Community INVESTED in Sustaining Agriculture: Building the Network for Investment in a Local Food System

Final report for CNE13-102

Project Type: Sustainable Community Innovation
Funds awarded in 2013: $15,000.00
Projected End Date: 12/31/2014
Region: Northeast
State: Massachusetts
Project Leader:
Margaret Christie
Community Involved in Sustaining Agriculture (CISA)
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Project Information


Financing the start-up or expansion of farm and food businesses is an important hurdle in creating more robust local and regional food systems. In western Massachusetts, the Pioneer Valley Grows (PVGrows) Network, an independent network hosted by Community Involved in Sustaining Agriculture (CISA), has brought together a strong partnership of community lenders, local foundations, and agricultural service providers to create new financing options for local food businesses. In this project, CISA supported PVGrows’ creation of a new, $2.5 million Community Investment Fund, a place-based fund pooling resources from both accredited and unaccredited investors in order to finance significant growth in the local food system. In addition, this project supported an ongoing effort to connect higher-wealth investors directly to farm and food businesses in need of equity investment, and provided detailed documentation of a successful $500,000 community investment campaign launched by a local foods business, Real Pickles.

Project Objectives:

This funding supported planning for a new community loan fund in the Pioneer Valley of western Massachusetts, to include investment dollars from a large number of small investors as well as large investments from accredited investors, foundations and lenders. Specifically, this funding supported the facilitation and organization needed to engage a diverse group of partners in intensive planning, decision-making, and written documentation about how the fund will:

  • be administered and managed;

  • strengthen and amplify the work of partners;

  • provide access to both financing and technical assistance; and

  • engage participants, including community members making small investments, accredited investors, foundations, and potential applicants such as farmers, local foods businesses, and those providing services that strengthen the local food economy.

In addition, we accomplished related activities, including support for the PVGrows Slow Money group and education about new and existing investment and financing strategies. The most significant of these efforts was a detailed case study of the successful community financing campaign completed by local business Real Pickles.


Scaling up local and regional food systems requires the creation of new enterprises to fill gaps in the existing local food system. Some of these businesses offer services needed to link local farms and tables, some create new products using locally grown crops, and some reach markets formerly underserved by locally grown items. Access to appropriate capital is important throughout the lifecycle of these businesses. While traditional financing may be a good fit in some cases, more flexible or creative financing options could spur significant growth in local food system businesses. The need for flexible financing reflects added costs or complications that result from the commitment of these businesses to local, seasonal sourcing and from the lack of infrastructure geared to local and regional food systems.

As local food system businesses expand and proliferate in coming years, the need for financing will also grow. In Massachusetts’ Pioneer Valley, much of planning for these new financing needs has taken place under the umbrella of PVGrows, an independent network staffed and hosted by CISA. The $750,000 pilot PVGrows Loan Fund, founded in 2008, established a strong partnership between four community lenders, two foundations, and three agricultural service providers, including the state Department of Agricultural Resources.  SARE funds under this project have supported the planning and development of the next phase, the PVGrows Community Investment Fund, a $2.5 million fund which provides the dual benefits of flexible financing for food system businesses and an opportunity for local residents to finance the creation of a food system that works for all of us.

The PVGrows Community Investment Fund, to be launched in early 2015, will accept community investments of $1,000 to $10,000, with a five-year term and 2% interest. Twenty percent of the $2.5 million total fund goal will be provided by community investors, with the rest of the funds coming from larger investors, including foundations, institutions, and accredited investors. The PVGrows Community Investment Fund builds on the enthusiasm and dedication of local residents to provide truly flexible, patient, and creative capital. Thousands of consumers make a point of buying products produced by Pioneer Valley farms and food businesses, but have until now had few options for investing in those businesses.

