Examples

Introduction

The collision of the logics for organising society, and organising money, has created lots of interesting experiments around the world.

Observing this from a distance, it seems a lot of the earliest and most progressive work has been done with the groups that are most disenfranchised (sometimes even dehumanised) in different contexts worldwide: young people, LGBTQIA+ communities, sex workers, Palestinian communities in Israel, environmental activists (speaking on behalf of the natural world), people of colour, women and girls…

There is also a story of intersectionality and geography mixed with marginalisation, in many of the democratic money experiments and, until recently, more examples from grant-making than from social investing.

One more thing that stands out from the stories is the question of community control over what? It’s a really important question because there are examples where communities have control over the returns from money invested and controlled by someone else, and some where communities also have power over the capital that’s invested (like in Barking and Dagenham).  To give that some contours, the US makes a good case study: foundations in 2021 had $1.3 trillion in assets and made $95 billion in grants (7% of total assets). Even if every single foundation gave participatory grant-making power to communities tomorrow, that would be control over only 7% of the money. Power over the 93%, how it was invested, in what, and with what consequences, would stay exactly where it was. Chances are the 93% might be the cause of some of the things the 7% was trying to fix. It’s worth using the lens of control over what? Not all examples are equal.

 

There are a quite a few experiments with the ideas of democratic money (for example, try filtering the more than 2,000 examples of democratic innovation in this list from Participedia), with some of the most reflective sense-making from places like this report from Grantcraft, and from Hannah Paterson’s Churchill Fellowship.

 

We have curated some of our favourite examples here: a selection that we think tells the story of democratic money at its most imaginative, in the hope that you might find something to inspire you.

What does the social in social enterprise, or social investment, really mean?

  1.  Is it about ends, or means?

  2. About the product, or the process?

  3. Capitalising the social, or socialising the capital?

 

Whenever we looked at the social economy, it seemed like it was rarely a social event at all.

And we wondered what it would look like, if it was.

We got to try this out in 2022, when the Curiosity Society teamed up with BD Giving in an experiment to invest the first £1m of their endowment. It became a journey about the second half of our three questions: about the means, the process, and socialising the capital.

Fast forward to today and, with some careful navigation of recent charity law that allows charities to invest in line with their objects, BD Giving and the community of Barking and Dagenham have built an investment strategy, learned where to find investments, created some tools to test them, made their debut investments, and worked on measuring how they’re doing.

In short, the community has become the investment committee.

BD Giving: when the community is the investment committee

The Journey

How it happened…

Our journey with BD Giving began with a request to help write an investment policy. The question within that question, was: “can we learn how investment works, so that the people affected by financial decisions, are the people making them?”

The first stop was a bullseye model of an investment strategy, where the BD Giving community group designed what good investment looked like for them.

They spotted early that they could have better conversations if they weren’t limited to a binary yes or no. Instead, it would be more helpful to describe investments as: ‘less like that’ and ‘more like this’, which led to the invention of some sliders.

To test each of the potential investments that made it past the bullseye and the sliders of the strategy, the BD Giving community group alighted on four dimensions that mattered:

  • Impact (to what extent might the investment create the impact we imagine in the strategy);

  • Liquidity (can we get our money out when we need it);

  • Risk (what are the chances of us losing some or all of our capital); and

  • Return (what might we earn from our investment).

Like the sliders, the community group wanted to be able to see the whole picture: more than one investment at a time; and the balance between the four dimensions. What better way than a 4-D graph?

All these things: the bullseye; the sliders; the 4-D graph, are nothing more than tools to help the community have better conversations about the investments they want to see, to create the impact they want to make.

The value is in the conversations; and, crucially, who is having them.

More examples

  • The Ujima Fund, part of the Boston Ujima Project and named from the Swahili word for collective work and responsibility is, like the BD Giving model, democratising decisions about investment. Indeed, the Ujima Fund describes itself as the first democratic investment fund in the USA.

    It uses a participatory budgeting approach, based around Voting Members (current and displaced working-class Boston residents, grassroots partner organizations, community business owners, and their employees).

    The investment committee is composed of Ujima members and some local financial professionals, whose collective purpose is to make recommendations on which investments to choose, before all members vote. On the downstream side, the Ujima Good Business Alliance is a network of more than 200 community-based businesses that are eligible for investment from the Ujima Fund. The Alliance provides support and encourages adherence to shared values (some of the things that make them eligible for investment).

    And finally, a little like the strategy-side of the BD Giving model, Ujima works with grassroots partner organizations to run “neighbourhood and city-wide planning assemblies”. These involve residents, local businesses and their employees “to set investment priorities and vote on investments that help achieve shared community goals.”

    By the autumn of 2022, the Ujima Fund had raised its target of $4.5m, and invested $0.5m in local community businesses, channelling a Swahili word and what feels like Abraham Lincoln’s Gettysburg address: “government of the people, by the people, for the people, shall not perish from the earth”

  • The Buen Vivir Fund is a participatory impact investment fund, co-designed with the communities it invests in throughout Southern Africa, South Asia, and the Americas: Latin and North.

    The recognition, and rejection, of ‘normal’ power dynamics is eye-catching in the Buen Vivir Fund: communities and investors share the decisions on a one member, one vote basis and communities hold the majority of the seats on the decision-making Assembly; voting is rare because the Assembly is built around principles of collective reflection and consensus decision-making with any disputes resolved through collectively agreed principles; loan agreements are designed not to be legally enforced and are structured to shift risks away from communities and onto financial investors who can shoulder it; rather than renting investors’ money at an interest rate, the recipients of investment agree to a voluntary payment according to how well their project goes, which can be between 2% and 15%, and is designed to make the Fund bigger for future applicants and for investors to get their money back; information flows both ways, rejecting the (charity saviourism) assumption that those with less economic wealth need the ‘help’ of those with more.

