Building Sustainable Livelihoods

Wealth Creation Fundamentals

The Wealth Creation approach provides a framework for creating wealth that is rooted in rural parts of larger regions, including those of persistent poverty, by using a systems approach to:

intentionally connect people, resources, and markets

make investments that create multiple forms of wealth

develop new models of local ownership and control of investments and returns

Value Chains: Defined

Networks of businesses, nonprofit organizations, and collaborating players who work together to satisfy market demand for specific products or services.

Mental shift: from, “What is best for me and my firm now?” to, “What can I and my firm do to maximize the economic, environmental and community benefit to all the members of this value chain?”

Because value chains are built in response to market demand and involve clear and constant communication, they can be more responsive and innovative than traditional supply chains.

What Does a Value Chain Look Like?

Image by Leslie Schaller, ACEnet

Input Suppliers

Producers

Processors

Direct Sales

AggregatorsDistributors

Wholesale Buyers

Consumers

Waste Management

What Does a Value Chain Look Like?

Marketing

Economic Development

Media

Government

Other Value Chains

National Organizations

Trainers/ Extension

Researchers

Certifiers

Landowners

Brokers

FinancingValue Chain Intermediaries

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1. Move from the parts to the whole

2. Emphasize investment for long-term gain

3. Understand the difference between wealth and income

4. Collaborate for mutual benefit

5. Create wealth that “sticks”

Wealth Creation Framework

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Work with entire “value chains” • Producers to consumers & everyone in between

Connect small towns to regions, to urban areas and to the world – demand driven

Consider all the consequences of your decisions• Short and long term • Effects on people, place and economy

1. Move from the parts to the whole

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Move beyond focus on this year’s performance

Preserve assets that you will need tomorrow – and for generations to come

Improve or build new assets that will boost long-term outcomes

Invite investment from participants in value chains, including demand side investors

2. Emphasize investment for long-term gain

Most projects focus on income (a flow)instead of on building wealth (a stock).

INCOME

EXPENSE

WEALTH

3. Understand the difference between wealth and income

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Seven Forms of Wealth

t

Individualcapital

Socialcapital

Financialcapital

Naturalcapital

Builtcapital

Intellectualcapital

Politicalcapital

What do we mean by wealth?

Type of Wealth Interventions in Value Chains

Individual How will your intervention impact the stock of skills and physical and mental healthiness of people in a region?

Social How will your intervention impact the stock of trust, relationships, and networks that support civil society?

Intellectual How will your intervention impact the stock of knowledge, innovation and creativity?

Natural How will your intervention impact the stock of unimpaired environmental assets in a region

Built How will your intervention impact the stock of fully functioning constructed infrastructure?

Political How will your intervention impact the stock of power and goodwill held by individuals, groups, and/or organizations?

Financial How will your intervention impact the stock of unencumbered monetary assets at the individual and community level?

A wealth matrix for planning and evaluation

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Focus on how the process builds wealth

Build on values that rural areas naturally share with external markets • Clean water, healthy food, vibrant families, healthy

soil, reduced energy use…

Make economic connections in ways that create mutual benefit – identify the win-win

Intentionally and equitably share the benefits

4. Collaborate for mutual benefit

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Explore new models for local ownership of resources, firms, etc. • Cooperatives• Land trusts• Employee ownership

Create community-owned wealth through vehicles such as community foundations

Align investment/grant making decisions of regional foundations, local governments, federal agencies, etc.

5. Create wealth that “sticks”

© 2011 Yellowwood Associates and Aspen Institute Community Strategies Group14

Wealth Creation in Practice

Local Food Value Chains

Utilizing the Forms of Wealth

Assessment of existing value chainsPlanning for activities and interventionsMeasurement of outcomes

Intellectualcapital

Socialcapital

Builtcapital

Naturalcapital

Individualcapital

Politicalcapital

Financialcapital

Assessment

Which types of wealth currently exist in a community or value chain?

Which types of wealth are lacking?

Which are “limiting factors” to the growth of the value chain?

PlanningActivities and interventions that address the identified priorities

Using planned interventions to build multiple types of wealth simultaneously

Do no harm: ensuring that no forms of wealth are negatively impacted

Value Chain Development: Interventions

Training and technical assistance Small grants Planning and assessment Gatherings and educational events Regional events for peer learning, support, and education Regional and national policy work Leveraging additional investment into the region

Input Suppliers

Producers

Processors

Direct Sales

AggregatorsDistributors

Wholesale Buyers

Consumers

Waste Management

What Does a Value Chain Look Like?

Marketing

Economic Development

Media

Government

Other Value Chains

National Organizations

Trainers/ Extension

Researchers

Certifiers

Landowners

Brokers

FinancingValue Chain Intermediaries

Measurement

Shared measurement system based on pre-determined indicators and measures for each type of wealth

Baseline data collected in the first year, then annually

Annual data and changes from the baseline inform planning and priorities for each year’s work

Role of the Intermediary

Holding the big picture view of the value chainAssessing and planning with the whole value chain in mindManaging, implementing, and measuring the planned workFacilitating communication and relationships among value chain membersFostering investment in the value chain

The Climbing Bear

In reality, progress and priorities shift back and forth

Lifting up one part of the value chain allows other parts to grow a little, which in turn allows the first part to grow some more

Concept taken from Bob Fedyski, Rural Action http://www.woodworkersworkshop.com/graphics12/motherearthnews-climbing-bear.jpg