This post was originally written by Steve Tomey and published on Mosaic.
Investment in solar projects and programs can bring energy independence, profitable value creation, and empowerment to the communities that fund and implement them. But impact investing is creating opportunities in other areas of community development as well, and is an all-around powerful force for internal development by self-interested communities.
Traditionally, money pooled from large groups of people to fund community and public programs has fallen under the responsibility of the municipal or federal government in the form of taxes. However, this mechanism for public funding is deficient because “investors” (taxpayers) have no choice in whether, how much, or for what purpose they pay taxes. Not only are taxpayers forced to pay, changing a productive community investment to an imposed regulatory requirement, they cannot prevent their payment from going toward something they don’t support.
Direct impact investment in community programs and local enterprises returns the voting power of dollars to citizens and households. Here are a few examples of how this type of investment is allowing communities to finance and provide for their own essential needs to attain independence in areas other than energy.
Perhaps the most well-known community investment model relating to food is the long-popular Community-Supported Agriculture (CSA), in which participating households invest upfront via the purchase of a CSA share and then receive regular (usually weekly) bundles of fresh produce to enjoy. This is especially effective because it doesn’t require the grower to generate a profit and provide a financial return - it can simply deliver the fruits of its labor (pun definitely intended) as a direct return and need only break even, bypassing potential market access risks and more efficiently delivering value to investors. Additionally, the last few years have seen some communities venturing into community-supported fisheries, an analog of the CSA model providing fresh seafood instead of produce.
Because real estate and land development companies tend to be the ones to construct new homes, the need for housing-related community initiatives is lower, however, they are still happening in areas where these companies are less apt to make their usual profit. For example, Community Home Builders is an Oregon-based nonprofit that directly helps citizens in rural areas build and maintain their homes for the long term.
New online platforms are even enabling community members to fund local businesses and other endeavors.CommunityFunded, essentially a local KickStarter, allows direct crowdfunding of projects and ventures, offering citizens rewards as well as the benefit of having the projects they fund flourish in their own community. SmallKnot similarly lets community members fund local businesses to either start up or expand, in exchange for goods, services, and other rewards, as well as the economic activity they generate.
All of these models have one thing in common: they are alternatives to national and global corporate/government programs, and they restrict the value flow to within tangible communities, maintaining geographic, cultural, and economic ties between investors and the enterprises/programs they fund. This requires investors to consider the social and environmental ramifications of how they spend their money. It forces accountability and transparency, but without being prescriptive or regulatory in nature. The result is stronger local economies and more resilient communities, with the added benefit of creating jobs, generating value within the community, and delivering that value more efficiently and visibly to community members.
Obviously, community-centered models like these are only effective and favorable if the community itself can provide the necessary capital, equipment, and labor needed. Yes, a community can grow its own food or purchase and operate its own solar grid; but it might be less able to provide its own healthcare or treat its own sewage better than state-funded hospitals or municipal waste centers. However, we’ve already seen major citizen movements and impact investments that prove more effective than the status quo -- large, top-down efforts. Maybe the difference between what we have now and full community oversight of community services can be achieved with just a few years of prodding by active citizens.
Image from viterra.com
Steve Tomey recently graduated from James Madison University with a management degree and has a strong interest in social entrepreneurship and how it can be an engine for sustainable development and empowerment at the individual and community levels. He was previously a Net Impact chapter president and consulted through the Social Innovation Program at George Mason University. In his free time, he stays current on all things #socent and #socinn, and enjoys camping and outdoor living.