Changing Perceptions of Wall Street
- Is your own faith shaken?
- Are you sure in your own retirement planning that you can count on getting inflation plus, say, 3% growth over the long haul?
- Are you sure that the ecosystem will support such growth, before air, water, oil, food, become degraded or in shorter supply?
- Are you pretty sure inflation will stay low, and money sound, as the government prints trillions in dodgy debt to buy up dodgier debt?
- Are you yourself ready to think about solutions that don't involve sending money to Wall Street and DC?
- Are you a younger person, looking at your career, and asking, "Is working for a big company a valid response, when so much in our society is coming unstuck? Will my job or company be around much longer? How much trust do I have in my firm's management? How concerned are they with me? Will they keep the long term promises they make to me? How long can this scam-economy hold up, bailouts or no bailouts?"
- Imagine, then, that we as older and younger people, went local to build a better shared future.
Community Investing for Personal and Public Good
Let's say you are a younger person who wants to start a for-profit social venture with a financial return to investors and a social return to your local community. Maybe you want to get involved with permaculture. Maybe you want to own a farm? Maybe start a food distribution business? Get an ethanol business going? Start a wind or solar enterprise? How to get investors for such grassroots start-ups is not such an easy question, as C.A. Fitts indicates here, with a review of investment laws and regulations. Still, the field is pushing towards solutions. These links may be relevant.
Wealth Wave on Main Street
- 90% of US Firms are family owned
- 64% of GNP
- 33% make it to next generation
- 15% to third generation
- 25% will transfer control over next 5 years
- 40% over 10 years
- 71% have not completed succession plans
- 93% have little income outside business
- 80% want business to stay in family
From a talk given by David Leibell and Dan Daniels of Wiggin and Dana to Communities Foundation of Texas, May 6, 2008
These family owned firms are embedded in the local community. The owners are often devout. The owners have not only wealth in their business, but also work ethic, connections, and business savvy. They were often born in town, educated nearby, will die in the local hospital, and will be buried in the churchyard where they worshipped for decades. They come from many political and religious traditions, actually, but they share a commitment to their community.
As family firms transition, as the owner sells out, or passes the baton to children, there is one golden moment when the money is available for reinvestment. Some of these families consider philanthropy as a way to reinvest in their religious organization, their town, or to make a difference in the larger world. Often they are trying to set an example for children, or get them involved in the giving, to pass on a family legacy of leadership and love.
When advisors talk to these families one topic is "founder's transition." What will the couple who started the business do when it is sold? What can be done to help them let go of the old and embrace the next phase of their lives? Some of these founders will settle for golf, travel, and shuffleboard, but many of these Boomer entrepreneur's want a new challenge and feel a sense of urgency about the way the world is going.
The investment vehicles listed earlier in his post are "fancy;" they are the kind of thing that might appeal, right now, to highly educated, leading edge people in the progressive community, or in philanthropic networks, or among foundation people. However, so much of the wealth of this nation, not just financial wealth, but also human capital, is locked up in Main Street businesses, that I look with interest at the coming intersection of small business owners and new ways to give and invest locally for a sustainable and gratifying future.
Power Phrases for Business Owners
- You did a great job building this business, what is your exit strategy?
- What is next for you, when you do exit?
- Let's say we put all you own on the table. Let's say we took off the table enough for you and your spouse to live the rest of your life in comfort. What might be left? A financial planner can calculate that for you if you are unsure.
- At your death there are only three places the remaining money can go: Taxes, charity and children. Let's say we could reduce taxes to zero. How much would you want your children to get? How much is enough? How much is too much?
- As to the portion devoted to making the world better, the part you want to invest for the community, do you want to just give it away? Would you prefer to invest in a socially oriented business? Do you want to put your own talent with it? Do you want some skin in the game? Might you start the new venture yourself? Partner with others who will?Lend money, maybe at below market rates? Would you do business with a new venture that does social good? Encourage others to do so? Bank with a bank who lends to such ventures?
Investments are highly regulated, as C.A. Fitts points out in the post linked above. Anyone getting involved in social investing, whether as a philanthropist, trustee of a foundation, individual investor, an investment advisor, a philanthropic advisor, a fundraiser, or as an entrepreneur, needs to research and follow the legal and regulatory procedures with the help of qualified legal counsel. This social investing field is truly leading edge, and that can mean bleeding edge.
This post is not investment advice nor an encouragement for anyone to make a specific social investment. My point is that certain mega-trends are converging: loss of faith in Wall St; youth impatient with traditional and seemingly doomed career choices; ecosystems in dire need of care; innovative social investment structures; and the exit of Boomer Main Street business owners with cash in hand, looking for new challenges. Out of that convergence we will see turbulence, experimentation, and perhaps bottom up solutions we can barely imagine today.