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Oh Place Based Capital Is Where To Go!

by | May 13, 2024 | Community Wealth Building, Economy

Written by Shane Arthurson

Imagine capital from a community being used to own a project in that same community.
This is Place Based Capital is. An inclusive financing structure where you can own the local
strip of shops you visit, you can own the local renewable energy project that you use, you
can own a local housing project that you live in, you can own a local childcare centre you kid
attends.

Place Based Capital makes sense, because the people using the project are the investors in
the project. That creates utility and so in addition to a financial return you get a utility return.
Imagine as a community you wanted an Early Childcare Centre and there currently wasn’t
one – then when you create it with Place Based Capital you now get to use the service, you
get all of the benefits of ownership, like having a say in how the business is setup and how it
is run. And… wait for it…. This means that the Place Based Capital investor can do
something no other investor in history has ever done, lower their financial returns because
they are in fact getting a utility dividend, this is truly the only form of concessionary capital
and is true impact investing.

Place based capital is harmonious because the benefits and the cost are collocated. Let me
explain with an example imagine if we all had to bury our rubbish in our backyard everyday –
we would be the best recyclers and now apply this to finance, in the example above imagine
a large private equity firm out of USA owns the child care centre and rates are high. This
means that the financial cost (the high rates) are borne by the local community, but the
financial benefits are in the USA, this dislocation of costs and benefits creates friction and
bad outcomes. Because you are not the owner you don’t get the transparency of the flow of
funds, you don’t even know how much profit they are extracting.
Place based capital is enormous and has enormous potential, it makes finance functional, it
brings communities together, it educates, and it is a true weapon against wealth inequality, it
truly is concessionary because of utility, this is fairness, this is distributive justice, this is true
ethical capital.

We need to acknowledge that the current finance system and free market lead to
monopolies and wealth inequality, so join us to fight it with Place Based Capital. Can you
believe we don’t have a community ownership vehicle in the legal or tax system,
Government if you are listening we need these mechanisms and we need incentives to level
the playing field against private equity.

What if the worlds malfunctioning was driven by the wrong financial ownership. What if
Woollies and Coles are price gauging because their biggest shareholders is vanguard a US
fund and not the people who work there or the people that shop in their stores. And
executives hide behind limited liability companys and fiduciary duty.

Imagine if the polycrisis could be solved with Place Based Capital, lets try…its fun to try. You
have brains in your head and you have feet in your shoes and this is 98 and ¾ percent
guaranteed!