The role of right (not THE right)

We are living in an historic moment. This moment makes us consider what is right, as in morally right. It’s easy to talk about what is wrong. What’s hard is to articulate what is right. This can also be said of our financial world.

In fall of 2015, I was invited the United Arab Emirates to represent Community Sourced Capital at EFICA, the Ethical Finance and Innovation Challenge, an annual award made to a financial organization that represents the values of ethical finance. This brought the question of “What is ethical finance?” to front and center for me. “Ethical” and “finance” are words you just don’t see together here in the United States.

I was the only American there. And I was the only woman and the only non-Muslim in my category. I made the long trip to the UAE twice for the competition and had the pleasure of meeting Nobel prize winner Muhammad YunusFounder of Grameen bank and considered the grandfather of microlending. He said about CSC, “It is a good business.”

At CSC, we’re engaging with the question: why not put ethics and finance together?  We ask, why are people always consumers buying something for themselves, investors looking for the highest return, or philanthropists giving away their money. We think the narrowness of these categories leaves a lot of room for something else– for generous reciprocity in finance.

In the UAE I learned about Islamic Finance, which is considered to be ethical finance. Zero interest lending is one of the components of Islamic Finance and is part of Sharia Law. Islamic Finance, where lending is always “riba-free” (non-interest-bearing) teaches us something about the generous instinct that lives within our Squareholders. Whether or not they know it, Squareholders are taking part in ethical finance.

When I blogged about my trip to UAE back in November 2015 I said:

…we find that people intuitively understand that their money is creating value when they participate in making a zero interest loan to a business in their community….People WANT to make generous loans to their neighborhood businesses.”

Squareholders use their money to create real value in their communities, and do this outside of the traditional investor, philanthropist, or consumer roles. At CSC we believe it is morally rightit is ethicalto consider money as a tool for creating value in our world, and not to think of it as an end in itself.

The Spirit of a Squareholder

One of the exquisite pleasures of launching our fundraising campaign has been connecting with the CSC Squareholders. Most Squareholders found out about Community Sourced Capital when a business or business owner they know and love asked them to participate in their loan by buying Squares. CSC wasn’t a familiar name to them when they first got introduced to the possibility of becoming a Squareholder, but once they heard about our way of building connected, community finance, they wanted to participate! 

Here are some things Squareholders had to say about CSC when they first bought their Squares:

I love the concept of supporting a business that I want to see succeed because it’s existence enhances my community.

I’m really excited to be part of the Community Sourced Capital program. I may need it some day!

I love having strong local businesses and this type of micro loan arrangement makes sense to me.

More recently, we’ve heard from Squareholders when they responded about our own campaign to fund CSC’s nonprofit reemergence:

We are in! Donate all & best of luck….we’re rooting for you & CSC.

Congratulations on CSC’s evolution into a non-profit.  Best wishes for future success in accomplishing your goals.

Happy to donate my (small) square balance to this cause. Best of luck!!

Thanks for your email.  I would like to leave the balance alone for now and support a future loan.  Thanks for reaching out and offering this option – I had forgotten all login info and would probably have taken no action if I hadn’t been offered the email choice.

I would love to donate the balance of my account. Thanks for all that you do!

We would like to withdraw the balance, which we will forward to our son and new daughter-in-law, who will certainly pour this gift right back into the community!

I think [Community Sourced Capital] can be life-changing. One starfish at a time. Thanks for the work you do. It matters.

During our campaign, Squareholders have made different choices about what to do with their money. And we love hearing every single story about why they made their choice. The spirit of a Squareholder is generous and connected to community. And we are so grateful! Thank you to each and every Squareholder—we love you!

A Love Story for John Berdes

John Berdes, the CEO of Craft3, lost his life to lung cancer and we are deeply bereaved. John was Our friend, partner, and mentor. We loved him. He was a brilliant visionary who worked his whole life to build just and equitable finance for communities.

We met John almost three years ago. He pinged CSC and said, matter-of-factly:

I would be interested in sitting down sometime and figuring out what possible synergies there are between us. We seem to share some core beliefs.

Who could resist? That was the beginning of a beautiful collaboration and friendship. A delightful aspect of working with John was how he wrote. In the follow-on to our first meeting, he sent this morsel embedded in a list of what he could offer to CSC:

3. I am personally available to provide depressing perspectives and irrefutable truths (and generally opine on your considerable options).

Yup. That was John. We learned that his depressing perspectives were pretty much right on, and his irrefutable truths, well, despite our best efforts, they turned out to be just that.

John wanted to accelerate our brand of healthy community capital and he put 500,000 of Craft3’s dollars to work on our platform. He recognized the power of community based finance and supported Squareholders by matching their Squares one to one. Craft3 matching capital has built larger loans for 40 small businesses in Oregon and Washington.

