Don’t just buy local, invest local: One town’s plan to buy stock in their own community.
We’ve all been told to buy locally, but when it comes to investing, we give our money to the same old faceless Fortune 500 companies. If we could invest in the neighborhood bar or bike shop instead, that capital would stay in the community. Unfortunately, securities law makes it practically impossible for small businesses to issue stock and accept investment.
An innovative program in the 9,000-person town of Port Townsend, Washington, however, has found a way to skirt this obstacle. The Local Investing Opportunities Network allows individuals to provide financial backing for businesses in Port Townsend or surrounding Jefferson County through an easy application process. A business owner submits a business plan, references, and a request in a specific amount, and LION distributes the application to residents who want to invest. From there, the business and the investor figure out the details of an equity investment or a loan. So far, LION has provided local investments for a wide variety of businesses, including a dairy, a bike shop, a nightclub, and even local schools.
Keeping investment money in the community creates positive echoes through what’s known as “the local multiplier effect.” When an investor helps a neighborhood business grow, the profits and jobs stay local as well. Investing in a corporation headquartered elsewhere, by contrast, merely increases profits in some far-flung corner office or helps open a new store in another part of the country.
The LION program also brings people together. “It really helps build community,” says LION’s informal spokesman James Frazier. “Businesses feel appreciative that there’s another option outside of just going to a bank. They appreciate knowing that their neighbors want to help them out, take a stake in them, and will have an interest in their success.”
Indeed, tight local connections make LION possible in the first place. “The only way that we’re working right now is basically under the radar of [securities] laws by virtue of the fact that everybody knows everybody around here pretty much, so we’re able to say that these are non-public offerings. They’re exempt from registrations and all that kind of stuff.”
Now LION is looking into publishing a blueprint for local investing networks so other cities can follow suit. In the absence of major reforms at the Securities and Exchange Commission, following LION’s lead might be our best way of investing in the economic ecosystems we actually inhabit.
\n
Want another way to keep money in your neighborhood? Start a local currency. Here are a few examples of neighborhoods with their own kinds of cash.
The Brixton Pound\n
The multiethnic neighborhood of Brixton in South London launched the Brixton Pound in September of 2009. The notes, which feature images of local celebrities such as the community activist Olive Morris and the environmentalist James Lovelock, were an immediate hit. Currently more than 120 local businesses accept the currency.
\n
The Brooklyn Torch\n
The Brooklyn-based artist Mary Jeys started the Brooklyn Torch Project in 2009 to create and distribute a local currency for the Greenpoint, Williamsburg, and Bushwick neighborhoods. The Torch hasn’t launched yet; they’re still working on designs.
\n
Ithaca Hours\n
Started in 1991, Ithaca Hours is the largest and oldest community-currency system in the United States. Each Hour is equivalent to $10, or roughly an hour’s work. They’re accepted by several hundred businesses, but haven’t come close to replacing the dollar.
This article first appeared in GOOD Issue 19: The Neighborhoods Issue. You can read more from the issue here, or find out what it's all about by reading the introduction.\n
Share on Facebook
