New Economy Week 2015: Putting Divested Money To Work, Repairing The Damage

This post is part of New Economy Week: From Austerity to Prosperity (November 9-15)—a public conversation about the ideas that can transform society and build an economy where people and the planet matter. Today is Day 4, “A People’s Climate Agenda“: What are the policies, campaigns, and grassroots initiatives that can address the magnitude of the climate crisis while building shared prosperity?

The following is adapted from a speech delivered to the Fossil Fuel Divestment Student Network’s Southeast Regional Network this September. It has been edited for length and clarity.

I’m part of the Reinvest Network, and I have lots of exciting news to share about our progress in developing the kinds of projects that funds divested from fossil fuels can and should be reinvested in.

First though, I want to use my age and status as a person who has been doing this work for several decades to share some of my personal story, because I think it might be instructive. There are a number of commonalities between my personal journey and the work that student divestment activists are doing.

My story can perhaps be useful to you as you struggle to find your place in a movement that needs you. The movement needs you, even though you may be wondering about how your college-going privileged selves can possibly help.

This brings me to a story I call, “You did what with 10 million dollars?”

In 2007, my father, W. Hayden Thompson of Cleveland Ohio, died at the age of 79. My Dad’s death was, of course, sad for my family and me, though it wasn’t unexpected—he’d been ill for several years. In addition to being a sad occasion, it was a momentous event in the lives of his five kids, including me—because we were all set to inherit millions of dollars: enough money that none of us would ever have to work again if we chose not to.

Except, I didn’t inherit. In the years before my Dad’s death, I worked with him to make a different arrangement, where all the money went to start a foundation focused on nurturing grassroots democracy, the Fund for Democratic Communities.

I didn’t set out to become a philanthropist—I had a perfectly viable career as an educational researcher and an equally committed life as a community activist. Not only did I have other career aspirations, I was, and remain, somewhat suspicious of philanthropy as an authentic force for social change.

And yet I made the choice and it’s given me the opportunity to understand both the possibilities and limitations of philanthropy.

It’s been 8 years and I’ve pondered a lot about what it means for me to have taken this pile of money—piled up by my good, hard-working, staunchly capitalist Dad—and put it to work to challenge the very mechanisms by which he piled it up.

How the money got piled up in the first place: the story of Best Sand

My dad and his old high school buddy Bill Conway both loved golf. They played golf together from high school until the year before my Dad died. They often talked business when they played golf together.

Bill Conway wanted to buy a small company called Best Sand that dug sand out of the ground in Chardon, Ohio, cleaned it, and shipped it out. My Dad liked Bill and liked the prospects for the company, so he invested and took a seat on the Board of Directors.

Best Sand did well, and the single operation in Chardon, Ohio grew as Bill acquired more small sand and mineral companies.

Eventually Best Sand got so big it renamed itself to reflect its new stature and breadth of operations: Fairmount Minerals. But sand was still at its heart. In fact, it became their greatest asset due to new uses for sand in oil and gas drilling.

It turns out that as we use up the finite supply of oil and natural gas in the ground, the price can go up. High enough to make it worth the cost of digging it out of ever more difficult-to-reach places, and digging out grades of the stuff that were earlier considered too dirty to mess with. Turns out that you need a whole lot of sand to blast into these places and to clean the dirtier deposits.

The value of Fairmount Minerals shares went up and up, the value of my Dad’s initial investment rose by about 2,000 percent. Eventually, in 2010, my dad’s Fairmount Minerals shares were purchased by an equity fund that was looking to get more involved in the booming oil and gas business.

So here’s a contradiction for you: The proceeds from the purchase of the Fairmount Minerals stock, millions in oil and gas money, represent the lion’s share of the funds that undergird F4DC and its work.

I have to stop for a moment and say something here: It feels almost traitorous to my family and the Conway family to expose this piece of truth about F4DC’s origin story. Let me be clear about this: We Thompsons are good people. So are the Conways, and all the other people working at Fairmount Minerals.

I believe that with all my heart. But I think we have to start looking under the hood to see what’s driving our economy and society. We have to be honest and open about the contradictions and the part we play in sustaining them.

I decided to disrupt the contradiction by trying to use the money to undermine the very processes that allowed it to pile up in the first place.

So every day, the five of us at F4DC go to work spending my Dad’s money on building a more democratic, just, and sustainable economy. We’re trying to use money made from the most extractive parts of the extractive economy to build a non-extractive economy. How’s that for justice? Or irony, at least…

We plan to have spent all the resources of F4DC by the end of 2020 because we think that this money is best put to work at this critical juncture in history by helping to create a Just Transition.

The Southern Reparations Loan Fund

The first project I’ll talk about is one we’re working on with eight other organizations in the Southern Grassroots Economies Project, also known as SGEP.

