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Glossary - Financial Permaculture

Alternative currency Any currency that is used as an alternative to the dominant national currency. This could be a foreign currency, a locally created currency, or an international currency such as Bitcoin. It can also include commodities used as currency (salt, in Ethiopia), barter, service hours, etc. Virtually anything that is traded for value can legally become a currency, if people agree to it.

Benefit, or “B” Corporation Is a response to the lack of accountability to the environment and communities,  of publicly owned C Corporations, and their sole focus on profits. The  purpose of a benefit corporation is to create general public benefit, which is defined as a material positive impact on society and the environment. Shareholders can sue a C Corporation if it invests in environmental or societal improvements which affect profits.  A Benefit Corporation structure legally allows people care and earth care to be weighted equally with profits, and shareholders must determine if the corporation has had a material positive impact.  Two well-known public companies that have converted to B Corp status are Patagonia and Ben and Jerrys.

 Bitcoin (sign: code: BTC or XBT)  a digital currency that is not backed by any country's central bank or government. Bitcoins can be traded for goods or services with vendors who accept Bitcoins as payment.  Bitcoin-to-Bitcoin transactions are made by digitally exchanging anonymous, heavily encrypted codes across a network of personal computers, each of which can access any of the others, and can exchange files and email directly with every other computer on the network. Access can be restricted to those files that a computer's user chooses to make available.  The operators of these computers, known as "miners", are rewarded with transaction fees and newly minted Bitcoins. Bitcoins are increasingly used as payment for legitimate products and services, and merchants have an incentive to accept the currency because transaction fees are lower than the 2 to 3% typically imposed by credit card processors.  (Wikipedia)

Capital  wealth in the form of money or other assets owned by a person or organization or available or contributed for a particular purpose such as starting a company or investing (Google Dictionary). 

Community Development Financial Institution (CDFI) The mandate of this institution is to loan money locally in order to improve the community. It can be a bank, credit union, or community-development loan fund. Some CDFIs ask community members what they would like funded and proceed to raise the money for it.

Conscious investing Is the philosophy of using investment money to improve conditions in one’s community or on the planet. This is often done through investment in social entrepreneur-based companies, small farms, or other local self-reliance efforts. See also “Impact Investing.”

Cooperatives are groups of people who form voluntarily associations for the mutual benefit of all members. The most common cooperatives are non profit or for profit organizations co-owned by the people who work there, or organized to gain market advantage (for instance, a food cooperative may buy health food wholesale and deliver direct to its members with no or reduced mark-up). Profit sharing or employee owned companies are examples of cooperative businesses. Professional associations are yet another form of cooperation, with potential mutual benefit being more recognition, support and standardization for that field. Any activity can be cooperative. There are many benefits to finding ways to create cooperative structures, from cross-marketing to lowered costs, to more support for one’s activities. 

Cradle to cradle design  Per William McDonaugh, products can be sustainable if toxic chemicals and non-renewable metals, etc, are kept separated from organic systems at all stages of production, and recycled. This needs to be done at the design stage. Thus, a car should be designed so that all non-renewable materials are designed to be separated at the end of the vehicle’s life, for recycling. Extraction of resources from ecosystems would also need to be done in  way that does not create further damage. This is called “Cradle to cradle design” because no element ends up as waste. It is all capture by the system and re-used in some way. 

Creative commons is an international copyright licensing organization that expands ability to copyright works beyond “all rights reserved” so that they can be used freely by others under certain flexible criteria. This is a digital license and gives many advantages for those who want to make intellectual property freely available but still retain some right of control over it. See an example of this license here:  creativecommons.org

Debt based economy  The Federal Reserve (Central Bank of the US) is able to print more money whenever it wishes, which it then loans to the government and to banks. This money is not based on goods, services or gold. It is based on debt, to the Federal Reserve. The Federal Reserve controls interest rates on which the debt must be paid back, and how much money is in the system at any given time. From April 2008 to April 2009, the adjusted monetary base went from $856 billion to $1.749 trillion, without any new wealth or new production, creating inflation.

Deflation A general decline in prices, often caused by a reduction in the supply of money or credit.

