The 2nd annual conference — hosted by ImpactPHL + Good Capital Project — covered themes from public equity ESG integration to racial equity to Opportunity Zone investments. Read the recap!
Foundations command a combined $900 billion in the U.S., and more than $1.5 trillion globally. No other class of asset owners should be more predisposed to move “beyond trade-offs” than philanthropies, which have a legal mandate and tax obligation to benefit society, as well as a presumably charitable original intent.
In recent years, there has been a quiet revolution taking shape across our economy. A growing movement led by passionate pioneers out to change the world has been slowly but surely expanding. A growing chorus of fearless leaders have been championing the idea that businesses can be a powerful tool for social good, beyond the jobs that they create, while also retaining a focus on profit and growth. And the markets have responded.
ESG investing — short for “environmental, social, and governance” — is a once-fringe idea that’s now mainstream on Wall Street.
In the United States, eighty-seven thousand foundations collectively own approximately $800 billion in assets. Each year, these foundations - financial institutions established for the public good - have a federal obligation to give just 5% of those assets toward achieving their mission. The remaining 95% of assets are traditionally invested in Wall Street, to preserve and grow the foundation's endowment and, consequently, ensure their capacity for philanthropic giving in perpetuity. In other words: foundations generally invest 5% for mission-first outcomes and 95% for finance-first outcomes. It is my resolute belief that challenging and changing this status-quo is not only philanthropy’s greatest 21st-century opportunity but our most critical obligation.
Impact investments from donor-advised funds helped seed the growth of Beyond Meat, the plant-based meat company that staged a successful public offering earlier this month. Commercial real-estate investor Mark Van Ness, and Honest Tea’s Seth Goldman, now executive chair at Beyond Meat, invested in the company from their donor-advised funds, tax-advantaged accounts originally designed for grant-making.
Values-aligned investing is called by many different names, which are commonly misused or misunderstood by investors. Let me decode the lingo, because a shared understanding of the terminology makes this type of investing more accessible to advisors and investors alike. Please note that there are no universally agreed upon definitions among professionals, and everyone uses the words a bit differently. After 15 years of working in this space, this is how I define the most commonly used terms.
Financial Advisors are transforming themselves into “agents of impact” in order to deepen their relationships with existing clients, build their book of business – or stay in business at all.
Mayor de Blasio today announced New York City's Green New Deal, a bold and audacious plan to attack global warming on all fronts. It is comprised of $14 billion in new and committed investments, legislation and concrete action at the City level that will ensure a nearly 30 percent additional reduction in emissions by 2030. The laws and investments of New York City's Green New Deal will directly confront income inequality, generating tens of thousands of good-paying jobs retrofitting buildings and expanding renewable energy.
Drexel University has taken on a mission as an engaged anchor institution with a substantial role and set of responsibilities in the life and local economy of West Philadelphia. One of our key strategies is to integrate this outward-looking perspective into our core academic functions through comprehensive supports for civic engagement. The Dornsife Center for Neighborhood Partnerships, part of Drexel’s Office of University and Community Partnerships, offers a hub for doing academically rigorous work that is creative, collaborative, responsive to the needs and interests articulated by residents and neighborhood stakeholders, and generates benefits for both students and residents.
After years of targeted actions by everyday activists and concerned shareholders, JPMorgan Chase announced early this morning that they will stop financing GEO Group and CoreCivic — the largest operators of private prisons and immigrant detention centers in the U.S. This is a big win for the world of corporate accountability; one that many believe wouldn’t have been possible without hundreds of thousands of people nationally demanding change in the wake of growing concern over family detention. It also calls into question the financial viability of the private prison industry, which has come under fire both by activists and financial analysts.
