3c hapter - Index of

124 Locavesting
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If you want to play it safe, prepaid shares are an easy, low cost
way to support a local establishment. Those with more disposable
investment capital might be comfortable becoming an equity
investor. For small businesses, community capital is a great way to
engage customers and literally get them invested in their success.
Cons:
• These are high- risk propositions. Small businesses, especially those
without a track record, can fail. Good management is critical.
• Most community capital deals are ad hoc. There is, as yet, no formal
way for investors to fi nd out about such opportunities. Typically
information is spread informally through word of mouth or from the
business itself.
• Interest rates on loans to a community- supported business may
not be commensurate with risk.
• The downside of equity investments, in addition to risk, is that such
investments in privately held businesses are typically illiquid.
• Finally, community capital deals should involve an experienced
professional, since they can easily run afoul of SEC laws.
The Bottom Line: Community capital can be a wonderful way to
support a business that you care about, and it makes great sense
if you are already a regular customer. For communities, it can build
a sense of belonging and shared purpose. Prepaid shares are an easy,
low- risk way to support a local establishment.
For More Information:
• General information on community capital and public policy can be
found at the Institute for Local Self Reliance’s New Rules Project,
at www.newrules.org. The Institute’s The Big Box Toolkit, at www
.bigboxtoolkit.com, is chock- a- block with advice and practical strategies
for communities that want to protect and enliven their own
downtowns or organize their own community- owned stores.
• The Plunkett Foundation tracks news and issues relating to rural
cooperatives and social enterprise at www.plunkett.co.uk.
• The Democracy Collaborative maintains a comprehensive site devoted
to community wealth- building at www. community- wealth.org.
• For information on creating community- owned energy production,
see www.cooppower.coop.
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For Saranac Lake Community Store, see www. community- store.org.