SARE funds supported facilitation and coordination of the diverse partnership which has created the PVGrows Community Investment Fund; outreach to and input from potential borrowers and investors; written documentation of loan fund terms and procedures; improved outreach and marketing for the pilot loan fund; support of the related PVGrows Slow Money (investors) Working Group; and outreach and information for farmers and other local foods businesses about financing options, including a case study of the innovative community financing strategy used by one local pickle business.


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Materials and methods:

Partnership was critical to the success of this project. Although CISA was the lead agency on this grant, we merely facilitated the process of developing a plan for the community loan fund with our network of partners. Throughout the process, we returned to the question of how the new loan fund could support and further the work of each partner, many of whom already provide loan funds to farm and food businesses. Both the pilot PVGrows Loan Fund and the new Community Investment Fund operate through partnerships with existing lenders, which provide a portion of the loan funds, as well as offering business assistance and loan review and underwriting services. Thus, the loan fund must strengthen the existing work of a diverse group of partners. Continuing to build and strengthen these partnerships has been an important part of this project.

Planning for the new loan fund was the most significant portion of our work on this project. In addition, we worked to strengthen the existing pilot PVGrows Loan Fund, particularly through improved outreach and marketing in order to increase the number of applicants, a critical factor for success of both financing vehicles. A third activity was support for and documentation of other innovative financing options for local farm and food businesses in the Pioneer Valley.

Activity 1: Planning for the new loan fund

1a. Plan, convene and facilitate monthly meetings of the PVGrows Finance Working Group to create community loan fund implementation plan.

The PVGrows Finance Working Group and its subcommittees have held monthly meetings to manage the existing PVGrows Loan Fund and to plan for the new larger fund. As we nailed down the specific details of how the new fund will be administered and promoted, and will work actively with partners, we relied heavily on the strong working relationships developed during the 6 years of our joint pilot loan fund.

1b. Identify and make use of additional sources of information, expertise, and experience needed to ensure the success of the Community Investment Fund. Specifically, we have:



    • Convened a meeting of nine community financing professionals to review our plans for the new community capital fund. Following the meeting, these advisors have continued to provide input as requested. 




    • Strengthened our relationship with the Cooperative Fund of New England.




    • Added a representative from the Carrot Project to the PVGrows Finance Working Group. The Carrot Project makes loans to small and mid-sized farms and farm-related businesses that use sustainable or organic practices and serve local or regional markets.Their participation improves PVGrows’ ability to offer a one-stop portal to a variety of financing options and strengthens the technical assistance we can offer to applicants and potential applicants.




    • Developed a good partnership with the Fair Food Network to provide business assistance funds to businesses expecting to need financing from PVGrows. The cost of business assistance services is subsidized up to $10,000, with business owners generally required to match between 25 and 50 percent of the cost of the consulting services received. To be eligible, businesses must be based in the Pioneer Valley (Franklin, Hampshire, Hampden Counties) and be engaged in aggregation, storage, distribution, processing, marketing, information technology, or other means of supporting farm viability in the Northeast.  Preference is given to established enterprises. Business assistance has been awarded to four businesses through the Fair Food Network partnership. This partnership augments the existing business assistance available through core organizational partners in the PVGrows Loan Funds. In 2013 and 2014, 11 businesses received business assistance from loan fund partners.




    • Convened a focus group of ten potential investors in the Community Investment Fund. Through this meeting, we improved our understanding of the priorities of potential investors, including their needs regarding risk, return, and management of the loan fund. Participants identified the factors that motivate them to invest locally.  For example, potential investors indicated that the overall mission of the fund—to strengthen the local food system—is as important as knowing the individual farm and food businesses in the portfolio.  It was also clear that there is a high interest and excitement about investing locally in the Pioneer Valley, where there is currently limited opportunity to do so. For more information, please see the attached Investor Focus Group Summary.


1c. Prepare documents needed for new Community Investment Fund.

