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Community Capital
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What is Community Capital?

There are seven different kinds of “capital,” or resources, which build community wealth: natural, cultural, human, social, political, built and financial. Investing financial capital in a community positively affects the other types of capital.

Rescuing a Troubled Economy with New Financing Options

Northeast Oregon is struggling. Business Oregon reports regional unemployment at 8.8 percent, with significant out-migration of former blue-color workers and young people. Many people who stay in or move to the region start a business to earn a living. Depending on the county, between 29.3 and 48.3 percent of the individuals who are employed in the region are self-employed. There are limited funding sources to support these businesses, either at start-up or for expansion. Information from and the 2005 Gallup Small Business Index indicates a capital gap of about $27 million in the region.

One untapped source of business funding exists in current residents’ investments and retirement funds. According to the Employee Benefit Research Institute, there may be more than $1 billion invested by residents in non-local banks and corporations. Some residents are dissatisfied with the interest rate they are getting at their bank or would rather support a business that operates in their region. NEOEDD is examining the possibilities and benefits of encouraging residents to re-allocate some of that money into local business.

Why Focus on Locally Owned Businesses?

Michigan-based Local First recently tracked money spent at locally and non-locally owned businesses. They found that $68 of every $100 spent locally stays in the community, while the same amount spent with a non-local entity nets just $43. The difference comes from local businesses purchasing supplies and services from other local businesses, such as printing and marketing, accounting and legal services, and goods from other retailers, manufacturers, small farmers and crafters. Small businesses, which by definition are locally owned, are also known to employ half the private workforce and create two out of three jobs.