Moving Money in the Direction of Life

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To date, nearly 16% of Squareholders have withdrawn or donated their money, or told us they’re intentionally waiting until new campaigns come online to redeploy those funds.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.

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!

New buds and shoots coming up at CSC!

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.

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.

Wendell Berry Quote

“There are, it seems, two muses: the Muse of Inspiration, who gives us inarticulate visions and desires, and the Muse of Realization, who returns again and again to say “It is yet more difficult than you thought.” This is the muse of form. It may be then that form serves us best when it works as an obstruction, to baffle us and deflect our intended course. It may be that when we no longer know what to do, we have come to our real work and when we no longer know which way to go, we have begun our real journey. The mind that is not baffled is not employed. The impeded stream is the one that sings.” ― Wendell Berry

Need a small business loan? Attend CSC’s Money on a Mission event!

Money on a Mission Event - get a small business loan
Money on a Mission Event – attend to explore small business loans

More often than not a small business owner needs the opportunity to do lots of things all at once – from managing people, community relations, and inventory management to payroll, social media and financial planning for future growth. That’s an awful lot and we’ve heard from the small businesses we work with that managing their business finances can be the most difficult part of running the business because it’s not where their heart and passion lies.
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Announcing a partnership with B Corp

Maybe you’ve noticed the logo in the footer of our website or the thousands of emails our website sends to Squareholders every month. There’s a logo of a little “B” with a circle around it, and it stands for B Corp.

Shortly after we launched Community Sourced Capital, we started pursuing an endorsement that we believed would signal to the world our absolute commitment to using business as a catalyst for change. B Corp is a private certification assessing social and environmental performance of for-profit companies around the world. After a rigorous application and interview process, we received our certification a little over a year ago.

Using business as a catalyst for change is no small feat, and we aren’t trying to do it alone. That’s one of the reasons we’ve surrounded ourselves with the B Corp community — which includes legions of strong, committed small businesses as well as large entities like Patagonia, Beneficial State Bank, Etsy, King Arthur Flour, and very recently, Kickstarter!
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Amplifying the voice of community

The first loan we made at Community Sourced Capital was for $2,950. It involved 31 Squareholders lending on average $100 each. The loan itself was to an entrepreneur in our existing network who was willing to try out our new community finance system. We kept the amount low to keep things easy, and the loan was repaid pretty quickly.

We’ve made a lot of progress since then. We’re a bigger company with more capacity for handling larger loans. This month, we’re making our largest loan to date: $47,000.
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Starvation Alley Farms: one year in

Starvation Alley Farms hasn’t stopped moving since we first worked with them a year ago to raise $12,000 for an industrial juicer. In fact, Starvation Alley Farms fueled the very first Square through our lending system.

As the first organic cranberry producers in Washington State, the farm needed a new market to sell their berries. Selling juice to cocktail bars instead of berries on the commodity market revolutionized their revenue model. Instead of traveling from Long Beach to Portland week after week to juice their berries, they were able to buy an industrial juicer to keep at home in Long Beach.

2013 was a year of expanding their juice sales to cocktail bars in Seattle, farmers markets, and even an experimental CSA program to deliver juice directly to people! Recently, their expansion to Portland has found them in a few new locations, and perhaps most exciting, in a great spread from Portland Monthly. You’ve got to see these pictures.

Perhaps the most exciting news from Starvation Alley has been the impact on their own industry. Seasoned farmers have asked SAF to help convert their berries to organic, too. Thanks to the scientific and business expertise the farm has been developing over the last few years, bringing on the second organic farm should be a little easier. To help them finance this next stage, our friends at Craft3, a local CDFI lender, have stepped up with some serious financial support.

People often ask about the story of their name: Starvation Alley. “Starvation Alley,” as deemed during the Great Depression, was the road on the Long Beach Peninsula that housed many hard working migrant farmers. Now, it’s home and work for these cranberry farmers. Though the road is now officially named Birch Street, the locals still call it Starvation Alley. They kept the name as an ode to those that came before and to honor everyone still working hard for food (and drinks).