Slow Money: A New Movement for Social Enterprise

Woody Tasch is a man with a mission. The former venture capitalist-turned-revolutionary, as he calls himself, is the guru of "slow money" - the name Tasch gives to his philosophy that combines a passion for social enterprise with the benefits of locally-grown food. Tasch is the catalyst behind a new national campaign to persuade at least 1 million Americans to donate between $25 and $1,000 each to help create a grassroots, non-profit seed fund to support and grow local food businesses and family farms.

But it's much more than healthier food that Tasch is after. He is traveling the country this fall, warning that money moves way too quickly. Billions and trillions of dollars zip around the globe, he says, as if disembodied from the people who invest it. "Investors don't know anymore where their money goes and more and more, they want to see an impact for what they give in their own lives and own communities," Tasch told a capacity crowd at New York University Thursday night. Tasch said he wants to build and test the concept of something he calls "nurture capital" - a healthier and more sustainable alternative to venture capital for funding new businesses. It's time, he says, to shorten the distance between investors and their investments. It's also time, he says, to create new economic models that deliver a return but that also put community, soil fertility, and the environment at the bottom line.

"This is really paradigm-bending stuff," says Gabriel Brodbar, the director of NYU's Reynolds Program for Social Entrepreneurship. Brodbar invited Tasch to speak as part of Reynolds' fall speaker series. "Even the most traditional, free market capitalists like [philanthropist] George Soros and [National Economic Council director] Larry Summers have recently admitted in one way or another that our traditional paradigms have failed us."

But Tasch is no out-of-left-field gadfly. He is chairman emeritus of Investor's Circle, the nonprofit network of angel investors, venture capitalists, foundations, and family offices that since 1992 has facilitated the flow of $130 million to 200 early-stage social enterprises dedicated to sustainability. Before that, he was the treasurer of the Jessie Smith Noyes Foundation. Tasch's slow money movement, which was officially kicked off in September during a conference in Santa Fe, is an extension of that work. Tasch also says there is "a dramatic need" now to focus time, energy, and capital on the next generation of small businesses entrepreneurs because they represent economic diversity. Also important, he says, is fixing the nation's broken food production system. "Fix it, and many other social, economic, and environmental benefits will follow," he says.

"Right now, it's hard to believe that the Whole Foods Market down the street is still able to exist, given the damage we're doing to our soils, and it's hard to believe something bad is going to happen," Tasch told NYU students. "But [our food production system] isn't sustainable. It's time to slow down and start looking up close at what we are doing not just with industrial agriculture but what we're doing to ourselves on the planet in the name of sustaining our standard of living."

With slow money, Tasch is taking a page from the slow food movement, the 20-year-old movement that calls on consumers to treat the act of eating less as a hurried distraction and more like a family ritual that celebrates community and takes time out to reflect upon the labor involved in growing the food that we eat. "Money should move the same way," says Tasch. "This isn't just about finance but the relationship of finance to culture."

In short? Tasch wants to persuade grassroots investors to "take the power back" over their communities and start putting some of their assets into local businesses they can see and watch and [in this case] even taste. He wants them to measure growth not by numbers of dollars so much as the yield of a local crop and the health of a local community. He acknowledges that investing in sustainable local agriculture will yield below-market returns. But he says nobody will lose money; these returns, he says, will be solid - maybe a 3 percent profit or maybe 6 percent one over many years.

Traditionally, Tasch says, financial markets have connected people who have extra capital with those who need it. Banks, as middlemen, invest that capital wherever they can get the greatest return for their shareholders. But now, Tasch says, the system should be re-jiggered so that investment decisions also start to take into account what's best for local communities. When small businesses borrow or get investment directly from their customers, he says, communities become stronger; societies become more humane.

But the real dividend of slow money, says Tasch, is social, economic, and biological diversity. In an era of industrial agriculture, when millions of acres are planted with the same variety of corn and when millions of pigs are bred for their yield, small local farms are "the ultimate hedge fund," he says.

"Genetically-modified plants and organisms [GMOs] are like [financial] derivatives," Tasch says. "GMOs are like finance scientists trying to trick the yield on a piece of land. Sure, people will say I don't know what I'm talking about, that these new GMO varieties of plants are crossbred for less risk because every wheat stalk planted is exactly the same genetically. But I don't know. I'm not alone when I say that we headed for a biological correction similar to the financial correction we just had. Why? You can't trick risk. The only way to mitigate risk is with diversity. Biological, cultural and economic diversity is the only answer for risk -- meaning lots of small-scale, diversified things of all kinds coexisting in a healthy relationship. We're talking percolation versus circulation; diversity versus monocultures, fertility versus profitability, and relationships versus transactions."

So far, Tasch says, his slow money movement has 700 members, including about 50 people who have sent in $1,000 checks over the Internet and small local enterprises such as Vermont's Butterworks Farm, a $1 million annual yogurt business, as well as Let's Be Frank, a Berkeley, Calif.-based hotdog company, and Sky Vegetables and Local Harvest. At the Sante Fe slow money convention in September, there were 450 attendees from 34 states and six countries, he said. "Now we're trying to get 1 million people to sign the slow money principles and from that, build capacity."

He admits that early investors may not be "big money people" but instead, small money investors who are "frustrated with the foundations system and who are frustrated as philanthropists." Says Tasch: "We must bring money back down to the Earth. It's time to restore a bit of reality back into all of our lives."

For a copy of Tasch's petition of Slow Money principles, click here. For more on Tasch's slow money philosophy, check him out on this March 2009 YouTube video.