Describing the essence of Slow Money is easy. Trying to figure out where it fits into the scheme of things from an investment perspective isn’t so easy.

The Slow Money Alliance is a Boulder, Colo.-based national network of individuals who literally invest from the ground up when it comes to the soil and local economies. This entails making low-interest loans to local small farmers, food shops, distributors or other small players involved in the food production and consumption chain. The folks at Slow Money give this several names––“farmer capital,” “natural capital,” “nurture capital,” “social capital,” “local capital” … even “cheese capital.”

The basic point, according to the Slow Money manifesto, is that money is too fast, companies are too big and finance is too complex. Slow Money participants subscribe to the notion that the soil teaches us we must put back as much as we take out to ensure long-term health and a strong, restorative economy. Another notion is that investing in food, farms and fertility connects investors to the places where they live while creating vital relationships and new sources of capital for small food enterprises.

I know, some of you are probably rolling your eyes and thinking Slow Money people are either a bunch of granola-fueled tree huggers or are super wealthy-types who can afford to funnel some of their money into an idealistic scheme.

Indeed, Slow Money isn’t for everyone, nor do its leaders expect it to be. But it does have intrinsic appeal to people attracted to impact investing, a broad and growing subset of investors putting money into organizations and companies addressing climate change, supporting organic farms, improving health care in poor nations and reducing foreclosures in inner-city neighborhoods, among myriad other objectives.

Carrie VanWinkle, a financial advisor with the registered investment advisor Natural Investments LLC in Louisville, Ky., is one of those people. An urban beekeeper with a background in community-based nonprofit work, VanWinkle’s advisory practice is based on socially responsible investing principles.

She helped found Slow Money Kentucky last year to invest in small food operations in Kentucky and neighboring Indiana. The group now has more than 80 members, and it aims to meet thrice yearly to connect potential investors and borrowers. “They find each other and develop the relationship from there,” VanWinkle says. “Our basic method is peer-to-peer lending.”

As of August, most of the group’s loans have gone to two farmers––one who wanted to lease land to expand his operations and another who wanted to build a greenhouse to extend his growing season and keep his workers employed through the winter. VanWinkle says both loans were less than $10,000, and neither farmer considered getting the money from a bank. Either they wouldn’t qualify or they simply didn’t want to enter into that type of arrangement.

Slow Money Kentucky’s loans charge no more than 5% interest, and VanWinkle says they tend to be 3% to 5%. Loan lengths are decided by the lender and lendee.

“I think people sometimes come into Slow Money––or local investing more broadly––with the right intentions, but they get caught up in financial return rather than the whole return, which is financial-plus,” she says. The 3% to 5% loan rate “seems to be a pretty fair rate of return in today’s environment.”

VanWinkle says one of her clients has made loans through Slow Money, and that he does his own due diligence on the loans he makes. “I’m still learning how to best fit Slow Money, local investing and impact investing into the client conversation,” she says.

VanWinkle will sit on an impact-investing panel at Slow Money’s national gathering in Louisville that runs November 10-12. She says one of her goals at the panel is to help facilitate the conversation about Slow Money––and peer-to-peer local investing in general––between financial advisors and clients interested in this space.

Revolution, Evolution
It’s late May, and Slow Money founder and driving force Woody Tasch has just flown into Philadelphia and hired a ride to the city’s Chestnut Hill section to meet with a Quaker congregation who invited him to speak about Slow Money. Before he meets with them for dinner, he stops in a nearby coffee shop to speak with a reporter for an hour.

Tasch is on a mini-whirlwind tour that is taking him from Aspen to Philadelphia to Louisville to Vancouver. In Philly, he hopes to plant the seeds that could grow into a Slow Money network there. He’s flying to Vancouver for the launch meeting of that city’s nascent Slow Money network.

With his luggage nearby as he sips his iced caffeinated beverage, Tasch is doing what he’s seemingly been doing nonstop since he launched Slow Money in early 2009––namely, traveling to meet with anyone willing to hear his message about the need to change the way people think about food, investing and the planet.

“We call it Slow Money because we’re suggesting a fundamental alternative that’s on the boundary between philanthropy and investing, says Tasch, who at 63 is tall, lean and energetic. “Investing is about minimizing risk and maximizing return. What Slow Money is doing isn’t investing by that definition, but it’s investing by other definitions.

“However, it’s not philanthropy as it’s commonly understood because that’s granting money to NGOs and we’re talking about making direct loans to farmers and small businesses,” he adds. “These are small food businesses, which are particularly risky and not a great way to make money.”

Tasch’s background is in the money game, mainly at the intersection of asset management and philanthropy. He was treasurer of the Jessie Smith Noyes Foundation in New York City and founding chairman of the Community Development Venture Capital Alliance. He was also chairman of Investors’ Circle, a network of angel investors, family offices and social purpose funds and foundations that to date has invested $166 million into 265 early stage sustainability-promoting ventures and venture funds.

In late 2008 he published his book, Inquiries into the Nature of Slow Money: Investing as if Food, Farms, and Fertility Mattered, that laid the foundation for Slow Money. The book’s foreword was written by Carlo Petrini, founder of the Slow Food movement, which began in Italy in 1986 in response to the opening of a McDonald’s restaurant in Piazza di Spagna in Rome. It has since gone global with participants and projects in more than 160 countries.

Both “Slow” movements were born of a shared concern about the industrialization of the food supply. “People call it [Slow Money] a movement or a revolution,” Tasch says. “But that’s hype, and it’s not our hype. I know what we’re talking about is a new way of thinking about a certain set of issues. Whether it’s a revolution or an evolution or a mildly intriguing and incremental shift, that’s for other people to put names on it.