John wasn’t only generous, he was also tough. He challenged us every step of the way– to do more for small community businesses (especially those left out of the financial system), to do it responsibly, and to build our business in a way that was sustainable so we too would survive. Sometimes it was tough to hear his perspectives. And often that was just what we needed.

In his frank way, shortly before he died, John said:

I’m not here to read tributes, just stories of love and life.

And so, John, this is not a tribute, but a love story.

Travels in the world of ethical finance and good business

Human scale investments and financial institutions that care;
Collaboration among competitors;
Businesses that build goods and services for the benefit of people and communities.
All things we are coming to expect.

I’ve been on several grand adventures in the past month. Some close to home and one far away – all close to my heart and strong indicators of a world turning its focus on the well being of people and planet.

B Corps Champions Retreat
My first visit to the B Corps Champions Retreat was inspiring. It’s an annual gathering of leaders of B Corporations – a group of businesses large and small, who have embraced the concept that how a business treats people and the environment matters as much as the finances. The business-for-good movement is growing: Etsy became a B Corporation this past year and Kickstarter is a BCorp too. Even Unilever has announced that it’s interested in becoming a B Corp. BCorps voluntarily meet high standards of transparency, performance and accountability to all stakeholders (not just shareholders). As a B Corporation for two years now, Community Sourced Capital signed a Declaration of Interdependence, signifying we are both dependent on and responsible for each other and our mutual well being.

Money on a Mission, Portland
Beneficial State Bank, where we bank, is one of few B Corp banks in the country. For the second year in a row, we co-hosted an event called “Money on a Mission” in Portland, Oregon to bring together small businesses and mission-driven financial institutions that provide healthy capital. It was a sell-out event. The Governor of Oregon and the Mayor of Portland both showed up. There’s a lot of new ways for small businesses to access capital right now, and many online sources choose not to disclose their fees to potential borrowers (and they do that for a reason). That message was continually reinforced throughout the evening: all borrowers can and should fully understand how much a potential loan will cost. If you don’t want to take our word for it, just check out what these entrepreneurs had to say about it.

Ethical Finance and Innovation Challenge
Finally, my biggest travel opportunity of the last month took me all the way to Dubai, twice. We were selected as a finalist for the Ethical Finance and Innovation Challenge. Islam, the official religion in Dubai, has embedded rules in its principles and laws about what money is for. I first learned about Islamic Finance when a colleague sent me an article from the Guardian with a provocative headline: Can Islamic Finance Save Capitalism?. The article started with a question: Is there a place for ethics and morality in the global economy? I can only think — How could we have a global economy devoid of ethics and morality? Our economy is a reflection of our society. Islamic finance holds that money is merely a means of exchange, not something with intrinsic value itself. Money should be used for things that build real tangible value for society. It was an honor to share an American perspective on this. After all, I was the only American presenting (and the room was filled with 350 people, including Nobel Peace Prize recipient Muhammad Yunus).

At Community Sourced Capital, we find that people intuitively understand that their money is creating value when they participate in making a zero interest loan to a business in their community –- over 90% of the businesses that run CSC campaigns are successful in finding people to fund them. That’s compared to other kinds of crowdfunding which often only see around a 40% success rate. People WANT to make generous loans to their neighborhood businesses. It feels good!

And here’s an amazing thing about finance that feels good: real value is created. Measured in jobs alone –- the $1.5 million dollars deployed via CSC so far has already contributed to creating over 100 new jobs. Real value, on the ground. That’s the goal.

The boxes are getting bigger

Starvation Alley Farms is located on the small coastal town of Long Beach, Washington. It was one of the first funding campaigns on our lending platform. The leaders at Starvation Alley are cranberry farmers and business people, plus they have their eyes on the prize of influencing the food system. To do that, Starvation Alley completed a three year process of certifying the first organic cranberries in Washington State. Since then, they have recruited several other farmers to follow their lead.

Transitioning to organic can be an expensive process, and Starvation Alley knew they needed to beef up their business model to pay for it. They thought that juicing the berries and selling the raw, unsweetened juice to bars and restaurants would increase the per pound value of those newly organic berries. Not only would they make more per pound, they could also freeze the berries after harvesting them and then make sales year round to create a more stable revenue stream.

The lowest end industrial juicer they could find was $12,000, and since they liked the concept of seeking the needed capital from their community, they took a chance and raised $12,100 from over 100 people in the form of small generous 0% interest loans. They bought the juicer. That was three years ago.

That small juicer is the manifestation of what a little moment of possibility can turn into when it has a community of supports behind it. Following Starvation Alley’s example, four more businesses in Long Beach ran Community Sourced Capital campaigns. Now there are hundreds of community lenders who have deployed over $90,000 into their small town: an independent hotel has installed solar energy (twice), a bakery purchased a stove, a industrial designer manufactured a new product line, and another hotel opened its doors just down the road. Big changes made bigger by the people who see possibility.

