AMES, Iowa – Recently published research from Iowa State University shines a spotlight on the “slow money” movement, which seeks to match locally produced and environmentally friendly food and artisanal products and services with fresh capital investment.
The growing fiduciary philosophy embraces environmental and social benefits in addition to financial gains, said Priyanka Jayashankar, an adjunct assistant professor of management and lead author of the study.
“It’s about bringing money back into the soil and making sure capital is circulating locally,” Jayashankar said. “The idea is to not let the capital circulate so far or so fast as in more traditional investment plans.”
Slow money derives its name from the “slow food” movement, an alternative to fast food that promotes local ingredients, Jayashankar said. Investors following the slow money model embrace what she calls a “triple bottom line.” That means investment is driven as much by environmental and social benefits as it is profit.
The slow money model generally requires a slower return on an investment, usually around seven years, she said. And the size of the investments usually falls short of those of traditional venture capital.
She said slow money investors have helped existing farms make the transition to organic production and new farms to lease land. Typical ag investment funds using the slow money model range from between $500,000 and $2.5 million, Jayashankar said.
Mark Rasmussen, director of Iowa State’s Leopold Center for Sustainable Agriculture and a co-author of the paper, said slow money may provide a new model that could shape agriculture in the future.
“As we continue to face the question of who will farm in the future, the Leopold Center is willing to explore a range of alternatives,” Rasmussen said. “The research in this paper is part of that exploration.”
Jayashankar said she wants to conduct further research into the viability of slow money in the developing world. She said the lack of conventional finance in developing countries often impedes the establishment of new, environmentally sustainable food production. And in areas of the world where mainstream venture capital is often difficult to come by, slow money may have a role to play in feeding growing populations in the developing world.
Growing awareness about what’s in our food and where it comes from also has fueled the slow money philosophy, she said.
“As long as there’s a niche for local food, slow money has potential for consistent growth moving forward,” she said.
Arvind Ashta, a co-author of the paper and a professor of finance at the Burgundy School of Business in Dijon, France, agreed that slow money has the potential to unlock environmental and cultural benefits.
“As fiduciary capitalism downscales from the Fortune 500 to slow money, such as investments in agriculture and in community development, we find that these smaller fiduciaries are taking more interest in sustainable development, both in terms of society and in terms of ecology and are willing to take a longer term and more reasonable economic perspective as a trade-off,” Ashta said.
The paper was published online in the peer-reviewed academic journal Ecological Economics. The print version of the journal will appear in August.
