Seed Commons

Interview with Seed Commons Fund staff members Brendan Martin, Co-Director, Ed Whitfield, Board and Investment Committee Member and Senior Fellow, and Marnie Thompson, Senior Fellow Systems Strategist

I met Brendan Martin through the Working World, his longtime initiative to bring non-extractive finance to businesses in Argentina via cooperatives. It wasn’t surprising to me to find that Marnie Thompson and Ed Whitfield, longtime community organizers through the Fund for Democratic Communities, joined The Working World as it grew into its next evolution, Seed Commons. Collectively, they are seasoned investors and lenders who believe that worker controlled businesses offer the greatest opportunity for democracy and economic opportunity for workers and investors. Seed Commons represents an evolution in their work as they scale through a cooperative of cooperatives.

Jen: Why did you start your fund?

Brendan: If we’re honest, we started this fund to try to transform the nature of capitalism itself. I learned what it meant to be mad at capital when my parents divorced and my mom faced extreme economic hardship, and in time, I came to understand that changing the way finance and capital works is one of the hidden keystones to dismantling social and economic injustice. The distribution of capital affects the distribution of most other things in our society, and we have concluded that we cannot achieve social justice unless we remake the infrastructure of finance which sets the pattern for that distribution of capital.

Jen: How are your investment funds catalytic in a way that is different from other funds?

Ed: What makes us stand out against the world of investment is our principles, those of non-extractive finance and building cooperative, democratic ownership, and our structure, which is based on control by the member communities over the capital being lent. We exist for the benefit of those borrowing communities, not to maximize the extraction for returns to capital. We are a fund of funds and a cooperative of organizations, and we are building the supporting infrastructure for making capital work for those who are actually doing the work in the community. We have 25 member funds now and we are building the infrastructure for cooperative finance so that we can create a new economy. We have already proven this can work over a 15-year period, and we have only just begun.

Jen: How do you describe the kind of non-financial returns the fund offers?

Marnie: We focus on economic justice and community self-determination as the ultimate “return” of our work. We want financial return to go to folks who don’t normally receive it. We care about where financial return is going and where ownership lies. That is how we are different, as we are creating ownership and return for those in communities who rarely have it, rather than just continuing to concentrate ownership and returns in fewer and fewer hands.

Brendan: One could change the definition of returns to look past just the financial to improve the normal investment calculus, but we think the system needs to have a more fundamental change than that. If we could imagine a holistic accounting that included the impact of an investment on all of society, on people and the planet, this would be much more powerful than just changing the definition of returns. Holistic accounting would take into account externalities, like the pollution of a river or the cost and benefit to a community of an investment decision, to determine what, on aggregate, had a positive or negative return. This is the kind of redefinition of return we are looking for, not just one that asks an investor to think beyond their financial return, but one that thinks beyond the investor and instead considers the impact on the whole. It’s not so much that we need to expand our definition of return past the financial, but we need to expand our definition of the beneficiary well beyond the investor.

“Members of the Seed Commons Southern Reparations Loan Fund Network, at our regional
gathering in Charleston, WV (February 2020).” Photo credits: SRLF.

Jen: Can you describe how you use integrated capital to do your work?

Brendan: There are so many benefits, profound, community benefits, from the economic activity that we are engaged in, that we cannot think of the capital provided as only capital that has to be paid back — some benefits of this work will never be monetarily captured in a way that can be paid back, but that work should still clearly be supported. Integrated capital recognizes the general community benefits of investing in community businesses and that not all benefits can be captured for repayment, and a spectrum of capital, integrated capital, is therefore needed.

We also believe in integrated capital not just for our worker cooperative borrowers, but for the financial infrastructure of Seed Commons. We have a multi-year plan for Seed Commons to become self-sustaining, but at the moment, philanthropy provides grants for Seed Commons operations because much of the beneficial work we do cannot yet be paid for by the economic activity our growing network has nurtured. I would love to see foundation support replaced by revenue generating activity in communities as it grows and matures, and we are currently on plan to make that happen in the next five years.

Jen: What is transformational about the businesses that you invest in?

