The Circle of Aunts & Uncles is a multi-generational project to provide low-interest loans and social capital to under-resourced entrepreneurs in order to co-create a more equitable, compassionate, sustainable, and vibrant local economy in the Greater Philadelphia region.
We envision a prosperous local economy that supplies basic needs to the local population, works in harmony with our ecosystem, supports vibrant, joyful, and inclusive community life and has broad-based business ownership reflecting the demographics of our population. We aspire to:
1. Strengthen regional self-reliance by supporting the local production of basic needs, replacing imports with locally made products and services.
(This is of particular importance, not only to build the wealth of our communities through local ownership, but also to address climate change by reducing the carbon omissions of long distance shipping and to limit our reliance on global supply chains easily disrupted by increasingly unstable weather and social unrest.)
2. Support local business owners in historically marginalized communities and populations, which will create jobs and increase community wealth and vibrancy.
3. Build a community of lenders and entrepreneurs who experience the collective joy of working collaboratively toward a common vision for our region.
4. Protect and regenerate our local ecosystem.
The Circle of Aunts & Uncles offers qualified local entrepreneurs with demonstrated need a new vehicle for accessing local lenders offering low interest loans, as well as advice, business and connections. The Circle intentionally creates trusting relationships between lenders and borrowers, in the spirit of actual aunts and uncles, enabling investors to understand the true needs of the business and provide advice and contacts.
The focus of support is on businesses that:
a. Produce, distribute and/or retail goods or services that serve the basic needs of our region in areas such as sustainable agriculture and food; renewable energy and no-emission transportation; sustainable clothing and textiles; green building materials and construction; eco-friendly cleaning; repair/reuse/recycle; health, well-being, and personal care; household furnishing, crafts and artisanal products; independent media; local arts and culture, neighborhood tourism, and technology that supports our local economy.
b. Import products not available locally using fair trade practices that support sustainable local economies where products originate, while filling a local need;
c. Export goods or services needed by other communities while providing our region with living wage jobs and a respect for the health of our local eco-system.
d. Develop growth and exit strategies that maintain local independent ownership, ie, not selling to a publicly traded corporation, but rather to employees, family members or another local entrepreneur.
e. Measures success by the triple bottom line of people, planet and profit. How does the business impact people (employees, customers, suppliers, community) and the natural environment?
Priority is given, but not limited to entrepreneurs who:
a. Come from low-income communities and/or populations traditionally excluded from business ownership, such as women and people of color.
b. Embrace eco-friendly business practices, especially those that limit input of natural resources and output of waste, make use of waste from other businesses, and not only maintain, but restore and enhance our local eco-system.
c. Work cooperatively with other entrepreneurs to share resources, ideas and information in order to co-create a viable, fair and sustainable local economy.
Building a Network: Approximately 30-40 “aunts and uncles” committed to supporting the next generation of local business owners.
Members of the Circle are willing to accept no financial rate of return on loans in order to serve this vision, and value the “living return” they will receive by living in a more inclusive, sustainable and vibrant community. Each commits to loaning $2,000 per household to the loan fund at no interest, and to contribute advice, connections and other forms of social capital. The Aunts & Uncles are also advocates for local businesses and locally made products, creating a positive energy field that helps to popularize and grow our local economy.
Loan Account: A separate bank account housed and managed by The Enterprise Center (TEC). Aunts & Uncles make a loan of $2,000 and the check is written to TEC where it is deposited in the Circle’s account. When a loan is approved by a majority vote of the Circle, a check is sent from TEC to the entrepreneur. An amortization schedule is calculated based on the amount and term of the loan and interest amount. (interest is normally 3% for 1-3 years) Electronic auto-payments are made from the entrepreneur's bank account to the Circle account at TEC. 10% of contributions are held in a reserve account to help cover defaults. The interest collected from the entrepreneurs is also held in this reserve account (Not all defaults may be covered. It’s important that contributors be in a position to lose part or all of the $2,000. There is no guarantee that the money will be returned. We hope that does not happen, but our loans are most likely not secured.)
Advisors, Pipelines and Co-lenders: Growing mutually beneficial relationships with non-profit organizations that work with local entrepreneurs. To help identify qualified entrepreneurs, receive advise from professionals in the field, and partner in making loans and supporting entrepreneurs, the Circle maintains relationships with local business support organizations that provide training and/or loans and grants. In Philadelphia, these include The Enterprise Center, Entrepreneur Works, the Merchant’s Fund, Untours Foundation, Kiva Zip, Women’s Opportunity Resource Center, Philadelphia Department of Commerce and the Sustainable Business Network. We are also partnering with Ben Cohen’s Barred Rock Fund that is beginning a focus on the Philadelphia region. They can provide much larger loans as well as equity investments, with a particular interest in minority-owned businesses. (Currently Barred Rock is focusing investment in Chester, PA.)
Gatherings: Three gatherings scheduled per year in the homes of Aunts & Uncles. The gatherings include a reception with buffet supper, and are intended to build community and have fun, while providing the opportunity to introduce the Circle to entrepreneurs. Members of the Circle contribute $30 per person to cover the cost of each gathering. (this covers dinner for the entrepreneurs and advisors.) One or two potential entrepreneur borrowers will be invited by a committee of the Circle, supported in preparation for the gathering (filling out an application, preparing for standard questions, etc.), and treated as welcome guests. The intent is to build a high-trust relationship between entrepreneurs and members, so that the entrepreneur can fully leverage the resources of the group—not just pitch their strengths.
The Aunts & Uncles will be sent materials in advance of the gathering with information about the prospective borrower including the purpose of the loan, history of the company, financials and other information, so that questions can be formulated in advance. After a brief presentation and discussion with the prospective borrower, members privately discuss their individual interest in supporting a borrower. If advice is recommended, a group of members form a sub-circle to support the entrepreneur. They later recommend to the circle whether a loan should be considered. A vote on the loan is taken and majority rules.
In addition to the 3 gatherings a year to meet entrepreneurs, 3 or 4 events called Cocktails and Conversation are scheduled to provide time for more in-depth conversations and community building that help to strengthen the work.
Social Capital: Providing Non-financial resources
Like real life aunts and uncles, members of the Circle of Aunts & Uncles also provide social capital. Here are examples: Buy the entrepreneurs’ products and bring more business by spreading the word to friends and colleagues. Make connections for the entrepreneur such as with a store that might purchase their product or service, a reporter that could do a story, a successful friend in the same industry that could give advice, a local supplier that helps build local supply chains, or the availability of storage space, shared office space, or other resources.
Volunteers: Coordinating the Circle with volunteers. Some members of the Circle will volunteer to host gatherings in their homes. Others will volunteer to support individual entrepreneurs by joining a subcircle. Ad hoc committees are formed to work on specific projects such as developing forms and documents. The steering committee of three volunteers maintains relationships with advisors/pipeline organizations that recommend entrepreneurs for loans. The steering committee will arrange in advance for the gatherings three times a year, choose the entrepreneurs (with the advice of pipeline organizations and circle member volunteers who review the proposed entrepreneurs) and support them in preparing their presentations for the gathering. During the first year, the Circle will be coordinated by a steering committee of Judy Wicks, Kate Houstoun and Zoe Selzer.