A HISTORY OF COMMUNITY SOURCED CAPITAL
Community Sourced Capital was dreamed up by Brent Cochran, Casey Dilloway, Rachel Maxwell, and Meryl Hunter– a team of MBA Students taking an Entrepreneurship course at the Bainbridge Graduate Institute (now Presidio Graduate School). It was brought to life in the summer of 2012 (just after the video above was made) when Casey Dilloway and Rachel Maxwell joined Fledge, the conscious company accelerator. CSC launched and ran for three years led by Casey and Rachel with the help of a spectacular team, including core team members Alex Mondau, Hilary Wilson, Emily Triggs, Lindsey Shelley, and Stephanie Robinett. They were helped along the way by Ryan Ceurvorst, Emily Kanter, Michael B. Maine, Danny Lampton, Ben Chesler, Peter Rengstorf , Awen Wen and many others. The tech platform was designed by Casey Dilloway with the help of Marcy Tobin, and developed by Marc Cantwell and Mark Hurwitz of Launch Brick Labs. With loads of strong advisors including Carol Sanford, Todd MacDonald, Teri Bellamy and Luni Libes alongside the financial support of a group of committed angel investors, CSC grew into a much loved platform for local lending!
The power of CSC’s work attracted important partners such as Craft3 and the Washington State Department of Commerce. And our story excited people all across the globe. CSC won an investment prize from SVP Fast Pitch, became a finalist and the Ethical Finance Innovation Challenge in the United Arab Emirates, and garnered loads of earned media in national outlets such as Fast Company, Entrepreneur and on NPR. We even made the TV news!
After three years and 96 loans, the reality of scaling crowd sourced zero-interest lending for local businesses as a for-profit business came home to roost in the form of the end of the the runway of our working capital. We simply didn’t show enough progress and acceleration of adoption to be viable for a second round of funding. CSC, the Social Purpose Corporation closed its doors.
Rachel Maxwell and Hilary Wilson, with the help of Lindsey Shelley, thought the CSC platform could be viable as a not for profit organization. To this end, the directors and investors of the Social Purpose Corporation gifted the tech platform to a newly formed non-profit under the same name. Over 500 people made donations to help build the new non-profit.
And while we never relaunched the lending platform, here’s what we did do during our year as a non-profit:
- We brought the concept of our innovative lending platform to thousands of people in Hong Kong, speaking at their Social Enterprise Summit.
- We represented a real live example of community investment at an intimate gathering of innovators and investors from all over the US and Europe in Taos, NM exploring Money in Place.
- CEO Rachel was a keynote speaker at the Economics of Happiness conference in Port Townsend, WA focusing on the importance of real community value as a measure of the health of our economy.
- CSC brought together groups of people to discuss their relationship with money and the holidays in three cities.
- We were active on the steering committee of the People’s Economy Lab in Seattle developing a set of initiatives to foster a local economy that works for ALL people.
This month I attended two fabulous conferences: First, the COCAP Revolution: Building the WE Economy conference in vibrant Oakland and then the BALLE Leadership Summit in beautiful Monterey. These conferences were my first opportunities to meet other folks who do local economy work outside of our corner of the Pacific Northwest. I met amazing
changemakers from Mobile, the Mississippi Delta, Chattanooga, Philadelphia, New York City, San Francisco, Michigan, and Phoenix, just to name a few.
Through my role at Community Sourced Capital I have heard firsthand the challenges of running a small business: the barriers to accessing capital, the predatory lenders, unaffordable commercial space, as well as its great joys: meaningful work, cultural preservation, and vibrant local economies.
Gathering together with other folks from around the country was a wonderful opportunity to share what I’ve learned from our work, especially what I have learned from our Squareholders. Lending a small amount to a local business in one’s community has given individuals a new way to support a business they love. For most of us, the only way to support a business we love is through being a customer. But by buying a Square in a CSC campaign, we have a new way to support what we love. Local lending builds relationships, trust, and connection in local communities.
The lending community we have created together resonated with everyone I spoke to! I left the conferences determined to grow what we do here in the PNW and energized by the work that is being done all around our country.
Together, we’re building an economy that works for all.