Economics  Originally derived from a Greek word meaning “management of a household,” economics has come to mean a complex system of currencies, interest rates, speculation, regulation, trade, capital, and goods.

Economics of happiness is the study of economics within the context of happiness, well-being, quality of life, and related concepts. It considers the achievement of well-being and quality of life, to be more important than money accumulation, income or profit. The usual economic indicators such as growth of Gross Domestic Product, are considered valuable only to the degree that they increase well being.

Ecosystem services  Humankind benefits from a multitude of resources and processes that are supplied by ecosystems. Collectively, these benefits are known as ecosystem services and include products like clean drinking water and processes such as the decomposition of wastes. (Wikipedia)

Environmental “sin” tax A tax on companies equivalent to the cost of cleaning up the pollution they are creating, or preventing it in the first place. See “True cost accounting.”

Fair trade is a label used on goods which denotes that higher, fair prices were paid to producers of those products (food, goods, crafts, etc). It offers better trading conditions to poor and marginalized areas so that people can pull themselves up economically, and promotes higher social and environmental standards. There is no universal definition for this term, and the several organizations that offer labels all have their own labeling requirements. There is some question and controversy about how much money reaches the actual producers and that some potentially damaging long term social & environmental impacts are not being addressed by this labeling system. It is a good start, but the only way for consumers to really know how their purchases are impacting producers is to observe or do the research for themselves and to continue to demand improvements.

 Financial permaculture  An economic system designed with permaculture principles and ethics would include at its core people care, earth care and fair share or future care. Financial permaculture views the big picture and all of its elements. It considers wealth to include the value of the work that old growth forests perform, and children, and “retired” people who continue to contribute to society, etc. It includes our aquifers, peat bogs and perennial prairies. Economic activities and decisions in financial permaculture consider long term results in whole systems, not just short term profits for a single company.

Fractional reserve banking is the current form of mainstream banking in all countries worldwide.  All banks are able to loan funds multiple times on a single deposit. For instance, if you deposit $100 in a savings account, the bank can legally loan that amount 3 or more times, creating $300 of extra “money” in the process. Banks are only required by law to keep between 3-10% of depositor’s money in the accounts. The rest, they can loan. This is just one form of money storage and creation and is considered a "debt based economy" because money is created via debt. (http://money.howstuffworks.com/fed8.htm)

Genuine wealth indicator Economist Mark Anielski has developed a framework to measure wealth more sustainably than our current system does. He insists that we need to consider five types of capital to be able to accurately determine the state of our wealth. These are: Social, human, natural, manufactured, and economic/financial capital. Each of these must be conserved or increased to maintain or increase genuine wealth. He has developed guidelines and benchmarks for measuring these forms of capital, and outlines the process along with other ideas for economic reform in his book “The Economics of Happiness.” 

Gift economy A system in which goods and services are freely given with no thought of immediate or direct return or exchange. Some indigenous cultures have operated on this basis of exchange. Examples of gift economics are freecycle, Really Free Markets, volunteerism, etc. This is a workable system when enough people practice it.

Impact investments are investments made into companies, organizations, and funds with the intention to generate measurable social and environmental impact alongside a financial return. (Wikipedia)  See also “conscious investing.”

Inflation a persistent, substantial rise in prices, due to an increase in the volume of money in circulation, resulting in the persistent, substantial loss of purchasing power of money.

Land trust A legal arrangement wherein a trustee holds land for the benefit of another. The conditions of the trust dictate what the land can be used for. There are tax and other legal advantages to this form of land ownership. Land trusts are used to create conservation easements, and used by corporations to control large pieces of land. They can also be used to secure land for intentional communities or other projects that may have changing management, that need to maintain original agreements on how the land is to be used.

Life cycle analysis  A “product life-cycle” is the cycle from raw material to disposal, including extraction, transport, processing, distribution, sales, consumption, degradation, and discard. All environmental impacts are measured along the way. Energy used, waste and emissions/pollution, and renewability of raw materials are some of the inputs and outputs that are measured through the entire cycle to determine the impact of a product’s lifecycle. In permaculture, we design systems that produce more than they consume. A life cycle analysis will tell us if we have achieved that goal.