This process began with a detailed Request for Proposals for an administrative partner for the new community capital fund. The Franklin County Community Development Corporation (FCCDC) was identified as the loan administrator, and a Memorandum of Understanding was written to define the agreement. We are now finalizing promotional and informational documents for prospective investors in two categories: unaccredited investors who can make investments up to $10,000, and accredited investors who might make larger investments. The Offering Memorandum describes the Fund’s purpose, key players, risk factors, and how to invest, with different parameters of investing for each type of investor.  This document is in the final stages of review by partners and legal advisors. A draft copy is attached to this report.

Early in the project, project advisor Michael Shuman of Cutting Edge Capital completed Creating a Community Investment Fund:  A Local Food Approach, Version 1.0. Although this document was not created using SARE funds, it provided documentation of the PVGrows loan development process.

Activity 2: Strengthen marketing and outreach for existing loan fund.

Increasing the number of applicants to the pilot PVGrows Loan Fund was determined to be an important precondition to the launch of the new, larger Community Investment Fund. Increasing the number of applicants had several benefits, including 1) more fully utilizing the existing funds; 2) increasing our practical experience with the process of making loans as a partnership; and 3) assuring participants and potential investors that there is a demand for additional funds to finance local foods businesses.

We have significantly increased our marketing and outreach efforts over the past year.  Based on a marketing plan commissioned in early 2013, we began a dedicated effort to formalize marketing efforts on behalf of the Loan Fund.  Accomplishments include:


    • Designing and distributing a PVGrows Loan Fund Brochure (attached);










    • Identifying opportunities to increase publicity of the Loan Fund through existing partners, especially technical assistance organizations, including CISA, the FCCDC, and the Massachusetts Department of Agricultural Resources. CISA, for example, sent an email blast to all farm and food contacts in January 2014. This effort yielded an increase in loan fund applicants;


    • Increasing publicity through other stakeholders, such as farmers’ market managers and vendors.



In addition, we have strengthened our ability to receive input and feedback from farm and food entrepreneurs, in order to ensure that the Community Investment Fund is designed to meet their needs.  Over the past year we have put systems in place to collect baseline data on applicants that we can build on moving forward.  For example, we installed Google Analytics on our website, and implemented an annual survey for potential borrowers who have completed inquiry forms, allowing us to gather information and recommendations to improvements. In addition, we rely on an informal “kitchen cabinet” of farm and food entrepreneurs from whom to gather input as we refine and expand the Fund.  These businesspeople are familiar with the work of the PVGrows Loan Fund, often as clients, and provide us with quick feedback on key program design decisions.  Lastly, the members of the Finance Working Group have contacts and experience that provides useful insights into how to effectively work with the local foods businesses that are our target applicants.

Activity 3: Support for and documentation of other innovative financing vehicles in the Pioneer Valley.

Through this work, we have supported efforts to provide creative financing to farm and food businesses, and made information about these financing options available to farmers, food businesses, and peer organizations working on local foods financing around the country. Specific activities include:

3a. Support for the work of the PVGrows Slow Money Working Group. The Slow Money Working Group provides a mechanism for connecting interested investors with individual farm and food businesses. These investors may offer equity financing, an important complement to PVGrows loan funds. The Slow Money group includes individual investors, money managers, and business owners.  In early 2014, they held an “Entrepreneur Showcase,” at which six local entrepreneurs explained their business plans to local investors.  The Slow Money group offered coaching to the entrepreneurs in preparation for their presentations.

3b. A case study of the community investment campaign mounted by Real Pickles, a Greenfield, Massachusetts local foods business.  The company made a transition to worker ownership designed to ensure their long-term commitment to stay small, locally-owned, and mission-driven.  They funded the co-op’s purchase of the business through a highly successful community investment campaign that raised a half-million dollars. The PVGrows Finance Working Group and Slow Money Working Groups provided guidance and advice on this process. This was an unusual and successful financing mechanism that allowed this local foods business to provide an exit for their founders which repaid their sweat equity but did not require a sale of the business to a larger corporation which might not share Real Pickles’ mission-focused goals. The Real Pickles Financing Case Study is attached to this report and available online.

