Is Slow Money the future of Finance? A seasoned investor s

You need only look as far as your latest 401k statement to grasp the profoundly personal implications of the sub-prime mortgage collapse. Yet you may not have linked this crisis to your local food system. For Woody Tasch, founder of the slow money movement and author of the book Inquiries Into the Nature of Slow Money (Chelsea Green, November 2008), the relationship between capital and soil is clear. Tasch is the chairman of Investor's Circle, a network of investors that meets this week in Boston to fund startups that focus on sustainable business practices. In Slow Money, Tasch suggests a financial paradigm shift that mirrors the tenets of the slow food movement: valuing local food systems over global, industrialized food systems. We caught up with Tasch this week to talk about why slow money may be a long-term solution to sustainable finance.

MSN.com Green: This is a big concept for those new to the idea of scaling back our investment expectations. How would you describe what slow money means?
Tasch: It means we have to find ways to steer meaningful quantities of investment capital and sustainable capital to build local food systems. Essentially, to prioritize places over markets. There is such a thing as money that is too fast, companies that are too big, intermediation that is too complex. Slow money enables the financial and cultural transformation toward rebuilding social and environmental relationships that industrialization has destroyed.

MSN.com Green: A sense of connection seems significant in this equation. How can we create connection between people and their money?
Tasch: That's a great question. Slow food is about connecting food producers and consumers. Slow money is about connecting investors to that in which they are investing. Once you realize how disconnected everything is, you want to reconnect. So if you think about investing, where does your money go? It goes into a mutual fund, which might as well be a black hole or cyberspace. Once it goes out, it really isn't yours anymore. It is out in the market. Think of a portion of that dollar going up a smokestack in China. Either directly or indirectly, your dollars are supporting a system based on unlimited economic growth. So if you reconnect investors to those impacts, it makes people realize that how they use their dollars is a direct vote for or against sustainability.

MSN.com Green: How do you transition from a philosophy to a strategy?
Tasch: We are holding a series of institutes, starting with three regions: Vermont, Kentucky and Northern California. We're bringing together food entrepreneurs, farmers, investors and philanthropists, and seeing how people think the concept would work in that region. We're talking about understanding small food enterprises, or "SFEs", as a new asset class. SFEs include CSAs, slow-food restaurants, local dairy and meat processing facilities and regional organic brands. We're also looking at investing in small organic farms in the region. We believe that highly diversified portfolios of these investments will generate modest but predictable long-term returns that will look increasingly attractive in the years to come.

MSN.com Green: In your book you say it makes more sense now to listen to philosophers and poets than to economists as we look toward the future. Why?
Tasch: We are so inundated by data, and bytes, and bits, and blurbs, and numbers, and abstract formulas and stock quotes every second. Poetry explores new meaning and ways to see patterns of meaning. It forces you to slow down. You can't read a poem fast, it isn't just data. You could say that poetry creates new mental rocks that the stream of consciousness has to flow around. We are at a time where we need to see new patterns rising around a myriad of things. We are lost in a blizzard of data. We need a larger, slower view of where we are headed. I don't think we can find our way by analyzing more data or developing new financial tricks. In this sense, slow money is about returning to fundamentals, but defined in terms of the realities of the 21st century.

MSN.com Green: What aspect of slow money do you think will be the most difficult for people to adapt to?
Tasch: We're all about speed. We've been addicted to speed for 100 years, starting with the car, rocket ships, cyberspace, how fast things can be transmitted. We know fast food is not healthy, yet we still eat it. Addicts know they are wrong, but changing their behavior is extremely difficult.

How to Invest Your Money in Local Food

If you are looking to slow down, or even park, your money locally, Tasch has a few simple tips. Right now there aren't yet any slow money intermediaries, though he hopes to eventually have in place funds that represent slow money ventures by region. Still, here are a few ways to start adapting strategies for slow money.

Tip One:
Support your local farmer. Tasch says that joining a CSA (community supported agriculture) is one of the most direct ways you can invest your money in local food. "Investing in a local farmer is an easy way to put a little of your money to work," he says. "It has a huge social impact, we shouldn't underestimate the impact of small things."

Tip Two:
Bank with the local credit union. Your neighborhood financial institution may already be investing in local food systems, so check them out and put your dollar there if you can, says Tasch.

