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Shifting the global economy towards sustainability Making Money Our Servant Rather Than Our Master Right Livelihood Social enterprise Legal and Financial Issues
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“What is critically important is for a community to start putting all the pieces together in one place. Then, and only then, can you begin to enjoy the synergies that occur when local ownership is linked with local production, local investing, local purchasing and local employment” – Michael Shuman |
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Local Investment VehiclesCollectively, even relatively poor communities often have significant financial wealth in the form of assets and savings. Where savings are deposited in conventional banks, this wealth tends to be lost to the community. While some loans may be made to community members, typically most will go to borrowers elsewhere perceived (by the lending banks) to have greater potential for generating profits. How to mobilise community resources for the collective good? One mechanism for doing this is credit unions. Credit unions are cooperative financial institutions that are privately owned and controlled by their members. They differ from banks and other financial institutions in that the members who have accounts in the credit union are its owners. All members qualify for loans. The credit union model has spread globally, with around 87 million members in the US, 20 million in India, 11 million in Canada, 4.7 million in South Korea and 3.6 million in Mexico. A number of ecovillages, including Damanhur in Italy and Findhorn in Scotland, have also used cooperative structures to mobilise their members’ financial resources for the benefit of the community as a whole. The Farm ecovillage in Tennessee, US has created a body called The Second Foundation into which participants pool income that is used to provide low-interest loans to community businesses. The interest on these loans provides members with accounting and legal services, group medical and pension funds, while the capital continues to revolve, funding community-level initiatives. One final model that combines aspects of a community-based investment vehicle and a complementary currency emerged from the Self-Help Association for a Regional Economy (SHARE) group in Massachusetts, US. A local delicatessen owner failed in his application to borrow $5,000 from his local bank to undertake an extension of his premises. The plan he came up with after consulting with SHARE and the E.F. Schumacher Society, a local organisation active in the field of community economy, was to issue vouchers to the value of $5,000, which he then offered for sale to his clients. The vouchers were redeemable for products from the delicatessen over the following year. Each of the vouchers was marked with the month in which they could be cashed in for products, thus spreading demand throughout the year. In this way, the delicatessen owner was able simultaneously to raise his investment finance from within his community of clients, to guarantee $5,000 worth of sales in the following year and to further strengthen already strong bonds of affection with his clients. As another event, the vouchers also began to be used as a currency in the area, with people using them to buy and sell from each other. |
Locally-based investment
Credit Unions |
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