- Education and Training: workshop, technical assistance
- Sustainable Communities: local and regional food systems, public participation, community development
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 Massachusetts’ Pioneer Valley, the groundwork has been laid to direct millions of dollars to farm and food businesses by allowing thousands of consumers to invest in the same companies whose products they already enthusiastically buy. In this project, CISA and Pioneer Valley Grows (PVGrows) will work together to create an implementation plan for a “community capital” fund. At the same time,CISA will partner on an ongoing effort to connect higher-wealth investors directly to farm and food businesses in need of equity investment.
Since 2008, PVGrows, a collaborative network dedicated to enhancing the ecological and economic health of the Pioneer Valley food system, has worked to create new vehicles for food system investment. These include a $750,000 pilot loan fund and a network of equity investors, created and managed by an ongoing collaboration between nine organizations. These successes have set the stage for creating something which does not yet exist in the United States—a ten-million dollar, place-based community capital fund pooling resources for investment in the local food system. A fund of this scale would lead to thousands of new jobs and a significant increase in the self-reliance of the local food system. Funding from SARE will support the continuation of the collaborative planning process already established by the project partners, resulting in the creation of a detailed
implementation plan and supporting documents.
Project objectives from proposal:
PVGrows is an independent network, with many contributing organizations. CISA provides staffing and oversight, and each partner contributes time and other resources to specific projects. Strong collaboration through PVGrows has allowed local lenders, foundations, and agricultural organizations to work together to build new funds, begin to mobilize individual investors, and steer food system businesses to appropriate existing sources of capital. This project will build on and continue that record of collaborative action. Creating a fund of this size and complexity requires strong facilitation and leadership, balancing the needs of all nine partnering organizations. SARE’s support will allow CISA to play a larger facilitation and planning role during this demanding final phase of fund development.
Planning for a community loan fund began four years ago. The first stage was the creation of PVGrows, a broad network of food systems practitioners and entrepreneurs, which now includes 500 members. The second stage was the creation of the $750,000 PVGrows Loan Fund. This fund has served as a three-year pilot project to assess local borrower needs and to establish strong relationships between the nine partnering organizations. The Finance Working Group meets monthly to implement the fund, and has loaned out $300,000 to date. Through the pilot fund, we identified additional needs and missed opportunities, including business technical assistance, more flexible loan terms, and involvement of a wider range of community members in financing local foods businesses development. PVGrows partners are addressing the need for additional business technical assistance through a variety of activities outside the scope of this proposal.
Current Activities and Next Steps:
Now in the third stage, PVGrows partners are actively planning for the creation of a community loan fund, which would include investment dollars from a large number of small investors, rather than large investments from a handful of foundations and lenders. Six months ago, the potential impact of local investment in local food was documented in Shuman’s document, “The 25% Shift.” The next step in this project is a period of intensive planning and decision-making by the diverse partners in the PVGrows Loan Fund. Organizing and facilitating this planning stage is the work outlined in this proposal. This work will result in a clear implementation plan, answering questions to define the critical design features of the community capital fund, such as:
• How many investors?
• Total fund size goal?
• Annual size goals?
2. Fund location and management
• Will the fund be housed at an existing institution, or will a new organization be created?
• Relationship to existing loan fund, and plan for transition.
• Identify tasks required for launch and ongoing fund management, and create plan for supporting these tasks in the short and long-term.
3. Outreach, marketing, and publicity
• Plan for outreach to investors and to potential applicants, including discussion of appropriate staffing for each activity and the potential for synergy between outreach efforts.
4. Role(s) of partners
5. Timeline and milestones
• Identification of measurable milestones for success, including target total investment amounts; target breakdown by size of investment; number, size, and types of applicants (for example, farm businesses, start-ups, businesses providing market services such as distribution); number of jobs created or maintained.
• Creation of an implementation timeline
• Creation of a plan for tracking progress towards these milestones.
6. Creation of new legal structures (completing this portion of the work is not a part of this proposal, but will be funded by another PVGrows partner.)
Partnership is critical to the success of this project. CISA, the lead agency on this grant, will not single-handedly develop a plan for the community loan fund; instead, we’ll support the development of the fund through facilitation of the existing network of partners. We are well-positioned to achieve this goal because of the partners’ experience working together on the finance-related activities of PVGrows; CISA’s role as fiscal sponsor and staffing host for PVGrows; and the broad engagement of farmers, food system entrepreneurs, community members, and agricultural and community loan professionals through the PVGrows Network and CISA’s long history in the Pioneer Valley. In addition to the members of the PVGrows Finance Working Group, we have identified project advisors who will provide expertise in specific areas, including farm business owners, job creation, financing for sustainable agriculture, and urban communities and food access.
The Slow Money Working Group is a complementary, but much smaller task. Since the group was launched seven months ago, 157 PVGrows members have expressed interest, and 65 of them have participated in our the group’s first two meetings. The meetings are designed to create matches between investors and investmentready businesses. CISA will continue to play an active role in this working group, which is led by its members. We expect the group to continue convening approximately 3 times per year.
Planned activities using SARE funding:
1. Plan, convene and facilitate monthly meetings of the PVGrows Finance Working Group to create community loan fund implementation plan.
