Nowadays, there is no better way to support your favorite locally owned small businesses than to buy their goods or services and “vote” local with your dollar… Right?

Not entirely.

An exciting trend around the country, and the world, is an increasing interest in investing in the local community by offering financial support to small businesses in other ways than patronizing them. SCCF wants to know: Could some of these models be applied in our community?

For example, crowdfunding is a way that businesses can get pledges from supporters for monetary “donations,” often with some form of “reward,” in order for the business to raise capital for some project or purpose. Kickstarter and Indiegogo are two popular websites for this sort of crowdfunding, which utilizes social media and online networking to bring in financial support for entrepreneurs, artists, and even non-profit organizations. Two SCCF clients have used crowdfunding: Dawn Nay of Rule 42 and Valerie Smith of Larkin Arts; another intriguing (and successful) Kickstarter project was conducted by Lisa and Jim Jacenich of Artful Gifts in Monterey.

Another way that creative entrepreneurs are using to raise funds are to sell gift cards at a discount that customers can use later to purchase goods. This way, customers can provide much-needed funds for expansions, startup funding, and more, and end up getting more items than they paid for. A local example of this approach is A Bowl of Good Café, which raised money for some locally crafted tables for their second café location by selling $200 gift cards.

But why stop at these “investment” opportunities when you could actually invest funds in local businesses? Some cool approaches to doing this—and staying within the confines of SEC regulations and other laws—are popping up around the country.

• One model is an investing “club” in which local wealthy investors meet with entrepreneurs in need at dinners and other events in which connections can blossom into investment opportunities.
• Another idea is a local stock exchange, which would function similar to NASDAQ or the NYSE but be comprised only of local companies.
• Equally compelling is a community-financed loan fund, in which investors can contribute to a pool of funding that a financial institution then uses for loans to local small businesses.
• Some businesses, like cooperatives and credit unions, allow community residents to purchase memberships that then give them annual dividends—a local example is Friendly City Food Co-op in Harrisonburg.

SCCF wants to get a conversation started about the need, opportunities, and interest in local investment as a way to keep local dollars in the community and to help local entrepreneurs flourish.

Want to join the conversation? Keep an eye out for some of our upcoming events, like classes and reading groups, on local investing. And read up on the topic with great books like:

• Locavesting by Amy Cortese
• Local Dollars, Local Sense by Michael Shuman
• Raising Dough by Elizabeth Ü (forthcoming)