The following commentary by Gwendolyn Hallsmith was written for Vermont Public Radio and aired on October 9, 2013. Listen to the commentary by visiting VPR’s website.
As a private citizen, I’ve worked with many start-up small businesses and organizations that need money and have a hard time finding it. Money itself isn’t in short supply, but there may be a disconnect between where all of us keep our long-term savings and the values we hold dear.
A friend of mine goes out of her way to buy food from local farmers, and refuses to set foot in any of the “big box” stores. She has a bumper sticker that says “I buy local – spend it here, keep it here.” At Christmas, she gives people Capital City Cash for presents, so they’re sure to spend the money she’s given them in downtown Montpelier.
When I asked recently if she had any money put away for retirement, she said she has one of those 401K plans from her employer. Then I asked if she knew where it was invested, and she said she always chooses the options for socially responsible investing. But when I asked where the money was actually invested, she admitted she didn’t know.
That makes her penny wise and pound foolish when it comes to spending money in her local community. Even though she doesn’t shop at Wal-Mart, chances are that her investments are there. She uses local health practitioners, but her long-term finances depend in part on the success of the international pharmaceutical industry. And even with all her support of local farmers, she has invested in large factory farms in the Midwest.
It’s not her fault. The system makes it easy to put money into the large, publicly traded companies with a global reach – but a lot harder to invest in smaller, local companies in your own hometown. When Clare’s restaurant in Hardwick opened, they wanted to attract investment from the local community, but soon discovered that public solicitation for investment from non-accredited investors wasn’t allowed without going through a very rigorous and expensive regulatory process with the Securities and Exchange Commission. So they simply “pre-sold” their meals, raising money by promising future discounts on food.
Now, the rules are changing. Michael Shuman’s book, Local Dollars, Local Sense, outlines a number of ways people can move their money from Wall Street to Main Street – like using the new crowd-sourced funding options, public banking, targeted CDs, investor networks, pre-purchased goods and services, and municipal business lending programs. The JOBS Act passed by Congress last year now makes it possible for small investors – like Clare’s was trying to find – to invest relatively small amounts in local businesses without needing SEC approval. It also allows for more public solicitation, so people in the community can know who needs investment.
The Vermont Sustainable Jobs Fund has been working to raise funds to invest in our farmers and food industry, but these same investment rules mean they can’t advertise to the general public. Even our own large institutional investors, like the State of Vermont’s pension funds, find that it’s “too small” an investment to warrant consideration. But to make the improvements that are needed in our food, energy, technology, arts, and health care sectors, we need to find ways for all of us to move our money back home.