The slogan “Buy Local” has been the mantra for independently owned companies in Vermont for more than a decade, but at a gathering for a left-leaning statewide business group, members were told that now-ubiquitous retail concept isn’t enough to help businesses endure tough times.
“Invest Local” is the logical next step toward creating a viable community economy, according to a Brooklyn-based journalist who spoke at the annual fall conference for Vermont Businesses for Social Responsibility at Mt. Snow resort in West Dover last week.
Amy Cortese, author of “Locavesting: The Revolution in Local Investing and How to Profit From It,” told business executives that when community investors bypass Wall Street and put money in companies directly, the profits are more likely to benefit local communities.
Cortese pointed out “inspiring examples” of local investment models from Vermont, like Ben & Jerry’s initial stock offering, which was open only to Vermont residents and bypassed Wall Street brokers and their cut of the capital. When businesses sidestep the traditional initial public offering route, they “reach out directly to their biggest fans and supporters and customers.”
Lawrence Miller, the secretary of the Agency of Commerce and Community Development, said there is a disconnect between U.S. policies for local investors abroad and at home. “One of the things I find really funny is that the State Department and AID (Agency for International Development) create local stock exchanges all over the world, but it’s nearly impossible to do something in the United States,” Miller told VBSR members as part of a panel about business “resiliency.”
Many of investment opportunities are only available to millionaires, legally known as “accredited investors,” due to Securities and Exchange Commission regulations dating from the 1930s. The regulations were designed to protect unsophisticated investors from hucksters, but as Miller said, “I’ve met plenty of people with plenty of money who don’t qualify as sophisticated.”
The United States once offered broader opportunities for local investment, according to Cortese. “As little as 70 years ago, we had dozens of stock exchanges…in places like Buffalo, New York; Wheeling, West Virginia; Milwaukee,” she said. “Today, our markets are global and efficient, but they are not exactly serving those same regional growth companies that they once did.”
At the national level, Cortese pointed to a “crowd funding” bill that recently passed the U.S. House with bipartisan support. The “crowd funding” model includes online donation services like Kickstarter.com, which allows individuals to fund projects like books and CDs. The House bill permits companies to sell up to $2 million in equity online; investors are limited to $10,000 year, or 10% of their annual income, whichever is less.
Newer companies in Vermont, including Hardwick businesses, Claire’s Restaurant and High Mowing Organic Seeds, have paved the way for smaller investment opportunities with local capital, Cortese said. The two small businesses have found ways to attract local investors without using publicly traded stocks.
Author and businessman Bill Schubart, who moderated the panel, asked about opportunities for local investment in government. “It’s always confused me as to why municipal bonds and state-issued bonds were generally issued through the major houses and sold primarily to institutional investors… Vermonters are struggling to get 1 percent out of their savings account. Isn’t there a way to sell municipal bonds directly to Vermonters who could get 3 percent or 4 percent return but can only afford to invest $10,000 or $15,000?”
Conveniently sitting a few feet from Schubart was the local House representative, Ann Manwaring (D-Wilmington). When Schubart asked her for her thoughts, she responded, “I immediately wonder whether we don’t have a legislative initiative potentially here. It’s one that’s probably going to take more than one session to mature… How do we begin that conversation?”
Disclosure: Bill Schubart is the president of the Vermont Journalism Trust, the umbrella organization for VTDigger.org.