Laundry isn’t a life-changing experience. But when Gabriel Mandujano founded Philadelphia-based Wash Cycle Laundry in 2010, he set out to make it just that. Commercial laundry — literal dirty work — isn’t hip or high-tech. Most of the time, commercial laundry services are outsourced to cut costs; in Philadelphia, Mandujano notes, laundry from hotels, hospitals, and universities is trucked 50 miles or more to rural Maryland or northern New Jersey. The work also isn’t sexy or particularly lucrative. It can be monotonous, and most employees are paid less than $10 an hour, according to PayScale, which tracks compensation among 7,000 companies.
Investments into Opportunity Funds offer attractive tax benefits, while catalyzing capital inflows into economically distressed communities. However, prudence is necessary in evaluating these investment opportunities as they come to market. The tax benefits will not outweigh the negative consequences of a bad investment. Moreover, large numbers of investment opportunities have not yet materialized. While the initial round of IRS guidance has answered some questions, additional information, expected shortly, is necessary, and then firms will need time to evaluate and identify qualified investment opportunities before launching investment funds. Currently we assume that there will be Funds available for investment in 2019. While questions remain, Opportunity Zones offer an exciting space to monitor and evaluate for tax-sensitive and impact investors.
Each year, the Excellence Awards celebration attracts hundreds of prominent business leaders to recognize the people and companies that have demonstrated unique vision, innovation and achievement in support of our region’s economy and small to mid-size business community.
Philadelphia’s Department of Planning & Development incorporates “social impact” as a component of its review process for developers seeking public land and financing. This document explains the concept of social impact, with the intent of helping developers craft a successful social-impact strategy
The Kresge Foundation announced Monday it will partner with two established impact fund managers and provide $22 million in investments to anchor their emerging Opportunity Zone Funds, after these managers have agreed to a level of transparency, accountability, and disclosure thus far unheard of in the Opportunity Zones space.
Racial inequity is inextricably connected to nearly every social challenge that philanthropy seeks to address. Quality healthcare. Affordable housing. Access to a better education. Participation in a just economy. These are just some of the challenges that disproportionately affect people of color and are central to the mission-driven work undertaken by foundations.
If you’re in business or finance, the term “impact investing” is probably already on your radar. If not, the growing global market – $228 billion in assets (doubled from 2016 to 2017) – is a topic that leaders as diverse as Larry Fink, the Pope, U2’s Bono, and local Philadelphia impact leaders, Jay Coen Gilbert or RoseAnn Rosenthal, would advise you have on your 2019 agenda. And the Total Impact Conference, this May in Philadelphia, is the just the opportunity to begin or advance your impact investing strategy.
First Step Staffing has a disarmingly simple impact strategy for integrating homeless and previously incarcerated people into the workforce. The nonprofit acquires all or part of much larger for-profit staffing companies with steady customers in need of reliable workers. First Step assimilates the existing staff and, through natural attrition, gradually adds employees from much more vulnerable – but eager to work – populations. To boost retention, First Step provides transportation and covers other expenses.
WhoseYourLandlord, founded in Philadelphia by Ofo Ezeugwu to empower and inform renters, is among the first 25 companies backed by Backstage Capital’s new accelerator program. The venture capital firm for founders who identify as a woman, person of color, and/or LGBTQ will invest $100,000, and provide mentorship, investor introductions and financial guidance to each of the Detroit, Philadelphia, Los Angeles and London-based companies, in exchange for a 5% stake.
Most low-income communities in the U.S. have access to an important resource that few people outside of these communities know: a CDFI (community development financial institution). CDFIs are private community lenders dedicated to delivering social and economic impact by providing responsible, affordable financing to disinvested people and communities. Why are CDFIs important? If you live in a community whose streets are dotted with check cashers, liquor stores, and blighted buildings, chances are there are few if any bank branches and very little investment overall. Without access to capital, residents can’t start or grow a business, purchase or rehab a home, or oftentimes, have access to quality childcare and healthcare facilities. CDFIs provide access to capital that creates opportunity and leads to real change that wouldn’t otherwise be possible.