SGEP involves nine member organizations, which are committed to a mission of building a “new economy” in the US South that is democratic, just, sustainable and centered in the communities most affected by the economic crisis—African Americans, immigrants, and poor whites.

SGEP does three things: education, policy, and money.

The money aspect of our work has crystallized into a project called The Southern Reparations Loan Fund (SRLF).

We named it that because we are about repairing the damage done to our Southern people and communities by the extractive economy.

These were and are community harms, and they require a community response: communities working together to figure out how to solve their own problems by creating sustainable solutions that raise the quality of life for all; projects like the Renaissance Community Co-op.

The Renaissance Community Co-op (RCC)

The RCC is in my hometown—Greensboro, North Carolina—in a neighborhood that has been a food desert since 1998, when the last grocery store, the Winn Dixie, closed its doors. Since then, there has been no grocery store to serve the 35,000 people who live there.

After more than three years of organizing, I am proud to say that early next year the RCC will open in the footprint of the old Winn-Dixie. It will be owned by the community, it will pay good wages, offer fresh food, and profits will circulate locally.

It will take $2.1 million to open the store. And as of right now, the RCC has raised just over $2 million. Now, where does a low-to-moderate income community get $2 million?

$100,000 comes right from the community—families and individuals ponying up $100 apiece for an ownership share. Some is coming from foundations, and a little from the City of Greensboro, but there are limits to what’s possible there—about $570,000 total.

The rest is debt. A chunk of that is conventional debt that has to be paid back with interest, in a pretty short time frame and without regard to whether the store has the cash flow to be able to repay.

The RCC’s financial projections show that we can repay a certain amount of conventional debt, but we need access to more patient capital, and that’s why we’ve partnered with The Working World and Regenerative Finance.

Repairing the damage

Part of the arrangement with the Working World involves paying a small royalty on profits as the store becomes profitable. We’re still working out the details on exactly where the RCC royalties will go, but, most likely, these reinvested dollars will be “repatriated” to the Southern Reparations Loan Fund.

The fund is key in the development of a national network of democratically controlled loan funds, who band together to build the pool of capital and all the other infrastructure needed to create the finance arm of an economy built on justice, democracy, and sustainability.

I want to make sure you all get an accurate idea of the organic, developmental process that we’re all in together. As compelling as all this work is, we’re really just at the beginning:

–The RCC is very close to opening, but it’s not open yet.

–SRLF is beginning to raise money, but we haven’t made the first loan yet.

–SRLF is talking to about ten different projects in the South, ranging from a Black women’s sewing coop to a group of immigrant farmworkers who are building a coop to market foraged saw palmetto to the pharmaceutical industry.

–None of these businesses are, right now, ready to take a loan and turn it into a productive, revenue generating business that pays good wages while meeting a community need. They’re in different stages of development, and they all need technical assistance to become investment-ready.

–We just held our first Peer Network Training, with folks from Detroit, LA, Boston, and other places where folks are trying to launch loan funds for their communities. This was only the first step in the creation of the Peer Network of locally controlled loan funds.

And this is where it really connects to the work you’re doing.

That Peer Network is the ground from which a Financial Cooperative, made up of loan funds committed to non-extractive finance, will eventually grow. But it doesn’t exist yet, and it won’t until we have several more loan funds feeding hundreds more enterprises like the RCC.

Our hope is that one day, when reclaimed capital comes into the Financial Cooperative, it’s going to give Wall Street a literal run for its money.

Now, as divestment and reinvestment activists, you’re fighting to exert control over some big piles of money. They may not be as big as the piles of money controlled by the corporations and 0.1 percent, but in the community I work in university endowments look pretty damn big.

These piles of money, like F4DC’s, grew from the stolen land and lives of Native peoples and enslaved Africans; the stolen labor of people who essentially donated their lives and labor to form the kernels of cash that were invested in the next wave of extractive industries.

So what can we do to acknowledge our history, and honor the stolen lives and labor that grew these piles of money?

We need to put these piles of money to work repairing the damage.

I know that many folks in the divestment movement, in addition to getting their universities’ endowments out of fossil fuels and prisons, are trying to get their universities to re-invest in the “good stuff.”

I want to help your movement add re-investment to the demands you’re making. And I am also here tonight to give you an honest assessment of where we’re at: at the beginning.

And I couldn’t be happier to be at the beginning with you.

Photograph by the Fossil Fuel Divestment Student Network/Sonny Lawrence D. Alea.

Marnie Thompson is co-managing director of the Fund for Democratic Communities (F4DC), as well as an occasional educational research consultant focusing on what works in supporting teachers to become more effective in helping students learn.