Want to learn more about these inspiring folks? Check out the Boston Ujima project, which is creating an equitable local investing fund for underserved communities in Boston. Mutual Aid Networks is building a network of
cooperatives to cultivate meaningful work and connection, Kiva.org recently upped their loan limit to $25k. Rising Tide Capital supported local underserved entrepreneurs to create 154 jobs in Jersey City. And check out NextCity, Laura Flanders, and Yes! Magazine for covering this work and others all year round.
It’s become cliché: the “year in the review” (and ask*) that predictably comes from nearly every nonprofit in December. In CSC’s case, our past 12 months has been a veritable hero’s journey. In December 2016, CSC was wandering alone, a little lost, and there was a big ogre…
Just kidding, there was no ogre. Just you amazing folks. And our determination. That’s the short story of CSC’s 2017. The longer version follows.
Early last spring, after much encouragement from our community, CSC dusted itself off and fired up our engines to again bring connected, ethical finance to businesses and citizen lenders. The journey has been a challenging one. We’ve worked diligently to reboot as mission-based operation in both deed and legal fact. From building a stellar volunteer board and advisors, to enacting our strategy, building new partnerships and attending and presenting at dozens of convenings, we’ve been busy! We reactivated over 20% of repaid dollars in CSC’s Squareholders accounts to go do more great work (yay!) and engaged the support of over 500 generous individuals in directly funding CSC’s restart.
And we’ve also had setbacks, specifically around the technology that was custom built for us several years ago. As we end 2017, we’re doing deferred maintenance and making unexpected critical repairs to the platform. While there are still unknowns, we know it will be at least $20,000 to ensure completion of the first and most pressing step—ensuring the platform functions so we can launch new campaigns.
We’re grateful to be working with long experienced (and generous) developers. While the platform is “in the shop” we have businesses waiting to run campaigns as soon as all is well. It’s been tough for everyone to be patient, but fully functional technology is necessary to ensure we are creating a responsible path to connected capital for everyone!
It’s an understatement to say we look forward to 2018 (and a functional platform!) so we can truly rock our mission to to amplify, educate and connect people and and communities around healthy finance. After all, that’s why we’re here. And more importantly, it’s why you’re here. We couldn’t have done this without you. Thank you for being with us through this long journey and for supporting CSC’s work. We wish you a holiday season that is generous, reciprocal and connected!
* We’ll keep this part short. We are hoping to raise the $20K to cover the first round of our technology updates before January 1. If you feel motivated to give, tax-deductible year end donations can be made to CSC through our fiscal sponsor Seattle Good Business Network.
We were fascinated by this Harvard Business Review piece on the impacts of loneliness by former Surgeon General Vice Admiral Vivek Murthy, which talks about recent evidence that social isolation shortens lifespans in a way similar to smoking 15 cigarettes a day. It is—perhaps unsurprisingly—also bad for business.
“At work, loneliness reduces task performance, limits creativity, and impairs other aspects of executive function such as reasoning and decision making. For our health and our work, it is imperative that we address the loneliness epidemic quickly.”
And the trend towards disconnection and isolation is getting worse—new models of working remotely and factors like the rise of the “gig economy” create flexibility for workers but reduce the structural community-making of a traditional workplace. Researchers for Gallup found that having strong social connections at work makes employees more likely to be engaged with their jobs and produce higher-quality work, and less likely to fall sick or be injured.
Dr. Murthy does not mince words, calling the problem an epidemic. “If we cannot rebuild strong, authentic social connections, we will continue to splinter apart — in the workplace and in society. Instead of coming together to take on the great challenges before us, we will retreat to our corners, angry, sick, and alone. We must take action now to build the connections that are the foundation of strong companies and strong communities — and that ensure greater health and well-being for all of us.”
SEATTLE – Like many cities across the country, Seattle is finding great wealth often brings great wealth disparity.
The Emerald City has the fifth highest median income among large U.S. cities, is home to two tech giants in Amazon and Microsoft and is the nation’s fastest growing big city.
But some Seattleites see the downside of this growth as lower-income residents, particularly people of color, are being left behind.
Beto Yarce, executive director of the small business support group Ventures, is part of the People’s Economy Project. He says his mission is to help small businesses with a hand up instead of a handout.
“Creating a solution to alleviate poverty through economic empowerment,” he states. “So, what does that mean? It’s like creating business development training programs and really educate these communities on how do they budget better.
