A sure way to launch the "buy local" concept into the big leagues? How about investing your 401(k) dollars into companies on Front Street instead of Wall Street?

A group of Traverse City investors, bankers, activists and business owners are working to make that level of local investing a reality, and if they're successful, an economist says it could inject about $700 million into the Grand Traverse region's economy.

Michael Shuman, author of Local Dollars, Local Sense: How to Shift Your Money from Wall Street to Main Street and Achieve Real Prosperity, visited Traverse City earlier this month to kickstart the effort.

In his book and presentations around the country, Shuman shares data to support the notion that spending and investing locally creates more jobs, tourism, civic engagement, and income than dollars invested or spent elsewhere.

"There's an overwhelming body of evidence," he tells The Ticker, "that every dollar spent locally generates two to four times the amount of income, wealth and tax base. And this effort is spreading from Wyoming and Idaho to both coasts, from tea party Republicans who want less government involvement, to liberal democrats."

In his book Shuman notes that Americans’ investments in stocks, mutual funds and the like total $30 trillion, yet posits that less than one percent of those dollars touch local small business — even though half the jobs and the output in the economy come from the small business sector.

Some alternatives Shuman suggests:

• self-directed IRAs, which allow individuals to invest their tax-deferred retirement plan dollars in local businesses - or even a neighbor's house

• revolving loan funds (area Chambers and counties offer some already), which provide financing for farmers and other small businesses that might otherwise not be able to secure cash through traditional means

• co-operatives (like Cherryland Electric Cooperative and Oryana), which are exempt from many complex securities laws and allow "members" to receive discounts and benefits.

• selling bonds to individual local investors to help fund or accelerate public infrastructure projects

• local stock markets, in which investors can trade stocks of local businesses

• investment clubs or use of online funding sites like Kickstarter

Shuman is especially encouraged by the Jobs Act, signed by President Obama earlier this year, which allows any individual to invest up to $2,000 in a local company each year without onerous reporting and administrative costs, something he says is proof that the local-investment movement is gaining momentum - even in Congress and in the White House.

During his all-day workshop, Shuman shared examples of initiatives taking place elsewhere, including something as simple as Awaken Cafe in Oakland, Calif., whose owners used crowd-funding techniques to raise funds to help relocate and expand the business. Unable to get traditional bank financing, the cafe's owners asked customers to "invest" $1,000, for which they would receive $1,200 in coffee credits once the new location opened.

The Traverse City group has divided into five action teams focused on institutional funding, co-ops, crowd-funding, revolving loan funds, and self-directed IRAs. Doubt the local efforts will go anywhere? 

Shuman, who has been writing and speaking about these topics for 15 years, disagrees. "Of all my presentations," he says, "this particular group had the most skills and diverse leaders in the room to take things the next step. They understood stuff at a deep level, and they're ready to act. I was very, very impressed and really upbeat about this happening in Traverse City."

Doug Luciani of the Traverse City Chamber is a participant in the process. "The Traverse City Area Chamber believes the region exports too much money for everything –from energy to food. Michael Shuman's research into local investing shows ways to keep dollars in our communities," he says. "The Chamber had at least three quick takeaways that we're working to implement immediately."

To learn more or join the effort, email Bob Russell  or Dave Barrons.