By Rodney North, rodney@equalexchange.coop

(The 2^nd of two articles in response to Marcia Stepanek’s November 6^th post on Slow Money.)

Because we at Equal Exchange worry about good, small, mission-driven businesses being unable to grow and remain independent – and that their special character is often diminished or diluted after the company is sold – and because there are other characteristics we’d like to see in firms (like a greater role for workers, farmers, consumers) we think it isn’t always enough for capital to be patient. Therefore we ask that socially responsible investors and anyone wanting to reform our food system to give a look at a business model that has been around for 150 years – co-operatives.

We think the co-operative model achieves much of what Slow Money founder Woody Tasch is striving for and maybe more. Here are some examples:

▪  Organic Valley and Deep Root are just two of countless farmer owned co-ops that are doing great work to restore our soils, provide great, safe, organic foods, and that are structurally protected against selling out.

▪ Our own 23-year old worker co-operative which is already putting about $8 million of equity capital to work through our ever-growing Fair Trade partnerships with co-ops of small-scale organic farmers in 20+ countries. We’re owned by us, the 100+ employees, and have a no-exit clause in our by-laws that removes any temptation to sell by committing any net proceeds from a sale to be given to another organization in the Fair Trade movement.

▪ Hundreds of consumer food co-ops nationwide (who, by the way, are among the original pioneers of the whole food, local and organic food movements) represent a great example of investing locally in supporting a sustainable, connected food system. What’s more local than where you buy your organic milk? Plus, each store constitutes an investment that will stay in your community and that will not be bought out five or ten years down the road.

To make it easier and more attractive to invest in co-ops Equal Exchange is working with the National Cooperative Business Association (www.NCBA.coop ) to create a model mutual fund where folks could buy shares knowing that their money would only be used by co-operatives. Stay tuned for more on that as it develops.

Also, Equal Exchange and others have already contributed financially to the relatively new Co-operative Capital Fund (CCF), a socially responsible investment fund that invests in New England cooperatives in the form of "patient capital,” or equity-like financing. CCF helps the regional cooperative industry to grow and flourish by providing capital that acts like equity without requiring co-ops to give up control over their own management and destiny, as traditional venture capital might. 

I’d be remiss if I didn’t mention another Slow Money-esque innovation that we’re involved in. Wainwright Bank (well-known for their commitment to sustainability, social justice and community investing) helped us create a progressive alternative to the ubiquitous but generic Certificate of Deposit.  It’s called the “Equal Exchange CD”. It pays a competitive rate, but unlike the typical CD where your funds go who-knows-where 90% of these funds are dedicated to creating a line of credit reserved for our worker co-op to use to help finance the purchase of millions of pounds of Fair Trade, organic coffee every year from 26 farmer co-ops around the world. While a transparent, socially responsible CD like this has created another financial tool for our own co-op and hundreds of depositors, it’s a model that we hope social enterprises of all types can explore.

Lastly, because small-scale organic farmers, and their co-operatives, in places like Peru and Guatemala need financing, too, but have none we need innovative organizations like Root Capital (US) and Shared Interest (UK) who are working hard to meet that need. However, they first have to raise their own funds from socially responsible investors at home before they can re-distribute that capital abroad.

In the end, we welcome the launch of Slow Money and any new interest in financial models and instruments, like those listed above, that restore capital to its rightful role as a tool to serve everyone's needs, and not just the needs of those who possess it.