Financing Sustainable Communities

Underlying local economic enterprise there needs to be sustainable community finance, which can mobilize community funds to invest in local green endeavors—an essential element if businesses like local farms and sustainable third places are to thrive. Traditionally, community development financial institutions (CDFIs)—including development banks, credit unions, loan funds, and venture capital funds—finance projects that build affordable housing, create livable-wage jobs, or provide essential services such as health care. (See also Chapter 13.) Although these investments are comparatively small— at just $20 billion in the United States—the effects of community investing are impressive. A survey of 496 U.S. CDFIs found that in 2005 these institutions financed 9,074 businesses that established or sustained 39,151 jobs, and they facilitated the building or renovation of 55,242 units of affordable housing and 613 community facilities in economically disadvantaged communities.34 While interest in CDFIs has grown significantly over the past years—with total investments quintupling between 1997 and 2005—few of these investments are targeted toward sustainable community development. If they were, they could have not just an economic impact but an ecological one as well. Some ecovillages have small banks that do just this. In Italy, the community of Damanhur maintains a co-operative that invests members' savings in existing community businesses as well as giving loans and business advice to community members trying to start new sus tainable businesses.35

On a larger scale, ShoreBank Pacific in Washington State sees itself as a sustainable community development bank. This bank, with assets of $113 million, lends to community businesses while also proactively helping clients in a variety of industries to use energy efficiently, reduce waste, conserve resources, and shift production toward a greener model. This starts with a review of the business by a staff scientist and continues with consultations throughout the course of the loan, offering strategic advice on how to become sustainable.36

Instead of creating banks, some communities are actually creating their own currencies. These can take many forms. Some, like Ithaca Hours, are pegged against an hour of labor, thus valuing all work equally. Others are pegged to a national currency. The Berk-Share is one of these. In Great Barrington, Massachusetts, there are about $760,000 worth of BerkShares circulating; they are accepted by some 300 local businesses—from coffeeshops to grocery stores. A local bank is even considering creating a credit card based in BerkShares. And Great Barrington is not alone. There are over 4,000 community currencies around the world.37

While the true economic impact of these currencies is relatively minor, they do provide many benefits to communities that use them. Because franchises typically do not trade in community currencies, these systems help create support—and loyal customer bases—for local businesses. They also help build community support networks. According to a U.K. study, local currencies help many users develop a network of people they could call on for help, as well as helping people cope with unemployment. And local currencies can help address specific social needs in a community. In Japan, many areas use fureai kippu (caring relationship

Engaging Communities for a Sustainable World tickets): helping the sick and elderly with daily living will earn the helper some tickets, which can then be exchanged for help when that person is sick or can be given to sick or elderly relations to use. This has enabled more elderly people to continue living in their homes and communities rather than moving to convalescent homes.38

Another innovative way to finance sustainable communities involves harnessing the profits of a new breed of business called "social enterprise." This term refers to businesses that achieve their social missions through their earned income strategies. For example, Greyston Bakery in New York City was founded in 1982 to provide jobs for the chronically unemployed. Today, the profits of this $6.5-million business provide funding for health clinics, day care centers, affordable housing, and other social services that help address poverty in New York City. And in Thailand, the resort and restaurant Cabbages and Condoms uses its five restaurants and two resorts to promote safe sex and AIDS prevention while generating revenue for the Population and Community Development Association, an NGO that works on rural development, AIDS education, population growth, and environmental protection.39

Although few social enterprises currently focus on sustainable poverty alleviation, when they do they can make an important contribution to redesigning the economy to serve the needs of communities in an ecologically responsible manner.

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