3c. A new summary of options for community investment in local food businesses is available on CISA’s website. A pdf copy is attached to this report.

Research results and discussion:

During 2013 and 2014, fifteen Pioneer Valley farm and local food businesses received business assistance through the PVGrows loan fund. Frequently, PVGrows coordinated assistance from several partner agencies:  for example, for one nursery and flower farm, the Carrot Project helped with creation and review of financial statements in order to complete enterprise analysis and understand areas of profitability and loss; the Franklin County CDC supported the preparation of a loan application; and CISA provided marketing assistance. This example illustrates the value of a coordinated, partnership-based financing and technical assistance portal, which ensures that applicants can receive the assistance they need from a variety of sources without approaching each provider independently.

During the same 2-year period, seven farm and food businesses received loans from PVGrows and our lending partners, bringing the total value of loan funds expended through the pilot loan fund to $500,000. Enterprises receiving loans and business assistance include farms and the enterprises that buy from them, creating additional markets and opportunities for profitability for local farms. Examples include a cooperative grocery that has built the value of its purchases of local food to $3.7 million in FY2014, a retail butcher specializing in locally grown meat, and a beverage company that has built a national market for products that include local honey, ginger, and blueberries.

In early 2015, PVGrows will launch the new Community Investment Fund. This fund will be administered by the Franklin County CDC, but will benefit from the strong parternships of lenders, foundations, and agricultural service providers developed during the pilot loan fund phase. This $2.5 million fund will be large enough to catalyze significant growth in the local food economy, and will allow unaccredited investors to expand their participation in that economy to include investment in a pool of local foods businesses. Two foundations have committed to supporting the administrative costs of the loan fund in its first two years, and the fund administrator and partners will coordinate outreach to both large and small investors in the fund.

The PVGrows Community Investment Fund offers a model for cooperative effort joining the strengths of existing local lenders and agricultural service providers, recognizing that the joint effort must amplify the individual missions of each partner organization in order to succeed. In addition, it provides a model for managing investments from two categories of investors, including the unaccredited investors who have frequently been excluded from opportunities to invest in their own local communities. Taken together, the savings represented by these moderate income investors is significant and essential to catalyzing real growth in the local foods economy.

These activities have improved business assistance and financing options for local farm businesses, improving the outlook for farm viability. In addition, they offer a model for local food financing efforts across the nation.

Participation Summary

Education & Outreach Activities and Participation Summary

Participation Summary:

Education/outreach description:

Outreach in this project falls into two categories: first, outreach to potential business applicants, documented in Activity 2 under Methods, above; and second, outreach to peer organizations interested in local foods financing, available through our loan fund documentation, the Creating A Community Investment Fund for PVGrows, 2013, and the Real Pickles case study. The Real Pickles Financing Case Study has been downloaded more than 100 times from CISA’s website, making it one of our most popular publications. In addition, it was the catalyst for a detailed article on Real Pickles in a local paper, also attached.

Several PVGrows partners are active in regional and national conversations about financing local and regional food economies, and their outreach has been very valuable in sharing our process and accomplishments.

Project Outcomes

Project outcomes:

See "Outcomes and Impacts," above.

Assessment of Project Approach and Areas of Further Study:

Potential Contributions

Opportunities for replication have been discussed above, and include:

  • A community loan fund focused on local foods businesses that includes investments from both accredited and unaccredited investors;

  • A partnership of lenders and agricultural service providers that offers coordinated access to business assistance and financing;

  • A model of community investment in a local business that makes possible a business transition with the goal of continued commitment to a regional food economy, documented in our Real Pickles case study.

Future Recommendations

Financing for robust local and regional food economies is still in early stages. Additional years of experience, both in the Pioneer Valley and elsewhere, will help to illuminate the most effective forms of financing and business assistance, the best ways to engage and communicate with local investors, both large and small, and the possible need for additional services, such as project development or management or ongoing community support for certain types of important but low-margin businesses or services.

Information Products

Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.