompts effectively	I should frame my question and the introduction to the session to really highlight the need for expansive but focused ideas
The music set the tone nicely, I chose a good, creatively shaped room at the library	I could have been better at infusing the room with energy (or not chosen a weeknight)
I feel that I managed the dynamics in the room well (introverts vs. extroverts)	I really need an assistant to take notes for me next time

Creative Session Plan

noreply@blogger.com (Ryan Brown) — Fri, 20 Nov 2009 21:45:00 +0000

As second year students at BGI we are asked to facilitate a "Creativity Session" in which we select a focus question that we are interested in and bring together a diverse group of knowledgeable people to do the brainwork for you. For my session I decided to investigate the barriers to and innovative solutions around stimulating broad-based community investment. The following is my session plan, I'll follow up with the findings in a subsequent post:

Statement of focus
In what ways might we further connect local investors with local entrepreneurs?

There are a few perceived needs that this session would like to address. The first is that our investment dollars are nearly all leaving our communities. The second is that many people in our communities cannot or do not access capital to launch their ideas for businesses and projects.

Criteria for successful solutions

Must Criteria:
• The investor and entrepreneur are in the same city/region
• Maintains an attractive level of risk
• Provides some financial return / has a payback mechanism

Desirable Criteria:
• Inspires/encourages aspiring entrepreneurs to take action
• Creates new aspiring entrepreneurs
• Remains within the bounds of the current SEC regulations

Brainstorming Questions

These are questions that I asked the participants to consider before arriving to the session.
o Where do our community’s investment dollars go?
o How would you define local investment?
o What are the pros and cons of local investing?
o What are the barriers to accessing capital for entrepreneurs in our community?
o What are the criteria that private investors use to identify investment opportunities?
o How might we effectively communicate the potential benefits and tradeoffs of local investing to our community?

Session Plan

Welcome and introductions (10 mins)
I will welcome everyone, introduce myself and ask them to give a brief description of their background

Creative orientation (10mins)
I will reiterate the creative idea and read the brainstorm questions from the briefing document. This is also where I will establish the rules of the creative session, especially encouraging the use of the note cards for ideas at any point.

Silent, rapid idea generation (5 mins)
The participants will write down on a sheet of paper as many ideas as they can think of.

Round robin of favorite ideas (10 mins)
I will then ask each participant in turn to share their favorite idea and write them down on note cards to model the behavior. I will ask for no comments or judgment during this phase, just ideas. We may have to go around a few times.

Open brainstorming (25 mins)
This section will hopefully flow nicely from the round robin, however if the session stalls then I will employ one of the following techniques for spurring creativity:
• The escape method : I will make the statement that, ‘no one is concerned about getting any return on their investment.’
• The stepping-stone method: I will ask someone to read one of their ideas from their dump and ask everyone to answer the question, ‘what is good about that idea?’

Debrief and Adjourning (10 mins)
Here I will thank everyone for their participation and ask them to each say what worked and what didn’t about the session

Co-operative model for employee and community investment

noreply@blogger.com (Ryan Brown) — Wed, 04 Nov 2009 21:24:00 +0000

These are two videos about co-operative business models that are having some success. Evergreen Cooperatives is in Cleveland, OH and they've got some really cool businesses as part of the coop including a large-scale solar installer and a huge greenhouse producing tons of lettuce and herbs for the community. Their model was based on the Mondragon Corporation from Spain which is incredibly successful with 2008 revenues of 16.77 billion Euros.

While this is not really an investment that is available to the general public, the employees are able to invest after 6 months of working in the company and then grow their ownership stake and share in the profits. The effect that this has on a community's economic development is huge. The key here is for the large purchasers of services in the region (Universities, hospitals, local governments, large local corporations, etc.) to exclusively source their services from these local cooperative providers. This maintains and in fact ends up building community wealth through the employee ownership model.

My big question here is how to start something like this. Would a group of socially and environmentally responsible businesses in the Puget Sound region band together and begin to offer this employee re-investment program? What would the benefit to these existing companies be? Would it be more likely that a large endowment or foundation would have to go in an purchase these companies with the goal of selling them back incrementally to the workers? If anyone has some experience or knowledge of cooperative operations please chime in because I feel like I've got a lot of energy around this idea.