2. Identify additional resource people with specific expertise willing to work with Finance Working Group on creation of the implementation plan. (Invitations accepted by August 15, 2013)
3. Build key partnerships with other local and regional financing efforts, such as the Fair Food Network, to share expertise and resources (Partnership plans created by September 15, 2013)
4. Identify additional outside advisors, including food system business owners, bankers, and other community lenders to review implementation plan prior to finalization. (Reviewers identified by October 1, 2013)
5. Research existing community and food-focused funds and summarize information for partners. (Summaries completed by October 1, 2013)
6. Convene community focus groups to provide input on marketing, outreach and investment terms for community investors (Two focus groups held by December 1, 2013)
7. Create implementation plan, loan review criteria, marketing and fundraising plan, and plan for outreach to applicants. (Plans and criteria drafted by April 1, 2014 and finalized by May 15, 2014)
8. Summarize “lessons learned” to benefit similar efforts in other regions. (Created and disseminated by May 30, 2014).
How will you measure results?
Our immediate goal is to create a detailed implementation plan for a place-based community capital fund focused on food system investing. When that fund is in place,
• All farms and food businesses that demonstrably strengthen the local food system, will have access to a large new source of flexible, affordable loan capital, and 2) a community of equity investors.
• Community members will have a new opportunity to put their money where their mouths are by investing dollars directly into the local food system. A smaller number of community members with higher wealth will also have more opportunities to make direct equity investments in individual farm and food businesses.
The following deliverables will document our accomplishments related to these goals:
1. Creation of an implementation plan with clearly defined steps and roles for partners.
2. Revised criteria for reviewing loan applicants which reflects PVGrows’ goals of building a strong local and regional food system that provides healthy food for all residents of our community.
3. A marketing and fundraising plan which outlines the loan fund’s methods and timeline for reaching out to community investors;
4. An outreach plan which describes the loan fund’s methods for reaching out to business applicants, linking those applicants to technical assistance, and supporting them in making applications to the fund.
5. A “lessons learned” documents which summarizes our experience for others interested in creating a community capital fund.
Part of the planning process will include identifying measurable milestones for success once the loan fund is launched and creating a plan for tracking progress. Although we cannot measure this progress during the time period of this grant, we are happy to share this information with SARE. Another important measurement of success during this project will be tracking the activity and satisfaction of partners. We have prepared a sample survey for use with partners at the completion of the grant period. We will also track the number of new partnerships developed during the project and the related activities undertaken by partners to support the success of PVGrows finance activities. For example, loan fund partners have already undertaken new activities to provide business assistance to food system businesses in order to address gaps identified through our joint financing experience. Tracking the number of additional new activities will be one way to measure partners’ investment in the success of a new loan fund, and satisfaction with the on-going partnership.
How will the results make your community more sustainable?
Despite the enormous interest in locally grown food, farm businesses still struggle to achieve profitability. Creating financing options that work for local foods system businesses can improve farm economic sustainability by allowing farms to expand into new, value-added products or services, and by supporting the creation of businesses that offer new market opportunities for farmers. Profitable farms and food businesses producing local food for local communities build community sustainability in several ways. Local businesses tend to spend their money locally, benefitting the local economy and creating multiplier effects. Strong local businesses help to create and sustain local jobs. Food grown, processed, and distributed locally requires less energy for transportation.
Here in the Pioneer Valley, many residents count local farms and local food as an important factor in their quality of life. Recent events, such as support for farmland preservation, creation of community farms, and formation of two food cooperatives, bolster the hypothesis that residents are eager to support local food with more of their resources than their food dollars. We believe that community investment—of time, energy, and money—into local food and agriculture can create an array of food businesses that feed and connect residents from both the urban and rural parts of our region, strengthening not only our economic ties but the community ties that lead to longterm resilience and sustainability.
How will you package and disseminate your results?
Planning for marketing and outreach are a critical piece of the work outlined in this proposal. In order to succeed, a community loan fund must reach and engage several audiences:
1. Investors, including both traditional investors and local residents who want to support a stronger local food system but have not previously made any business investors.
2. Existing local food system businesses, such as farmers, processors, value-added businesses, and those providing services such as distribution.
3. Potential local food business entrepreneurs.
In addition, the work outlined in this proposal will be a valuable model for others interesting in food system financing across the United States. Reaching these colleagues is also important to us.
Luckily, CISA and PVGrows are well-positioned to reach these audiences. The existing PVGrows Loan Fund is collaboratively directed by nine organizations, including the Massachusetts Department of Agricultural Resources, each with a network of constituents. CISA, for example, has 343 local food and farm business members, including 220 farms. The PVGrows Slow Money Working Group includes many local investors. We have strong working relationships with several other organizations with a constituency of local food supporters, including food cooperatives, community farms, and community-supported-agriculture farms. The PVGrows Network includes a listserv of members and holds two annual forums which attract more than 200 food system professionals. These networks will help us reach local investors of all sizes and existing and potential food businesses.
Members of our team are also active participants in the national conversation about financing for local food systems, including Sustainable Agriculture and Food Systems Funders and Slow Money. We are building fruitful partnerships with regional and national projects such as the Fair Food Network.
We will use these strong relationships to disseminate the information gained through this project to interested parties both locally and across the nation. In addition to these active and direct channels, we will announce the availability of this information through local media, the farm press, listservs and partner newsletters.