Mission: To identify and facilitate ways for local investors - both accredited and unaccredited - to invest in local businesses with emphasis on "green" (needs definition).

Aspects & Assumptions: It is assumed that investors will support the following:

• Triple Bottom Line - socially responsible investing in socially responsible businesses
• Slow Money - patient, nurture capital, longer-term payoff
• Locally owned & operated
• Economic leakage - find and fill the gaps in our local economy

Committee's Focus Areas for 2012:

• Business Opportunity Parties
• Self Directed IRA - seminar
• DPO

Funding for Local Business
The following is a comprehensive list of methods and techniques to grow local money. The list has been complied principally from information provided by BALLE webinars, Slow Money Gathering 2011 and Michael Shuman's writing.

Local Investment Legislation
In greater Spokane millions of dollars of public money are invested in Wall Street. (The amounts and sources need documenting.) County and City ordinances can be enacted that would force a percentage of the public investment to be reinvested locally.
   example - California

Self Directed IRAs
A self directed IRA allows the owner of the IRA to invest the funds directly with very few limitations. The State of Washington allows an individual to set up a LLC as a self directed IRA and use a check book for disbursing funds.
   reference US Tax Code   Q&As   Flow Chart   self kit - Washington

Customers and Vendors Support Businesses
Accessing the financial resources of customers and vendors include pre-selling, customer financing, vendor financing, crowdfunding, memberships, donations, and sponsorships.
   examples:   Awaken Cafe   Little City Gardens

LLCs, Corps, & Co-ops for Investment Clubs, Lending Clubs, and Donation Clubs
A group of people or entities may agree to pool money and use the funds according to the method laid out in a legally binding agreement, such as a member's agreement of an LLC, or the stockholders agreement of a corporation. The Washington state's corporate version of co-op can be an effective entity to choose. Using a business entity also simplifies the details such as accounting and banking while reducing the individual member's or stockholder's liabilities.
   WA Corp regs   Co-op regs   out of state members   BALLE webinar 2011 - No Small Potatoes   tips

Local Buying Reward SCRIPs
Various SCRIP ideas are being marketed. Customers receive award points when buying from any number of local businesses that belong to a merchant organization. Consumers may redeem these award points towards purchases from any of these merchants.
   examples:  OurTownZIP   Spokane Grape Vine   BeeCard - Valley   ChatterFly   ForkFly
   SupportLand on Twitter   Article with multiple example   Great Lakes Scrip   Fundraising with Scrip

Barter Exchanges
Barter exchanges are businesses licensed by the state as a third party record keeping agency, similar to employment and travel agencies. The businesses are licensed to provide record keeping functions for bartering (non-cash or part cash) transactions between its members or customers. Members carry a credit style charge card and use the card at members' business to make purchases for food and services, usually paying the tax, gratuity, and freight in cash. The transaction is recorded in an accounting system, such as a website, debiting one member's account while crediting the other member's account. A cash fee, usually 10 percent, is paid to the barter organization to support its services of accounting, publishing a membership directory, and growing the barter network.
  Itex Spokane office  Itex National  |  Seattle Barter  |  barter online  |  West Coast: BizXchange

GRANTS for Local Business
Consider doing a survey of all the grants that are available for local business with a follow-up publishing of the survey results.

Public-Private Partnerships
There are increasing number of ways to build partnerships between business and nonprofits and governments to raise money.
  National Council for Public-Private Partnerships 
  examples:  Mandela Foods Cooperative   Review of partnerships in the State of Washington

LION - Local Investment Opportunity Network (Port Townsend, WA model)
LION, pioneered by a group in Port Townsend, Washington, is a unique model of business development funding. Using a legal entity, LLC or corporation, members or stockholders financially support a small staff (can be part time) who discover and qualify business investment opportunities for it members or stockholders. The members are accredited investors and the vetting includes an agreement by the businesses seeking funding to complete a sustainability assessment and follow recommended sustainability best practices. LION type of organizations files disclosure memorandum with state securities regulators.
  LION  BALLE webinar Mar. 2011  |  NYC LION

