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neighborhood economics funding kitV3

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neighborhood economics funding kitV3

  1. 1. NEIGHBORHOOD ECONOMICS FUNDING KIT 1.2 How to fund things in places where venture capital doesn’t work…
  2. 2. IT HAS FOUR PARTS… 1. Lending, both funds & lending clubs 2. A donor advised fund that invests philanthropically 3. Giving circles 4. A kids community savings bond
  3. 3. LENDING THAT… …For businesses that are not high growth or fast enough growth to call for venture capital. …works for loans that are good for the community and that can pay back investors at below bank rates.
  4. 4. LENDING There are a growing number of Interest free platforms that make loans to small businesses, like KivaZip, and Community Sourced Capital, or community loan funds or relationship-led lending circles. We would also experiment with peer due diligences like vilcap Which creates collective community wisdom. And each investment would have to agree on a tax to the commons to support the food hub. Same with gifts Unrestricted operating grants, not program grants
  5. 5. BENEFIT democratization of funding in an environment where most of the capital needs to be gathered from local sources. Local people powered capital.
  6. 6. OUR INNOVATION We look at our community and decide when it makes sense to: o give with no financial return; o when a philanthropic investment makes sense; where the tax deduction is enough to justify an investment that is mostly for public benefit but can return capital to the Donor Advised Fund (DAF) to replenish the money that is given; o or simply lending, either through a local fund or less formal local lending clubs.
  7. 7. WHAT’S REALLY NEW? We are going through a transition that requires we look at our resources differently and act in a new way; investing and giving for good in our communities. We offer a holistic look at community investing and giving that erases the outmoded and destructive bifurcation of investing versus giving. We can no longer afford to invest for personal financial return and then put some of the excess aside to do good with, often trying to amend the ailments caused by investment. Our three part approach will reduce friction & increase the amount of capital available in a community.
  8. 8. DONOR ADVISED FUND (DAF) The DAF can do loans or equity (probably mostly loans) but the individual donors get a donation tax credit by placing their money in a DAF. The loan to the profit or non profit business is paid back and the capital returned to the DAF (not the individual donor). The DAF owning group uses the money to either give away as a grant or recycle into another investment. Any return above $1 makes the donation side of the DAF a more powerful force for giving. This is the place to do long term investing, when getting close, as in horseshoes, is a win.
  9. 9. GIVING CIRCLES Two forms: Groups that meet regularly and trust each other, from book clubs to Sunday School classes, meet and one member presents a cause to donate to each month. The sponsor of each cause keeps the group updated on the progress of the non profit recipient. We have a software platform to enable this. Or more established, larger scale groups like Women for Women in Asheville, where each person puts up $1,100. All grants are unrestricted operating grants; the most valuable kind of money for non profits Each gift includes a tax to the hub as a gift to the commons baked into what is often microtargeted myopic philanthropy . Can’ work with kids under 8 but not who are 18. theory of change oppression is eliminated as much as possible.
  10. 10. FOOD HUB COOP Miss chemical. Spit out dividends. Owen cooper. No program grants. Tactical, not strategic philanthropy. not accept any program grants; only unrestricted operating grant.s the bst kidn of non profit grant dollars. The right funders willb e attractd to us. This whole thing creates a collective intelligence about value in the community, long term, so kids are smart about their bonds. Every grant on the daf is taxed on two thigns; the food hub and adolescent female agency. Top raptors and fragile biomes.
  11. 11. MAP AND FARMERLIN 11 languages vital sicence. Also medicine. Cultural preservation of language to help botanicals. Cultural. Goal restoration west african mangroves through indigenous land management as our best hedge against climate change transition. Respigard.
  12. 12. FOLLOWING SMART GIVERS Giving circles could follow the smart, effective Women for Women group in Western North Carolina. In WfW, each woman puts up $1,100 per year. They have become exceptionally strategic. For instance, they funded a social worker at ABTech, which has led to battered women graduating at around 90% in trades compared to under 25%. The social worker starts documenting instances that become an on campus restraining around a woman trying to get her life back together. Ideally, the giving circles would pay attention to Women for Women and other smart larger scale giving circles.
  13. 13. INFLUENCE ON BOTH POLES The kitwill also find ways to let the average person join in investing in companies vetted by smart angel investing lending & investing circles, (where people put up on average $5,000 to $25,000 or more) like the lending circle created by Accelerate Appalachia. Enabling people who have $25 to invest in local businesses following people putting in more money who’ve gotten smart about where to put their money is a key to both the giving & investing side of the funding kit.
  14. 14. KIDS SAVINGS BONDS This is the only slightly original idea of this tool. Kids save each week, for example $1, take it to school and put it in a little manila envelope with a red button closed with a string. Instead of saving $18 in a school year and getting a $25 savings bond at maturity, kids invest in a local project, involving themselves and/or their local community and environment. They would organize as Riparian Justice Scouts For first graders, their fund matures in 12 years. During that time they are involved in the project they invest in (river restoration in a poor neighborhood, eg.). Parents and grandparents can top up their kids deals and help make them turn out well.
  15. 15. THE COMBINATION IS NEW Lending circles and local funds exist, as do giving circles. Some DAF’s have turned into effective tools to invest for goods, especially those on the Impact Assets platform that is a spin out of the Calvert Foundation. These tools have not been combined and used with a holistic lens that decides which tool a community should use in which instance.
  16. 16. THE PAYOFF The threefold flexibility of giving, investing with a full tax deduction and lending where you get your money back at an appropriate return, make the Neighborhood Economics Funding Kit a lower cost, more powerful tool for creating a vibrant, thriveable community. Then add in the kids, who will not only lend, but build their own culture of local investment. Imagine that for a minute.
  17. 17. THE PACKAGE Together the four elements offer a variety of ways for churches, clubs and individuals to get involved, from giving, to donating and then investing, to outright investing. And they provide a way for kids to get involved and learn, and for the adults to learn from the kids; they would do due diligence, assisted by an adult on projects each year, as I see it, though ideally some projects would be 12 year timeline projects with enough variety to make them interesting.
  18. 18. NETWORK POSSIBILITIES This model could be replicable in many towns, and I think might scale down in Burnsville, and upward as we bring in Nashville, scale up for use in Asheville, Nashville, and Allentown, PA or Tupelo, MS.
  19. 19. THE BACKEND It might need a local community development financial institution (CDFI) or other community organization to help administer the package. It would require a full time staffer, say an experienced CDFI leader, who would thrive in a flexible atmosphere Seven percent is what Kiva gets for tips; seven percent would be a good target operating fee for this package of DIY local merchant banking tools.

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