"Slow Money" is charity, not investing

"Slow Money" is branding itself as an alternative to traditional investment, but at the same time is not saying anyone will get back the money they put in.

The name is a take-off of the "slow food" movement and it has wrapped itself in all the same old "buy local" and locavore nonsense of creating a new world fed and clothed by low-impact, wealth-creating cottage industries and handmade products. See the "Buy Local" tag on this blog for many, many posts on why almost all of those claims are false and counterproductive.

This voiceless cartoon they made shows a woman putting her money in the bank and expressing concern that it is being invested in arms manufacturers, oil companies and cliche 18th century smoke-belching factories. The woman then gives her money to a local farmer, who puts the money in the ground and a big plant comes out, which eventually sprouts an identical amount of money that she put in. We then we see more plants grow more money, and eventually a farmers' market sprouts up.

This one minute, 45 second cartoon doesn't actually show the woman getting her money back, and people who participate shouldn't expect to either, but it's the closest thing to a coherent pitch the group has.

Slow Money is a network of ideologically-motivated investments clubs who give what they call "loans" to local food producers. Since local farms typically lose money, I imagine they have a high default rate. The Slow Money network has been around for four years and has given out $35 million. It's very telling that the proponents do not talk about how many borrowers pay back their loans. Instead, their website talks about their principals, which for some reason includes a quotation from a Hollywood actor,

I realize that Slow Money is trying to attract angel investors, people who are interested in the cause and the personality behind the business more than generating a profit, but for some reason they won't come out and flatly say it. I wouldn't have such a problem if the Slow Money people would just say that they deal in donations, instead of talking about "investments" and making vague references to building a new economy.

Why not just say that the money people give will not be returned to them, but instead will create things in the community they want to see? Why not just be straightforward with what they're doing, instead of presenting it as something akin to financial investments.

You have to dig deep, but their are times when the movement heavily implies that is the goal. To complete the checklist of a faux-intellectual movement, Slow Money leader Ari Derfel gave a TEDx talk in 2011. After dropping shallow buzzwords like "business 3.0", reading inspiring quotations and talking about someone's honest-to-god vision quest, he summed up what Slow Money is all about. Vaguely. In particular, he said:

What makes life worthwhile is not profit; it's relationships... We need to measure return on investment not simply by profit, but by things like soil fertility, by the jobs we make, the relationships we build, the ecology we restore.

Please note: He never said his "investors" won't make any interest, he just implied it. He never said one way or the other if they can expect to get their principal investment returned.

Before giving his brief summary, Derfel explained  that he would need "a whole TED Talk" just to explain what Slow Money is. Funny, the title of the video of his talk is "Slow Money." Was he really invited to speak about organic food in rich communities and cliche wise-Native-American stories? If an executive director of an organization can't sum up what they do in 15 minutes, they are either incompetent or dishonest.

He could have told us that Slow Money is an angel investment group-slash-charity that accepts the growth of small farms instead of fiscal profit? How hard was that?

Sadly, his vague summary is as close to straightforward as you will get from this movement. If you want to delight in seeing local farmers milling about your community, than you probably won't have a problem with not getting your principal investment back. You're already choosing to pay too much for food anyways. Just don't have any illusions that the money you give to this organization will eventually return to you. As in gambling, don't spend what you can't afford to lose.