    In the world of Buen Vivir, ideas like ‘investment readiness’ for applicants would either be matched with ‘impact readiness’ for investors or dismissed.

    Buen Vivir has, since 2018, invested about $700,000 (in a mix of 65% loan and 35% grant) into healthcare, housing, small business development for artisans and farmers, environmental and climate protection, and shifting practice in impact investment.

  • Edgar Villanueva’s Decolonising Wealth (definitely a recommended read) has become a project and a fund aimed at dismantling the pernicious systems and structures of money that perpetuate colonialism. The Liberated Capital Fund, alongside Villanueva’s idea for a 10% tithe on dysfunctional philanthropy (which would raise north of $80bn, for communities of colour working on economic and racial justice) is the practical re-imagining of a fund that is everything Villanueva says conventional philanthropy and social finance is not.

    Liberated Capital is turning a polemic into a plan. Launched in March 2021, it has raised $8.5m from 500 donors at an average of $1,000 each. It is open to individuals only, and there is no minimum donation so that everyone who wants to, can contribute to the fund. Liberated Capital distributed $1.7m in 2021, and $2m in 2022, to a total of 43 projects working on healing the damage from colonial money through re-education, reparation, and re-telling of the story.

    There are some parallels with the North Star Fund in New York City, and with the Baobab Foundation in the UK, raising money from, moving money into, and giving control of funds to, communities who have suffered at the hands of orthodox financial and political power.

  • Seed Commons is the US-wide co-operative of which the Ujima Fund, included in our stories, is a part. There are something like another 30 funds in the Seed Commons co-operative, with access to a pool of more than $20m, all of them peers in a network that moves money into co-operatively owned and democratically controlled community groups.

    Seed Commons provides the finance and the technical support to distribute economic power to those communities that have been on the receiving end of extractive capitalism, de-industrialisation, and discrimination. Seed Commons’ focus on fixing the damage of extractive finance means that their own model of money is very different to the default-setting of conventional debt. Instead, Seed Commons makes loans that are repaid only when the community generates wealth from the loans, by increasing its income and profits. And, if things don’t work out, Seed Commons only reclaims the things that have been funded with its lending, rather than going after the assets of the community or its people like conventional lending would do through ‘security'. The imaginative technical and legal design of these ideas is described on Seed Commons’ website. The risk is shared more equally between the lender and the borrower, which means they are both incentivised to make the project a success.

    Seed Commons’ rule is that ‘a borrower will never be worse off than before working with us’. What’s interesting to our story of democratic money is not so much the technical design of the money, but the purpose of that. It’s a story not of business as usual, but of impact as usual: using finance to catalyse community ownership and control of money; turning money into the means not the ends of lending; and inverting the norm of shaping organisations to fit the money, by re-shaping the money to fit communities.

    The impact as usual approach is best told in Seed Commons’ impact report: $15m deployed; 85% of which is invested in communities of colour; 3,000 people employed in the community organisations funded, with a combined turnover of $85m.

  • If you are a philanthropic foundation with approaching $300m in endowment funds, can you really change the system of which you are a part? Can you become part of the solution if you’re part of the problem? The lessons from Heron Foundation suggest that you can, but that “daring to change requires clear-eyed (and often painful) self-reflection, honest intention-setting, and a steadfast commitment to embody principles as they emerge from [our] practice”. Heron recognises that community consultation, even when it is faithfully acted on, still leaves the ultimate control with the asset owners: in this case, Heron. Or, as they put it, despite their best efforts to serve community interests through consultation, the power and authority that comes with money can: “relegate community members to the role of tour guides and teachers when they should be active participants and decision-makers in setting the vision, shaping the strategy, deploying the resources, and learning together through the journey.” In the tradition of ‘physician, health thyself’, Heron is experimenting with divesting some of its decision-making power by forming ‘integrated capital committees’ of community members in a variety of places. Their idea is that those committees will have the power to decide how to deploy Heron’s assets, re-balancing the asymmetry of power in the relationship between money and people. This time, unusually, led by the organisation with the money.

  • Way back in 1989, the people of Porto Alegre in Brazil adopted participatory budgeting, which invited their citizens to create a financial plan, containing recommendations to elected representatives. Neighbourhoods in Porto Alegre have the authority to design budgets at the regional level, and local proposals are put to elected regional forums.

    When the World Bank looked at this participatory model, it found: starting with 1,000 participants in 1990, the model grew quickly to 40,000 people (about 3% of the population) participating in decisions by 1999; significant reductions in political lobbying and corruption; significant increases in participation from marginalised communities; and significant improvements in residents’ quality of life.

  • After the devastation of New Orleans by Hurricane Katrina in 2005, when there were more than 1,800 fatalities, 80% of the city was flooded, and $125bn of damage caused, the city had a couple of false-starts at planning its recovery. The first two failed because of lack of public support.

    The one that worked, the Unified New Orleans Plan, was built on a congress of more than 4,000 residents (about 1% of the population), over three rounds, composed of 67% African Americans, animated by 350 qualified facilitators, whose deliberations became a 10-year programme to invest $14.5bn in rebuilding the city, the way the people living there wanted

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