Farm Lending Sans Bankers
Last evening Teresa and I attended an inaugural meet and greet launch of Slow Money Central Virginia put together by Michael Reilly and Hunter Hopcroft. Under the umbrella of the Slow Money movement instigated by financial thought guru Woody Tasch, this chapter seeks to marry food/farm philanthropy with farmers who could use a no-interest loan for a couple of years.
Their goal is a modest $50,000 by fall to go into a fund that would be released in loans to farm applicants who would vie for votes from donors. Anyone who gives $50 is eligible to vote for where the loans go.
This is another permutation of Impact Investing, versus exploitive investing, otherwise known as "make-as-much-return-as-possible-as-fast-as-possible-who-cares-about-earthworms" investing. What struck me during the presentation is how the traditional role of the community or neighborhood bank no longer exists. The difficulty of getting a small loan, and getting it for something a bit unorthodox, has created an entirely new universe of capital fulfillment.
Similar Slow Money groups who have launched in previous years report a 1 percent default rate. That's much better than bank loans, and yet a bank would seldom make these loans. Leave it to financial innovators to create an instrument that can satisfy fiduciary desires without a bank even being involved. Once they take bitcoin the revolution will be complete. This is a step more formal than crowdfunding, but in the same ballpark.
As America secularizes--not a good thing--the traditional religious charitable organization no longer satisfies philanthropic desires. This arrangement allows philanthropists to donate money into a pool to facilitate capital expansion on farms that service the greater Charlottesville/Richmond area. While I believe the bigger need is to reduce regulations, I deeply appreciate philanthropic facilitation for investments bankers no longer consider culturally worthy.
Their website is slowmoneycva.org.
Where are your favorite places to donate money?