Is there a connection between organic rutabagas and the BP (BP) oil spill in the Gulf of Mexico? The Slow Money Alliance says yes.
The Alliance believes it can right some of Wall Street's wrongs by convincing investors that there's another way to approach money. Taking a page from the slow food movement -- which argues that fast food will ruin your health, local culture, and the environment -- Slow Money suggests that "fast money" is doing the same thing. The cure? Give up looking for Wall Street's fast returns and put money into local, sustainable agriculture instead.
That's what several hundred investors, farmers, philanthropists, and activists gathered to hear at a conference last week held on a 1,400 acre working farm in Shelburne, Vermont. (One irony perhaps lost on the hosts: The event was held at Shelburne Farms, formerly home to a branch of the Vanderbilt family, whose colossal wealth came from railroads and shipping.)
In the conference's keynote address, environmentalist and Middlebury College scholar in residence Bill McKibben argued that "fast money" is supporting petroleum-based farming and polluters such as BP. "The Midwest has become a place where you use oil to hold up plants so you can pour oil over them," McKibben said, speaking in a tent pitched near both Lake Champlain and Shelburne Farms' Coach Barn, which used to house the estate's horse-drawn carriages. A banner hung overhead with the message, "You want to talk about returns? At 1,000:1 in four months, a tomato seed makes even the highest fliers seem paltry."
Fossil Fuel Costs Are Key
At the conference, McKibben offered his recipe for helping avert global warming and environmental destruction: higher taxes on fossil fuels and government subsidies for small farmers, rather than agribusiness. "There is nothing that would cause the end of fast money" quicker than a higher price for fossil fuels, McKibben said.
While McKibben's speech received a standing ovation, the realities facing the movement are daunting.
Robert Zevin, the president of Robert Brooke Zevin Associates and a father of socially responsible investing, was asked by one audience member whether she should take money from her 401(k) and invest it along the guidelines being touted at the conference. "Certainly not," Zevin replied. "The whole system is rigged to make slow money difficult."
The primary aim of the Slow Money Alliance is to convince one million investors to plunk one percent of their assets into small food systems within a decade. Yet even if an investor wanted to help Slow Money reach that goal, there's no way to pursue it. Without a mutual fund that targets small organic farms, for example, there's no way for most ordinary investors to put money into a raw dairy operation. And even for wealthy investors, foundations and charities, there are few pathways to funneling money toward Slow Money's intended beneficiaries. One session at the conference led to a debate about how to create such investments -- should the Slow Money Alliance create a fund-of-funds for wealthy investors, for example? -- without providing clear answers.
Other Obstacles for the Movement
It's also unclear whether the slow-food approach to money would appeal to investors other than high-net-worth individuals looking to support a pet project or family foundations viewing it as a type of philanthropy. After all, food is a commodity people enjoy for its aesthetic benefits, while money is seen as a cold, hard asset that's best put to use creating more money. Another issue the movement faces is the lack of a track record. There is no way to tell just how well slow money investments would perform.
"We don't have good statistics on how it works as an asset class," admitted Slow Money Chairman Woody Tasch. "But if you believe it's broken, it's time to invest."
Tasch, who is the former CEO of Investors' Circle, which says it has directed $133 million into environmental and socially aware companies and funds, admitted that the movement is in its very early stages. "We're trying to figure out how to do this," he told the crowd. (Tasch didn't respond to multiple requests for an interview with DailyFinance.)
As it stands, the Slow Money Alliance is attracting the same type of crowd that pays $5 for a gallon of organic milk: wealthy, white and left-leaning. As Joel Salatin, the owner of Virginia's Polyface farm told the crowd, many of the country's most successful social movements began with the rich. "The abolitionist cause was viewed as elitist -- 'You're wealthy enough not to need slaves,' and so on," Salatin said. "We've got to start this with the wealthy people, because they can afford it."
What Is Your Risk Tolerance?
Answer the question "What type of investor am I?".View Course »