A few weeks after Starvation Alley paid off its first community loan, it took out another loan for a bigger and better juicer. They raised over $30,000 to buy this one. This new juicer makes it possible for them to open a channel for other farmers in the area to make the transition to organic by selling their berries to Starvation Alley for juicing.


One little juicer changed the entire landscape of farming and small businesses in Long Beach. The spirit, commitment and action of the people in this small coastal town has helped create a world of possibility for small businesses and farmers everywhere.

The community kind of impact investing

Ever since JP Morgan Chase started talking about Impact Investing as a “new” asset class in 2010, it’s been a topic of discussion amongst elite investors in the know.

Impact investing is described in Investopedia as an investment that “actively seeks to make a positive impact.” Today, many of us are invested in mutual funds and we’re taught to look for the most money we can make on our investments in the shortest period of time, regardless of what we’re actually investing in. The focus here is on dollar impact, not social impact.

I can remember way back when my grandfather talked to me about investing. He was born at the beginning of the 20th century and believed in investing in companies that did things he liked. He was an engineer and he relished having shares in 3M which was, at the time, probably the most innovative company going! I miss his excitement about the places he invested. And even though 3M may not fit in today’s standards of social or environmental impact investing, it sure was making an impact on innovation back then, and this was an impact that my grandfather admired and sought out with his investment.
Continue reading “The community kind of impact investing”

Connecting Capital to Meaning

I talk a lot about driving capital flows (money) toward the things people value most — community mostly, but also family, education, and love.

Much like Diane (in the video above), I talk a lot about driving capital flows (money) toward the things people value most — community mostly, but also family, education, and love. It’s a simple concept. But our world is currently set up to drive capital flows toward more money. Implicit in the system is that more money will bring us a world that is more valuable — it will bring us more of what we most value. But many people find that it doesn’t work that way once our basic needs for food, shelter and healthcare are met. Does making more money create more value? This is the experiment our world is currently running.

What if we didn’t measure our wealth in money? What if we measured wealth as the number of mountains we’ve climbed, the number of books we’ve read, or the depth of the friendships we have? What would we do with our money then?
Continue reading “Connecting Capital to Meaning”

Sacred Economics Part 3

Money circulates when we get paid; we move it when we spend it on rent and food; we move it when we pay our utilities bills. How often we move it in a certain time period is called “the velocity of money.”

“A medium of exchange needs to circulate to be useful.”
— Charles Eisenstein in Sacred Economics.

Money needs to move around in order to be valuable. Money is not actually very useful while it’s sitting in the bank. What does it mean to move money around? Money circulates when we get paid; we move it when we spend it on rent and food; we move it when we pay our utilities bills; and it moves again when the utility company pays their employees. How often we move it in a certain time period is called “the velocity of money.” Bet you didn’t know that money has a speed. Pretty cool huh?

When we move money inside our cities and neighborhoods, it creates even more value for our cities and neighborhoods. When you buy a meal at an independent restaurant owned by someone in town who buys from the farms and producers nearby, your money keeps moving quickly inside your community. Money paid for that meal will probably move several times over in your community before it heads out of town (if it ever does). It moves when the waitress from the restaurant buys a latte down the street and the farmer builds a new fence with local labor. It moves when the restaurant owner pays the local day care and the dishwasher buys a beer.

Next time you spend some money, think about who gets that money. Imagine where it might go next. When you pay the dentist, what happens to the money next? And after that? If you buy some flowers on the way home from work, who got that money? What are they going to do with it? Does it move fast? Or sit somewhere for a long time?

Try this out today. See how far you can think about money moving through your local economy. Now here’s the intriguing question I’ll leave you with: does your money ever make its way back to you?

Sacred Economics – Part two

Attending the Integrated Capital day at the BALLE (Business Alliance for Local Living Economies) conference last week left me awestruck and inspired by the people working on transforming our economy from one based on Ego – “What’s in it for me?” – to one based on Ecosystem – “What’s in it for all?” Continue reading “Sacred Economics – Part two”

Sacred Economics – Part One

I’m reading Charles Eisenstein’s book, Sacred Economics. I’m including his great video on this post, which presents his ideas.

In his book, Eisenstein suggests that we humans are born with deep gratitude because life itself is a gift.

He has a point, and I’d like to try applying it to how we support small business. What if we changed our financial story from one of every man for himself to one of the more we support one another the more we have?

At CSC, we are using new technologies to build on old traditions of sharing resources in order to support one another. One day, when I was introducing Community Sourced Capital to a small business owner, she said, “We do that!” It turns out the Vietnamese immigrant community has a practice of lending circles in order to help each other get a leg up. How wonderful 🙂

So I’m kicking off this series with a question: what more could we do to create an economy that is a reflection of our gratitude for each other, the resources of the Earth, and life itself?

Occidental Street by Community Sourced Capital Pioneer Square
A photo I recently took of Occidental park in Pioneer Square, just a few blocks from our Seattle office. Taking a walk through Occidental always feels like a gift to me.