If you’re one of the many who have been moved to take matters into your own hands and ensure that your retirement accounts are divested from sin-sectors, such as fire-arms, alcohol, tobacco, petroleum, mining, or other companies and industries that extract from the earth, people or communities, you may be asking “now what?” The divestment movement reached a fever pitch when organizations like 350.org and communities around the country compelled foundations, universities, pension funds, and municipal treasuries to take a critical eye to endowment investments to ensure they weren’t invested in companies and funds that were causing or exacerbating climate change.
If the latest bout of news has you thinking about doing your part, we’ll happily take a break from our usual work to help share tips for how to proactively invest in greater alignment with your values.
Take note: we are not financial planners or advisers. You should consult a licensed financial planner and tax adviser when considering acting on any of this information. This blog comes from my personal journey to invest retirement savings in my local community and in companies and funds that I believe are part of the solution. We are not experts at this and others have written more prolifically about the subject.
First, here are some great resources for further reading:
- Equal Exchange: Investing in the Solidarity Economy. Check out and consider joining the Equal Exchange Action Forum.
- Michael Shuman’s 24-top tools for local investing. Michael Shuman has a forthcoming book that is an excellent guide to investing IRAs and Solo 401(k) savings locally.
- Green Money Journal.
- An Introduction to Financing for Cooperatives, Social Enterprises and Small Businesses.
- The Self Directed IRA Handbook, by Mat Sorenson.
- Self-Directed IRAs and the Slow Money Investor.
Second, here are some of the things that I have done:
- Move your money out of an investor-owned bank and into a community credit union. After the Occupy efforts dwindled, one of the things that my family felt it could do was move our banking to our local credit union. Credit Unions are cooperatively owned banks – they exist to serve their members, not Wall Street shareholders. There is a huge multiplier effect when you bank with a local credit union. Fees and interest get reinvested into the community. We bank with Elevations Credit Union, the largest credit union in Boulder County. It turns out Elevations C.U. is also the largest originator of mortgages in Boulder County, making it one of the most important pathways to home ownership.
- Check out the newest credit union in more than 30-years to open in Colorado, the Clean Energy Credit Union.
- Give preference to mutual insurance companies. Again, mutual insurance companies are cooperatively owned insurance companies. Mass Mutual, Northwestern Mutual, Liberty Mutual…get the picture? Many insurance products are simple commodities and can be purchased through any broker. It may not seem like a radical act, but choosing a mutual insurance company over an investor-owned insurance company is a big deal. It sends an important signal and it helps demonstrate the power and reach of economic democracy. I just clicked “submit” on our director election e-ballot; how often do you feel you have a say in the governance of the company that holds your life insurance policy?
- Join a local investment club. My local favorites are the Colorado Co-op Investment Club, and the Slow Money investment club network. If there are none in your area, start one! Just make sure you’re aware of and tending to securities laws. My friend Joe Reimann is a super nice guy and quite willing to help.
- STOP TAKING UBERs and LYFTS. Better yet, #deleteuber and #deletelyft. In many big cities you can easily find a taxi company or a ride hailing service that is cooperatively owned. For example, in Denver/Boulder, we helped Green Taxi Cooperative form and obtain regulatory approval. The upshot is that you’ll be riding with a licensed, insured, professional taxi driver, not a college kid who has been up for 36 hours straight and is trying to earn some extra money between classes. If you really want to put your money where your heart is, then ask yourself whether you should hail a ride from companies that average $3.37/hour wages for drivers. I say #gocoop and #gocooptaxi.
- Check out the Calvert Impact Investment Note. Note, the investment is not for everyone and this is not advice or a recommendation.
- Check out “Change Finance Diversified Impact U.S. Large Cap Fossil Fuel Free ETF (NYSE: CHGX)”. Among the many cool things about this fund is that it is organized as a public benefit corporation.
- If you’re like 98% of us, you’re not an “accredited investor.” This means that until recently you were all but forbidden from investing in privately held companies. This all changed with the JOBS Act. Title III, in particular, paved the way for non-accredited investor crowd-funding. Subject to certain investment limits, ordinary people can invest directly into privately held companies. This means it is now easier than at any time in the last 80-years to actually invest in your favorite local business. You’ll have to invest through an online portal, and there are many out there. Check back soon; we’ll be publishing future blog posts about crowd-funding, direct public offerings and other ways to invest in local businesses.
- Set up a self-directed IRA and/or Solo 401(k) plan.
- Last, but not least…shop local and shop coop. Local buying and community purchasing is by far the most effective and direct way to support local business, keep money local and vote with your feet (or is it dollars?). Why shop at Home Depot when you can shop at a local Ace or True Value Hardware store? Did you know that both of the latter are cooperatives? Each store is independently owned and the store is a member of a wholesale purchasing cooperative. This allows each store to achieve economies of scale with other coop member stores. This aggregated purchasing power translates into better prices for customers. Locate your closest food coop! If one doesn’t exist, help to start one.
The bottom line is that once you divest, you’ve got to INvest. It can be overwhelming with so much to learn and so many options to explore. Remember, you’re not alone. It doesn’t just take a village…it takes a community. Good luck and please share your tips and experiences!