Eco-Living Magazine

Sustainability and Community Financing

Posted on the 25 March 2013 by 2ndgreenrevolution @2ndgreenrev

Port_Townsend_WashingtonThe value of bottom-up, community-driven leadership is a theme one constantly encounters when looking at success stories in sustainability.  Often a significant challenge for even the most successful initiatives is that of financing, and how individuals, organizations, businesses, and their broader communities can obtain access to the necessary funding.  In an increasingly competitive environment for scarce public and private sector funding  resources, financing itself may also be an area where innovative community-driven approaches will take on an increasingly important role to ensure that sustainability initiatives are themselves sustainable.

Some emerging models present interesting new ideas for sustainable approaches at the community level.  For example, a startup Seattle-based firm called Community Sourced Capital recently introduced a model through which small businesses can seek funding of up to $50,000 for growing their business, an amount that is made up of several small zero-interest loans called “squares” (each of which has a value of $50) purchased by individual “squareholders” in the community.  Each “squareholder” is limited to $250 in square ownership, in order to incorporate as much community participation as possible in the lending effort.  Businesses repay the loans as a percentage of their revenue, so the higher their revenues the more quickly “squareholders” receive a return on their investment—which also gives investors greater incentive to support the businesses they have invested in.  The goal, as explained by Community Sourced Capital President Casey Dilloway and CEO Rachel Maxwell in a March 9 interview on Seattle’s KEXP 90.3 FM (click here for a link to the interview podcast), is to promote the sustainability and resiliency of these businesses by producing the capital they need from within their communities in an accountable, transparent, and democratic way.

This model joins other community financing initiatives that have emerged in recent years.  LION, which stands for Local Investing Opportunity Network, is a Port Townsend, Washington-based group of local citizens that make investments to create opportunities for other local individuals and businesses with the goal of supporting the sustainability and resiliency of the local economy.  LION was launched in 2008 through a grassroots operation called Local 20/20, which has the mission of “working together toward local sustainability—integrating economy, ecology and community through action and education.”  LION’s success has spurred widespread interest  (Community Squared Capital’s Dilloway and Maxwell cited LION in their recent KEXP interview, and it has been highlighted in recent books), in response to which the organization has developed local investing kits for sale to others interested in organizing similar investor groups.

Community-focused approaches to raising capital such as these may offer a good match for businesses focused on sustainability-oriented goals and practices, for which the returns on investment are often intangible (including the satisfaction people derive from supporting something they believe in).  They additionally present the interesting question of whether elements of these approaches might be beneficial for non-profit organizations with a sustainability focus seeking creative ways to bolster community engagement and ownership.

Image by Hans-Jürgen Hübner (Own work) via Wikimedia Commons

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