“How do they make better decisions about their money? How do they change their relationship with their money?”
The People’s Economy Project brings together small business developers with the goal of increasing minority owned businesses and providing assets for lower-income communities in Seattle, noting that small businesses act as neighborhood anchors.
The project takes its agenda on the road this fall to neighborhoods that have benefited least from the city’s rapid growth.
Rachel Maxwell, executive director, Community Sourced Capital, is also part of the People’s Economy Project. Her organization helps crowd source zero interest loans for local small businesses. She says the project came out of a concern that the economy isn’t serving all Seattle residents.
“All those folks were convened to consider what were the questions, and design some initiatives that they could present to the civic leaders in Seattle around how it might look, or what might be different, or new things that could happen that would develop a people-powered economy here,” she explains.
Maxwell notes that the project’s agenda can be implemented in any city. She credits the Northwest for being open to new approaches to protecting communities’ assets.
Eric Tegethoff, Public News Service – WA
One month ago, when we began to ask Squareholders to move the money in their CSC accounts, we didn’t know how many of the 5,200 folks with active balances would still be thinking about CSC. Or if they remembered who we were! And we certainly didn’t know what—if anything—they would do if we asked them to activate their balance.
To date, nearly 16% of Squareholders have withdrawn or donated their money, or told us they’re intentionally waiting until new campaigns come online to redeploy those funds.
You might think we’d prefer to get donations, and you are correct that they are helpful in this particular moment. However, a larger truth is that inherent in CSC’s mission is our desire to help people’s money move.
If that means moving money out of our system and back into a community, we think this is a great outcome! Because, as we like to say at CSC: money moves in the direction of life.
As we like to say at CSC: money moves in the direction of life.
Instead of representing objects or a balance in an account, we think money most elegantly represents the movement of energy; a dynamic expression of what we as individuals value. This sounds pretty lofty, but there are concrete metrics that illustrate this idea. For example, multiple studies show that a single dollar spent with a local independent business generates two to four times as much wealth as expressed in jobs and income for the community than the same dollar spent with a national chain.
So we are really excited about the movement of ~$94,000 from static account balances back to where they are a dynamic expressions of values. The beauty of community finance is that money “spent” is just energy in motion, and that the act of moving it will always serve to multiply its power.
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!
No matter how many years I’ve lived, every spring I have what feels like a personal revelation. As I notice the trees and bushes come into bud and the beginnings of plants start to poke up out of the ground, I marvel: “So, all that energy was just being stored all this time!” Despite having having an intellectual understanding of the earth’s tilt and rotation, I slowly forget over winter what the rest of the seasons are like, and by February have accepted the barren landscape as a permanent reality.
As CSC embarks on our next adventure as a nonprofit, it’s easy for me to draw a parallel with my annual amazement at the fecundity of spring following winter’s dormancy. When we stopped making loans in winter of 2016, the reaction from our community was remarkable. This show of true gratitude for the role CSC plays in the world certainly buoyed our spirits, but it also galvanized our resolve to chart a new path. Here’s a little sample of sentiment sent to us from our borrowers:
“Just the other day I saw a square holder at a conference in Los Angeles and he “checked in on his business,” after all, he felt that he was part of our story and he is… And that’s pretty gosh darn extraordinary.”
“I’ve always felt that CSC has led the way for a financial/borrowing revolution. Can’t we just start a CSC campaign for CSC???? Thank you for all of your and the team’s wonderful work in supporting small businesses like mine. I will be happy to be a part of the next iteration of CSC.”
“You’re such a vital part of getting us back to being sustainable, and you’re such a vital (already) part of the small business community.”
“You dared to imagine and you went for it big time. I still believe in you and know that whatever you morph into next will be amazing!!”
As we reemerge from our time underground, we’re grateful for the community that has been with us through it all. While we “wintered over” organizationally, none of the incredible momentum and excitement about community-based funding has diminished. It has been there all along; ready to be a part of the next chapter.
Your belief in us has been a profound message for us to continue on. I know I’ve gone overboard with the season metaphors but bear with me for one more because it’s the truest of them all: the faith and support that our community has demonstrated for resilient, connected, community finance is the energy that ensures its next growing season.
We are so excited to be continuing this story with all of you.
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.