Community investing keeps small family farms in capital

WASHINGTON, D.C., Posted October 26, 2004: A network of seven organic dairies in Oregon … a third-generation vegetable farm in Maine … and a Hispanic, woman-owned, specialty-food growing and processing operation in New Mexico. These are just some of the small and family farm operations across America that are finding much needed expansion funds and business growth counseling from a relatively new and fast-rising source: “community investing.”

In this context, “community investing” refers to financing and other assistance provided by individual investors, banks, credit unions, loan funds, venture capital firms, foundations and other organizations. The help supports smaller family farms that often are overlooked by "traditional" financial institutions. The support that community investing and business assistance gives to farmers is particularly important in difficult economic times such as the present, where a slow economic recovery has not yet reached or altogether bypassed many rural areas.

Jean Pogge, Community Investing Program chair and senior vice president of Mission-Based Deposits for ShoreBank, America's first and leading community development and environmental banking corporation, said: “Small farming is moving into a much more entrepreneurial space, where a focus on organics and niche markets are becoming more and more popular. Capital is vital to these endeavors. With rapidly changing markets, receiving information in a timely and effective manner to help design business plans has also become crucial to farmers. Community investing helps provide the needed capital and information; it now plays a key role in the growth and success of small farmers throughout the country. Community investing is a powerful tool – not just for basic loans but also for organizational assistance, partnerships and coops, along with marketing materials. ”

Wally Holmgren, owner of Holmgren Dairy in Myrtle Point, Oregon and benefactor of a Shorebank Pacific loan, said, “I run a successful organic dairy farm, currently milking 225 cows every day. Shorebank Pacific has been instrumental in helping my farming business grow. Several banks we contacted were not interested in helping us with our loan. Then I remembered an individual who had come out to visit the farm from Shorebank Pacific. You can’t imagine my surprise when, in my first phone call to them, they said yes. ‘Come over – we’ll help you figure this out and make it work.’ Simply put, they were just there to help us.”

Community: A good investment

A 2003 study from the Social Investment Forum shows that community investing is the fastest-growing category of socially responsible investing in the United States. Total assets held by community development financial institutions (CDFIs) nearly doubled from $7.6 billion to $14 billion between 2001 and 2003.

Investment winners

In recognition of this agriculture financial trend, the Community Investing Program, a project of the Social Investment Forum Foundation and Co-op America, singled out nine organizations from across the United States that “best exemplify the building of economic opportunity for small farmers through community investing.” The nine organizations recognized today by the Community Investing Program for their support of family farmers are: Coastal Enterprises, Inc. (Wiscasset, ME); Mountain Association for Community Economic Development (Berea, KY); New Mexico Community Development Loan Fund (Albuquerque, NM); Northcountry Cooperative Development Fund (Minneapolis, MN); Rudolph Steiner Foundation (San Francisco, CA); Self-Help Credit Union (Durham, NC); ShoreBank Pacific (Ilwaco, OR); Southern Development Bancorporation (Arkadelphia, AR); and Vermont Community Loan Fund (Montpelier, VT).

Any individual or institution can become a community investor. The Social Investment Forum Foundation and Co-op America encourage all investors to direct at least one percent of their assets to community investing. One of the most popular ways to invest in communities is by opening an account at a community development bank or credit union. Most investors open money market accounts or certificates of deposits. Checking and savings accounts, CDs and IRAs also may be provided through community development banks or credit unions, which will use the deposit to strengthen the local community. If there is not a community development bank or credit union in their local community, many investors open up accounts in community development financial institutions in other locales

Another approach is to invest in community development loan funds, pooled funds, and venture capital funds. These investments can support local or international projects that are serving low-income communities. For individuals and institutions wanting to invest in mutual funds, some mutual funds have a community investing component as well.

Beyond the possible monetary payoffs and a sense of socially responsibility, investors and all members of the community stand to benefit by creating a thriving rural environment that continues to provide opportunities for the next generation.

Stutzman’s Vegetable Farm in Sangerville, Maine is a third generation operation that needed to evolve to survive. “It was time to make some changes,” Sid Stutzman, owner of Stutzman’s said. “Everything from methods and practices to equipment had been handed down through generations. The program helped us make our farm even more successful.”

Recent news and research

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