Local Exchange Trading System is a non-profit, locally and democratically organized community group that facilitates local exchanges and trades via a monitored system of LETS credits. It is a template for creating local trade with a local currency. A certain number and diversity of merchants and services need to participate before it becomes viable and self-sufficient. Local currencies work better when there is incentive to use them such as discounts, an economic emergency, etc.

L3C  A gradient step between for-profit and non-profit corporations, this structure allows a privately held, for-profit company to accept money from both investors and grants/foundations.  It is a “low profit” corporation, operating much as a non-profit, but retaining for-profit abilities. There are some tax advantages over a regular for profit corporation. This structure was created to meet the needs of "social entrepreneurs" who run businesses that have positive social and environmental purposes that are similar to a non-profit corporation, but wish to run their activity as a business.

Medium of exchange  Anything that is generally accepted as a means of exchange for goods and services, a standard of value and a measure of wealth in a particular region or country. In modern times, money is regarded as the major medium of exchange.

Natural capital  includes raw resources and the ecosystems that provide these raw materials for goods, services and other needs (for instance, trees on mountaintops provide protection for watersheds that may irrigate farmland downstream). Many of these resources are non-renewable or vulnerable to degradation. It is thus important to consider the depletion or destruction of natural capital when measuring wealth or production.

Production based economy Currency linked to production, rather than debt and lending, is an example of a production based economy. An example of this would be a local currency, or ticket, coupon, or scrip created to represent produce that is grown by a farmer’s cooperative. This money can be traded for any produce from any farmer. The amount of money created is based on actual production of food and is used as a medium of exchange to simpllfy trade.

Slow Food an alternative to fast food which strives to preserve traditional and regional cuisine, create sustainable foods, promote local small businesses, and encourage farming of plants, seeds and livestock characteristic of the local ecosystem.

Slow Money a movement to organize investors and donors to steer new sources of capital to small food enterprises, organic farms, and local food systems. Slow Money, which took its name from the Slow Food movement, aims to develop the relationship between capital markets and place, including social capital and soil fertility. Slow Money is supporting grass-roots mobilization through network building, convening, publishing, and incubating intermediary funding strategies and structures. The Slow Money principles advocate for cultural, ecological and economic diversity in an economy based on healthy people in healthy places. (Wikipedia)

Smart growth  planned economic and community development that attempts to curb urban sprawl and worsening environmental conditions.

Social capital is the expected individual and community benefits derived from beneficial connections between individuals and groups.  Such connections create social cohesion and foster personal investment in the community which, in turn, creates preferential treatment and cooperation.  

Time Bank  An alternative economic system that bases value on hours of time rather than on goods or money. It was developed in the 1980’s to increase social capital by focusing on the value of what an individual can contribute rather than on how much money he or she might control. Members exchange services and record these with “time units.”  Today, 26 countries have active Time Banks. There are 250 Time Banks active in the UK and over 276 Time Banks in the U.S.  As a philosophy, time banking also known as Time Trade is founded upon five principles, known as Time Banking's Core Values:

  • Everyone is an asset

  • Some work is beyond a monetary price

  • Reciprocity in helping

  • Social networks are necessary

  • A respect for all human beings

True cost accounting The concept that companies should document the true costs of their operations to the environment and society. Someone will pay or is paying those expenses and it is a covert charge, since it is not on the company’s books as an expense occurred in the process of doing business. Only with this form of accounting can we determine the real costs of production, which will reveal oil, coal and other damaging industries to be far too expensive to be viable. This alone, if implemented along with a tax that forces payment of these costs, could create economic realities where real sustainable products could flourish.  Because they are less expensive in terms of human health, community viability, and raw resource management, they would quickly become more price-attractive than unsustainable products.  

Wealth Derived from Old English weal, meaning “well being”, wealth has been redefined to mean “a great store of money, goods, property or other riches.” It can also mean “rich or valuable contents or produce, the wealth of the soil”   (Dictionary.com)

 
If you would like to suggest any additions to this glossary or clarifications of any definition, please contact us. We will be happy to credit you with any definition you write that we use.  

Glossary - Financial Permaculture by Koreen Brennan is licensed under a Creative Commons Attribution-ShareAlike 3.0 Unported License