Ever wonder where your money is going?

Economists, investment firms, and educational institutions are increasingly looking towards investment in local and socially responsible funds.  Some states are even working on creating mechanisms for people to invest small amounts in local businesses.

When individuals can invest in local businesses, those investors can keep an eye on what their investments are doing.  That also frees up more capital for local entrepreneurs, and encourages more local independent businesses to locate in communities with investment mechanisms.

Keeping money in locally owned banks or credit unions allows those institutions to lend more money to local people and businesses.  Those locally owned banks are far less likely to package and sell loans, so that local banking means financial stability.

Here, courtesy of Don Shaffer (of RSF Social Finance) are 6 ways you can support your local economy through investing and banking:

1.     Change your bank--from a big one to a locally based bank investing in your community.

2.     Put your short and medium term savings in CDs that are working for your communities—such as a RSF Social Finance or Calvert social fund.

3.     If you stay with your big bank, engage them and inquire what part of their deposits from the region gets reinvested regionally.  Write the CEO about community capital—they will actually write back.

4.     Spend less, save more, and then invest it locally.

5.     Make your investment in community capital the center of your savings, not the fringe.

6.     Engage the community institutions where you live (universities, foundations, religious institutions and others) and ask them where they are investing their funds.

So there's some food for thought.  Have a great weekend everyone!