Tip Three:
Buy local foods first. Tasch suggests dining at restaurants that serve local food, shopping at farmers' markets and selecting local foods over foods that have traveled far to make it to your grocery store.

Tip Four:
Keep slow on tap. Stay updated on the slow money movement through Investor's Circle, a group that meets twice annually to invest in triple bottom-line companies (people, planet, profit). Right now, IC, the Blue Moon Fund and 35 venture capitalists have signed on to pursue slow money. To more fully understand the concept, check out the slow food movement. Find out what is going on in your community with slow food and develop a clearer connection between you, your food, your local farmland and your money.

Jean Weiss is a regular contributor to MSN.com.

Slow Money, Manure and Prudence
By Woody Tasch
We have, of late, begun to get religion about carbon in the atmosphere. We have begun to pour venture capital into clean tech, searching for ways to maintain our lifestyles and grow the economy, while dramatically reducing our ecological footprint. This vision of ecological footprint is, in a great many respects, a mechanical one, asking only: How can we design new machines that work more cleanly?
No one, it seems, is asking a corollary question: If we cannot create wealth without degrading soil fertility and draining the vitality out of local economies, how can we, no matter how clean our machines, hope to thrive, or, even, survive?

Last August, at the 25th Anniversary Gala for the Rocky Mountain Institute, eminent panelists tried to answer yet other questions, posed by moderator Thomas Friedman: "If this is a win-win-win, if these new technologies and design solutions are so elegant and so profitable and so clean, what is holding them back? Where is the resistance to these innovations coming from?" To my surprise, since this was not a finance conference, the group discussion zeroed in on CEO compensation, short-sighted financial incentives and the structure of capital markets.

Inventor Dean Kamen opined from the dais:
Venture capitalists have great enthusiasm but short attention spans. We are stuck in a 19th century way of thinking that leads to largescale, centralized production and power generation. We don't have the mindset to really invest for the long-term in small-scale solutions that would improve life for billions of people.

Such questions and observations lead to the premise for a new kind of financial intermediation, going by the improbable name of slow money.

That premise is this. The problems we face with respect to soil fertility, biodiversity, food quality and local economies are not primarily problems of technology. They are problems of finance. In a financial system organized to optimize the efficient use of capital, we should not be surprised to end up with cheap food, millions of acres of GMO corn, billions of food miles, dying Main Streets, a dead zone in the Gulf of Mexico and obesity epidemics side by side with persistent hunger.

Speed is a big part of the problem. We are harvesting from the soil in decades fertility that was created over millennia. We are extracting generations-worth of economic and cultural vitality from our communities. We are acting as if the biological and the agrarian can be indefinitely subjugated to the industrial and the urban without significant consequence. We are, as the colloquial saying puts it so eloquently, beginning to believe our own bullshit.

Which reminds me of a story...
About 15 years ago, I was turning a horse stall into my office. My first project was to shovel out the dried horse manure and shovel in sand, in advance of the construction of a wooden floor.
One day, reflecting on the transition from equine to intellectual, I realized, "How appropriate: from horseshit to bullshit."

No consideration of the disconnect between capital markets and the land is complete without at least one reference to manure.

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If slow money is going to be effective, it is going to be in part due to inspiration derived from the celebratory, life-affirming, pleasure inducing humanism of Slow Food.

Slow Food began as a protest against McDonalds, but it quickly evolved from a single act of protest into an international NGO, on the strength of a family of pro-biodiversity, pro-small farmer initiatives dedicated to restoring and preserving quality of life. Similarly, slow money seeks to support the creative power of entrepreneurship to build new commercial relationships that enhance quality of life for farmers, food consumers and their communities. In a world of monoculture and special interests, the emergence of for-profit social entrepreneurs, whose companies integrate private enterprise and public benefit, is particularly intriguing, and worthy of support.

Just as is the case with Slow Food, slow money needs an approach that dares to be cultural, agricultural, economic, historical and biological. We will need to fight against over-specialization, putting the jargon of the specialist, the technician, the quant in its place. We will need to define new benchmarks, being unafraid to assert the importance of qualitative distinctions.

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"Money only knows one speed," the scion of one of America's wealthiest families once said during a public discussion. "Money only goes fast, faster, fastest. Try to slow it down, and you'll just end up with sloppy investing."