“A radical transformation of the food system would take billions of dollars to get farmers on the land and address processing and distribution, the restaurants and niche brands, and the seed companies,” he continues. “It’s not going to come from Wall Street or Washington, D.C., or from philanthropy. The one prayer is we’d all do it ourselves where we live—put some of our money from other places into this and be agnostic about how much money we make. The arithmetic on this isn’t great, so you have to be agnostic.”

‘Innate Value’
Slow Money says its roughly 1,000 members have invested more than $35 million in about 350 small food enterprises during the past five years––mostly in the U.S., with a little bit in France and Switzerland. Not bad, Tasch says, for a tiny nonprofit NGO with five staff people and a $500,000 budget.

Slow Money has 10 investment clubs around the country, where the whole group collectively decides where to invest. Slow Money’s first––and now largest––investment club was No Small Potatoes in Maine, which has made roughly $8.6 million in food-related investments during the past three and a half years.

But the bulk of Slow Money’s investments have come via local networks such as Slow Money Kentucky, where people hold meetings about investing in local food and essentially make individual investments. “A lot of these are short loans at two to three years with low interest, so we’re just starting to see returns and losses and we’ll have data in a few years,” Tasch says. “It’s an activist agenda and not a fiduciary thing in that we’re saying take some of your money from the big pot and put it to work in food.”

The question is how can Slow Money reach a wider audience when return on investment is secondary to helping the commonweal?

“As one woman at a Slow Money workshop in Ashland, Oregon, told me, ‘The innate value of this kind of investing is so obvious to me that I don’t care how much money I make,’” Tasch says. “When you talk about metrics and returns, you have to consider the social and environmental returns in doing this.”

Of course, basing an investment on innate value doesn’t cut it for many or maybe even most investors.

“Some advisors are waiting for a product to come along to make this easy to invest in,” Tasch says. “The closest there is are Iroquois Valley Farms and Farmland LP, which are a couple of professionally managed funds [focused on organic farmland] that make it possible for someone to advise a client to put money into. But most of us are just doing direct investments that are very local. Maybe we’ll eventually have the metrics that will help small institutional investors do something like this, or some of the fiduciaries. But that’s not our main objective, which is about getting money flowing and getting people engaged.”

This spring, Slow Money launched a nonprofit investment club in Colorado in the Aspen-Carbondale area that Tasch says is loosely modeled along the lines of Social Venture Partners, a U.S.-based organization with 36 networks of venture philanthropists around the globe who collaboratively invest in nonprofits in their respective regions.

“It hit me that we should put our money as a donation, which would relax some of our transaction mentality and build on the idea that we’re trying to build something over 25 years,” Tasch explains. “Putting this into the philanthropic allocation in someone’s portfolio might be a way of doing this from a fiduciary point of view. Instead of thinking about this as return-agnostic investing, you can think about this as super-positive return philanthropy. Seems promising, but the big question is how many people want to put in money on that kind of philanthropic basis?”

Beyond Local
Slow Money isn’t just about investing locally; it’s also about investing in scalable systems that improve the food system across the country. At its national gatherings, the organization spotlights food companies that want to expand but need loans to do it because there’s not enough capital in their local area.

At the 2010 national gathering at Shelburne Farms in Shelburne, Vt., one of the companies invited to state its case was Coyote Creek Farm, a Texas-based purveyor of grass-fed beef and pasture-raised chicken and eggs, the latter going by the nom de retail of Jeremiah Cunningham’s World’s Best Eggs. The ranch wanted to raise money to build an organic feed mill that would supplement the feed of its pasture-raised chickens with organic grains.

A retired couple from New York City who attended the Vermont gathering liked what they heard about Coyote Creek and talked about it with their financial advisor, Malaika Maphalala, who works at Natural Investments and has offices in Oregon and Hawaii.

As Maphalala explains it, the couple came to her as clients after they were burned during the market crash and wanted to get out of stocks. They frequent the local farmers market and buy organic foods, and they wanted to align their money more with their beliefs about sustainable agriculture and other things important to them.

After consulting with Maphalala, they decided to split their portfolio into thirds comprising socially screened, publicly traded stocks and bonds; community investments and so-called regenerative investments encompassing Slow Money and other direct, high-impact investments.

Coyote Creek would be part of the regenerative portfolio, and Maphalala took it upon herself to do due diligence on its expansion plans. “It took years to come to fruition, but I followed the process on my clients’ behalf to make sure it was investment ready," says Maphalala, who’s been active in the Slow Money Northwest chapter in Portland.

When she thought it was a good time for them to invest, the couple made a $120,000 loan to Coyote Creek at 5% interest over five years, returned in regular, interest-only payments that will be followed by a balloon payment at the end of the loan. “The couple is dependent on earnings from their investments,” Maphalala says. “Because they’re retirees, in the impact sector it’s very important that investments be real safe regarding reliable annual returns.”

Staring this past June, Coyote Creek’s organic chicken feed was made available at Whole Foods Market stores throughout the South. As for Maphalala's practice, she says she has four clients who are accredited investors who make Slow Money-type loans. Slow Money would like to see more advisors and their clients get involved.

“This could be an asset class that grows over time,” says Slow Money vice president Michael Bartner. “At our national gatherings, it’s key to highlight these companies [such as Coyote Creek] because they’re not only important locally but nationally, too. Over time, we hope there will be more ways for financial advisors to engage in this space.”