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.
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Give trust a chance

We live in an era of possibility. Everyday new leaders and companies are rewriting long-standing rules to create value and unlock promise. These new leaders realize that many times the very norms and rules meant to protect us from risk end up blocking us from true potential. If you have a credit score below a certain number, you cannot take out a loan. If you’ve had a criminal record, you can’t get certain jobs.

We live in an era of possibility. Everyday new leaders and companies are rewriting long-standing rules to create value and unlock promise. These new leaders realize that many times the very norms and rules meant to protect us from risk end up blocking us from true potential. If you have a credit score below a certain number, you cannot take out a loan. If you’ve had a criminal record, you can’t get certain jobs.

What if we could suspend those rules? What kinds of opportunities would emerge? A beautiful thing can happen when people rely on trust and connections. Infinite possibilities are allowed to emerge. At the community level, where personal connections, history, relationships, and human emotion flourishes, there is less need for so many rules.
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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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Emerging solutions

As networks grow and transform into active, working communities of practice, we discover how life truly changes, which is through emergence…

As networks grow and transform into active, working communities of practice, we discover how life truly changes, which is through emergence … change begins as local actions spring up simultaneously in many different areas. If these changes remained disconnected, nothing happens beyond each locale. However, when they become connected, local actions can emerge as a powerful system.
-Margaret Wheatley

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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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?
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