Cool investment research tool

noreply@blogger.com (Ryan Brown) — Wed, 04 Nov 2009 00:03:00 +0000

Kapitall.com has developed this very visual and dynamic tools for searching and sorting companies to invest in. You pick all of your desired criteria and a desired region and it shows you which companies to invest in. It even allows for portfolio management (buying and selling) on the site. Pretty good idea, even though the information is just on publicly traded companies. This kind of power given to investors is an innovation in itself.

https://www.kapitall.com/

Welcome Video

noreply@blogger.com (Ryan Brown) — Tue, 03 Nov 2009 23:34:00 +0000

Loaning Local Currency

noreply@blogger.com (Ryan Brown) — Thu, 22 Oct 2009 01:32:00 +0000

Many people have heard the success stories of local currencies, the most preeminent of which in the U.S. is the Ithaca Hour, instituted in Ithaca New York in 1991. The concept is fantastic, local currency that CAN'T leave the community and forces reinvestment. This model for local economic development seems very innovative, however it has really been going on for hundreds of years. The concept is really just a monetarization of a traditional barter system, but most likely is more inclusive because most people today are not very comfortable with bartering and would prefer some form of currency. Having recently participated in the Washington Barter Faire in Tonasket, WA I can attest to the power of a barter system. I brought some t-shirts that I had screen printed and returned with a huge box of veggies, smoked salmon, pear sauce, goat cheese, soaps, candles, and more.

I'm curious why this kind of local currency isn't more prevalent. Is it because people are not comfortable with a currency not tied to the national system? It would be interesting to study the relative risks between a national and community currencies. I am wondering if there is a business proposition for a consultancy who could take the best practices from all the community currency models out there and sell their services to other cities or regions...

Once the system is in place there are additional options for furthering local economic development through offering loans in the currency. Ithaca has loaned out hours to 31 businesses, the biggest loan awarded recently to Alternatives Federal Credit Union/CUSO. The credit union is using the $30,000 (or 3,000 hour) loan to build/improve their building. All in all I feel that this is a simple and exciting tool for catalyzing local investment and local economic development.

Peer to Peer lending legal battles

noreply@blogger.com (Ryan Brown) — Mon, 19 Oct 2009 02:27:00 +0000

Recently I have educated myself on the very interesting and recently politically hot industry of peer to peer (P2P) lending. I have to say that I owe much of my knowledge to Zachary Tillman's research for our entrepreneurship project.

P2P lending is simply individuals loaning money to each other without the intermediation by a financial institution. This has been going on for a very long time, but has recently experienced a large growth due to the social web (approx. $647 million in 2007). Sites have sprung up to facilitate these financial relationships and they mostly charge a service fee or percentage. In the last year however, these sites have had a lot of pressure from the SEC come down on them and one, Prosper.com is currently in litigation over the issue of trading unregistered securities.

This legal crackdown and authoritarian rule over securities by the federal government is a setback for the industry, however I'm certain that the players in this field will rebound and evolve to stay in business. They will do this because there is a real need that they are filling. In many ways P2P lending is riding the same wave as the global microfinance movement. The point being that people can do great things and better their lives when given access even to a little bit of capital. The main indicator of this is the repayment rate on loans in these industries. While the repayment rates on the P2P industry's loans are not as impressive as those that the microfinance industry touts, they still outstrip traditional bank loans.

My outlook for this industry is that it will continue to grow and thrive. Investors are realizing that they need to connect more intimately with their investments, and banks just aren't cutting it. What I would like to see from P2P lending is the ability to drill down a search to your community and find people and projects happening locally.

Welcome and Prospectus

noreply@blogger.com (Ryan Brown) — Mon, 19 Oct 2009 02:17:00 +0000

To: The Blogosphere

From: Ryan Brown

I welcome you to my new blog on the topic of innovations in investments. This satisfies my requirement for a class I am taking called "Using the Social Web for Social Change," however I sincerely plan on maintaining this long after this term.

I settled on the topic of "Innovative Investments" because it encompasses many areas of research I have been doing for other projects. I plan on discussing existing and conceptual tools for catalyzing local and responsible investing. The discussion will likely include debt and equity investments in the traditional sense, however I plan on defining investing broadly to include the support of local living economies as well.

Thanks for reading!