Marnie: We believe that worker ownership and control and the democratic investment infrastructure we are building are transformational in themselves — we don’t want to define new measures of impact to suggest we are transformational, is it the real, community economic power we are part of trying to build that is itself transformational. We are building an infrastructure that is directly challenging the business-as-usual rules that ensure we have rich people and poor people. Socially we are transformative of the relationship of labor and capital by creating democratic ownership. Some people go to market with just their labor, but by allowing workers access to capital, this changes the nature of one of the most fundamental expressions of power in our economy.

“California Harvesters is an employee benefit company supported by financing from The
Working World, a peer member of Seed Commons.” Photo Credit: The Working World.

Jen: How do you address racial justice, income inequality, and/or gender justice through your products and services?

Ed: We do this on two levels: through the way we are building the network, and how we make our loans. We set a standard for who can become a member, as a result, the majority of our peer members are led by people of color. In addition, we have an explicit racial justice and economic justice lens. In preparing a loan memo, our loan officers have to score projects around racial, gender, environmental, and economic justice. We first ask ourselves, “Does this loan meet our values, and if it doesn’t it doesn’t go forward to the second screen, which is focused on financial feasibility. The result of our emphasis on values is that 95% of our dollars are loaned to Black and people of color-owned businesses as well as gender non-conforming and women-owned businesses.

Jen: What does a foundation or investor need to understand in order to invest in transformational businesses?

Marnie: We are very relational with our borrowers — that’s where the vast majority of our time and resources go. We don’t have as much contact with the investors. We are all working flat-out, and the borrowers, the coops, are the people that we put most of our energy and attention towards. Investors need to understand that the world is going to hell in a handbasket under the mainstream economic regime, and they need to think about how they are going to craft an okay world for their children and grandchildren.

If investors are willing to move their money to Seed Commons, we are deeply appreciative. And we also want them to trust our time-tested democratic principles and processes for deciding what and how we invest in — they don’t have say-so over the money they invest, the democracy of the Seed Commons decides, and that is for us the key.

Jen: What do you tell people who think your fund is risky?

Brendan: We have paid back every investor we have on time and no investor has ever lost money in our history. We’re building infrastructure for the long haul, and we won’t be around for long if we lose all our money. On the contrary, we have this stellar track record because we have very strong quality control on the loans we make, we help ensure that community investment plans go from aspirational to rock solid, and because we know our portfolio as a whole, its cash flow needs and its strengths and weaknesses. Ensuring that investor money isn’t lost is the same as ensuring that our beloved community projects are successful — we don’t want any community project to fail, and so we don’t want to lose any investor money. In the way we have designed our fund, we’re all in it together, investor, Seed Commons, and borrower. Of course, investors are making an unsecured investment, and this means there is risk. But all investments have a risk of going bad, while very few have the possibility of truly doing good.

Seed Commons puts the power of big finance in the hands of the grassroots. Even our smallest member can access capital on the best terms of our whole network, and our infrastructure continues to extend this access to capital to more communities every day via its network of community-owned loan funds that provide investment and technical support to businesses in communities harmed by the extractive economy, deindustrialization, and discrimination. Our explicitly non-extractive approach creates jobs, builds wealth, challenges inequality, and transforms local communities. Every investment in us is another investment in a different and more just economy.


Seed Commons

Investment Thesis/What is your rationale for your approach to investing?Seed Commons, a network of community-owned loan funds, provides investment and technical assistance to cooperatively owned businesses in communities facing the extractive economy, deindustrialization, and discrimination. Our local, non-extractive loan funds transform communities through community-controlled finance to create jobs, build wealth, and challenge inequality.

Geography: Place-based United States, Argentina, Nicaragua

Year Founded: 2004

# of Investments: 50-100 (1,000s historical)

# of Investors: 130 ($25K – $2 M)

Funds Raised: $30 M


What’s on Our Minds?

Book (Marnie): Ministry for The Future (Kim Stanley Robinson)

Book (Brendan): Debt: The First 5,000 Years (David Graeber) Capital in the 21st Century (Thomas Piketty) On Earth We’re Briefly Gorgeous (Ocean Vuong)

Song (Ed): Some Day We’ll All Be Free (Donnie Hathaway)