To which I say: If insanity is doing the same thing over and over again hoping for a different outcome, then it is insane to think that by continuing to create wealth via an extractive system, so that we will have more money to give away, we will be able to adequately address the urgency of the current global moment. Both unfettered fast money, and its twin, philanthropy, which has an odd non-speed all its own, create and depend upon broken social relationships. We must seek to build an economy in which healthy relationships remain integral to the wealth creation process.

Prudence-as in the Prudent Man-can no longer be defined completely by tens of billions of dollars of fast money pouring into high-tech venture deals. Such prudence is incomplete.

We must find new ways to steer capital to tens of thousands of independent enterprises that promote the health and diversity of communities and bioregions. For every $1 billion that zooms around the planet-or is it cyberspace?-looking for the highest return and lowest risk, and supporting globalization, consumerism and unlimited economic growth, we must invest $10 million or $100 million in enterprises that support what is going by many names: virtuous globalization, localization, local living economies, natural capitalism, restorative economics.

Reconnaissance with respect to this new prudence comes from author Michael Pollan in a recent New York Times Magazine article:
The story of Colony Collapse Disorder and the story of drug-resistant staph are also the same story: Both are parables about the precariousness of monocultures. Whenever we try to rearrange natural systems along the lines of a machine or a factory, whether by raising too many pigs in one place or too many almond trees, whatever we may gain in industrial efficiency, we sacrifice in biological resilience. The question is not whether systems this brittle will break down, but when and how, and whether when they do, we'll be prepared to treat the whole idea of sustainability as something more than a nice word.

Pollan reminds us that the particular challenges that face us in this or that sector of food or energy or health actually have much deeper roots, reaching all the way to an historic struggle between the industrial and the biological. His reference to parable is telling. As easily, he could have referred to myth.

We are quick to assume that no battle between myths, or no myth at all, could hold sway over the modern mind. Yet could it be called anything other than myth, the story that is powerful enough to have us believing that unlimited economic growth is not only possible but desirable, despite the rapidly accumulating data to the contrary? What else but a myth could be powerful enough to convince us that what made sense as an economic organizing principle in a 1 billion person planet or a $1 trillion dollar global economy would still be appropriate in a 6.4 billion person planet and a $24 trillion dollar global economy? What else but a myth could be powerful enough to convince us that there is no such thing as a company that is too big, intermediation that is too complex or money that is too fast? What else but a myth could make the violence of the modern economy invisible to the modern investor?

Our success in moving beyond half-steps depends upon acknowledging, unabashedly, without scapegoating, without undue recrimination, and with a commitment to looking forward, the violence of the modern economy.

This is the violence of the modern economy: by prioritizing markets over households, community, place, land, it does violence to the relationships that underpin health and that give life sustaining meaning-family relationships, community relationships, relationships to particular places, relationships between consumers and producers and between investors and the enterprises in which they invest, relationships between companies and the places in which they do business, relationships between wonder and awe and the universe that gave us plutonium, light-years, fertility, sentience, poetry, fugue. All of these relationships are attenuated, or, in the extreme, deracinated, by the modern, global economy.

This is violence of the most fundamental kind. It is no accident that such an economy would find it easy to support, and to depend upon, the building of nuclear weapons, the waging of wars in distant lands, the selling of cigarettes, the flying of trillions of air miles, the commodification of leisure, urban and suburban sprawl, gated communities and favelas, toxics in the food and water, and kids who watch an average of four hours per day of TV, paying more attention to instant messaging than to people in the room.

In these first few decades of the 21st century, it is our "inescapable duty," to use Wendell Berry's words, to change not only our light bulbs, but our myths. And along with them, our concepts of entrepreneurship, investing and philanthropy, which will have to be amended, expanded, and, perhaps, even radically transformed, as part of a new vision of restorative economics.

Article by Woody Tasch, Chairman and President of Slow Money, which is currently holding Slow Money Institutes in several U.S. regions, in anticipation of launching a first Slow Money fund in 2009. He is also Chairman of Investors' Circle ( http://www.investorscircle.net ) and author of the forthcoming book "A Bee's-Eye View and Inquiry into the Nature of Slow Money," which is due out fall 2008 from Chelsea Green.