Business Opportunity Parties - Informal. Attendance by invitation only.
Investors and interested persons are invited to a party where entrepreneurs make short presentations about their business projects (5 to 15 minutes) and declare their need for funding. After the completion of presentations the entrepreneurs (usually) sit at tables and meet interested investors. A host provides a comfortable venue with quality food and drink and makes no recommendations or guarantees to either investors or entrepreneurs. The express purpose of these events is to provide networking opportunity for business opportunities and investors. The host selects the attendees and usually does not formally share the process of selection.
  presenter's checklist

DPO
A Direct Public Offering allows a small business to raise equity capital by legally selling stock directly to non-accredited investors who are residents of the state. State securities filing is required. There is no filing requirement at the federal level. The offering must not exceed 500 stockholders and the offering must be less than $1 million dollars (check this).
  general review  |  SCOR registration WA GOV  |  examples

CrowdFunding - Donations, Loans, Investments
With the advent of computers and the Internet a new method of gathering and distributing money has gained worldwide acceptance and billions of dollars have been distributed through this method. Using a website, monetary needs are posted. People may then visit these sites, peruse the list of needs, then make a donation, loan, or equity investment. Only donation crowdfunding is legal in the USA. Numerous political initiatives have been launched at state and federal level to legalize this type of funding.
  general review  |  WSJ article   |  examples:  Kiva  PeerBacker  RocketHub  Kickstarter  IndieGoGo

USDA Non Bank Business and Industry Loan Guarantee Lender
The USDA Business and Industry (B&I) Guaranteed Loan Program guarantees loans made by commercial lenders against a portion of the loss resulting from borrower default. The purpose of the guarantee authority is to improve the economic climate in rural communities in 'partnership' with the existing private credit sources by increasing the local lender's legal lending limit.
  UDSA rules

CDFI - Community Development Financial Institution
Is a federally funded program that encourages and expands the capacity of financial institutions to provide credit, capital, and financial services to underserved populations. The CDFI federal fund functions in four ways:
  1. directly provides loans, investments, training, and financial services to local certified CDFI correspondents;
  2. through the New Markets Tax Credit (NMTC) which provide tax credits to community development entities (CDEs), which also enable them to attract investment from the private-sector and reinvest these amounts in low-income communities;
  3. through its Bank Enterprise Award (BEA) program by providing an incentive to banks to invest in their communities and in other CDFIs; and
  4. through its Native Initiatives, by taking action to provide financial assistance, technical assistance, and training to Native CDFIs and other Native entities proposing to become or create Native CDFIs.
  reference  |  example - SNAP

Opportunity Finance Network® (OFN)
This is a national network of CDFIs that are 100% dedicated to delivering responsible, affordable lending to help low-income, low-wealth, and other disadvantaged people and communities join the economic mainstream.
  OFN reference

Goldman Sachs Growth Collaborative
This is an educational and services support program for CDFIs and is funded by Goldman Sachs. Its educational and service programs may be available for local funding initiatives.
  Goldman Sachs reference

Conventional Financial Organizations - Banks and Credit Unions
The following is a list of services that may be offered by conventional financial institutions that would advance the funding for small local businesses.
  example: Alternative Credit Union

• IDA (Individual Development Accounts) - A bank or credit union offers business saving accounts that are structured toward a one year goal, after which the saved amount would be matched with local, state, or federal grant money. Educational seminars augment the saving program.
  BALLE Dec 2012 webinar
• Community Partnership Lending - A community partner organization puts money on deposit and the bank or credit union provides custodial services for loans to the community partner's clients.
  BALLE Dec 2012 webinar
• SBA Microloans - Small SBA loans under $50,000 are administered by banks and credit unions.
  SBA information
• SBA 7(a) Loans - SBA 7(a) loans are SBA backed loans for special purposes and are administered by approved lenders identified as Community Advantage Approved Lenders.
  1. Businesses adversely affected by NAFDA
  2. Small export businesses
  3. Rural business activities
  SBA information

Blending
More diversity of funding methods are being observed as ideas are blended. A political environment is needed where experimentation is encouraged and successful models can be quickly implemented.