The spiritual guru Deepak Chopra had just finished teaching a class about ethics in business at Columbia Business School when he called the billionaire investor Paul Tudor Jones II in the fall of 2012. “‘Listen, one of my students has got a really good idea,’” Mr. Jones said Mr. Chopra had told him. The student had posed two questions: “Why can’t companies be an instrument for goodness? Why can’t companies focus their capital — human and financial — on being a change agent for societal betterment, a change agent for justness?”
Of all the factors stifling America’s underserved communities, a dearth of economic investment is among the most pernicious. For decades, institutional capital has largely bypassed disadvantaged urban and rural areas due to the perceived risk of investing there – whether those concerns are justified or not. As a longtime investor in underserved communities, I have witnessed firsthand the transformative power of private sector capital to create jobs, energize schools, revitalize neighborhoods, and ignite hope. I have also faced rejection from institutional investors who are fearful of any number of real or perceived hazards, from lack of market opportunity and narrow customer base to high crime and poor governance.
Larry Fink challenges. Tucker Carlson rants. David Brooks moralizes. Others wonder Can American Capitalism Survive? They all correctly diagnose the problem—a broken economic system that is not meeting the needs of the vast majority of people and that has embedded incentives that make it designed to fail in the more perilous times ahead—but they all fail to see clearly how long we’ve had this problem, what is its root cause, and what is required for its solution.
As one of my New Year’s resolutions, I’ve introduced my children to an excellent idea I heard once at an event on gender lens investing (which is, by the way, a whole other interesting angle I’ll come back to at another time!). Basically, the idea is that when your children get pocket money or Christmas money etc, instead of blowing it instantly on sweets/games/50 packets of Match Attax, they have to divide it up into four pots: one for spending, one for saving, one for investing, and one for giving away.
I have never been a big fan of joining clubs and recoil at the over-simplification often inherent in these types of identifiers. That said, I have found myself, circuitously, embracing this new badge. When I first casually glanced at promotional materials for last November’s Gender Smart Investing Summit, organized by Suzanne Biegel, I was not sure that it was a forum that would be relevant to me or my team at Ceniarth. Yes, we deployed over $40 million last year in a range of global funds and enterprises, almost all of which, given their rural focus, must be attentive to gender and power dynamics in underserved communities. Yet, I still did not consider myself a gender-lens investor.
In the last year, two unique opportunities brought the potential to drive significant new investment in cities across the country. First, Amazon announced their search for a second corporate headquarters (“HQ2”) which is projected to employ up to 50,000 employees over the next fifteen years. More than 238 cities and regions submitted proposals, and 20 candidate cities (including Philadelphia) were ultimately selected by Amazon to compete in a next phase. Amazon eventually decided to split its second headquarters into two locations and chose New York and Northern Virginia for its next stages of growth.
Like most parents, Dave Friedman approached his son’s graduation with pride. But he also worried. He knew that with valuable skills but high-functioning autism, his son would find few companies prepared to hire him. Friedman’s response was to create AutonomyWorks, which employs people with autism spectrum disorder to provide marketing operations support—work that, because of its detailed, repetitive nature, makes it hard for companies to retain staff.
New research from Tideline and Impact Capital Managers (ICM), a network of private fund managers committed to impact investing, shows that a social and environmental focus on investment management can, in fact, boost financial returns. The new white paper, titled The Alpha in Impact, is based on Tideline’s analysis of nearly 30 financial transactions from ICM-member investment portfolios. The analysis uncovered 10 unique drivers of “impact alpha,” defined as the ways in which operating with an impact objective can enhance or add financial value for fund managers, investors, and the firms in which they invest.
Thirty-four developments are under construction, completed or proposed for the North Broad Street corridor between City Hall and Germantown Avenue. The projects include the $56 million renovation of The Met Philadelphia into the state of the art entertainment venue, the redevelopment of the historic Lorraine Divine Hotel, $25 million renovation of the former Blue Horizon boxing venue into a Marriott brand Hotel Moxy and the transformation of the Beury Building into residential and commercial space.