Investing for Impact in a Post-Trump World

ON December 7, 2016

This month I was going to write about gender lens investing. I had a lot to share about all the research that shows that companies with 3 or more women on the board or in management outperform those that don’t. I wanted to give a shout out to MCF member InFaith Community Foundation for their new gender lens portfolio and feature our made in Minnesota women led-angel investing group, the Sofia Fund. But that will have to wait until next month because I have to say something about the election that stunned us all.

Whether you feel shocked, terrified, or vindicated by the election outcome, we can certainly all agree we need to come together to heal: listen to those who felt unheard before the election, those left behind by the global economy, and embrace our common love for our country with our vision that is truly a place of opportunity for all.

What does this mean for those of us working to make a positive change in the world through mobilizing all philanthropic assets for good? Here are my top 5 action items:

  1. Hoist a big tent for impact: it’s not just for liberals. In fact, what is now called “impact investing” started in the 1700’s with the Quakers and spread throughout Shaker congregations in the 1800’s and churches in the 1850’s. These early impact investors mainly wanted to align their business interests with their values and avoid “sin stocks”. Lately, though, I see too much group-think in impact investing circles. When stakeholders talk about investing in alternative energy we need to think about impact holisticly, including the effect on miners and others who depend on the fossil fuel industry for their livelihood. We need to include faith-based investors who want to invest their values across their portfolio.  We need to allow investors to define the impact they seek (as long as it’s not abhorrent to human decency, civil rights, respect for others, of course).
  2. Rural communities need to be included, too. Impact investing is a great tool for communities throughout Greater Minnesota and in other rural areas.  In fact, Mission Investors Exchange is hosting a webinar December 13th on just that topic. Of course our own Northwest Area Foundation has long championed creative initiatives to combat poverty in rural areas. Devoting more than 10% of its assets to market rate impact investing, the Blandin Foundation knows that grant funding alone won’t solve the problems of economic stagnation and dislocated workers. We need to use impact investing tools such as Program Related Investments and work with rural partners such as the Greater Minnesota Housing Fund, to name just one of the great Community Development Financial Institutions (CDFI’s) working outside the Twin Cities metro area.
  3. Keep an eye out for regulatory and tax changes but don’t panic. There’s a lot of speculation about what a Trump Administration will or won’t do about financial regulation and tax policy. Last year the Obama Administration clarified three significant regulatory rulings that increased institutions comfort with the concept of integrating environmental, Social and Governance (ESG) factors as part of regular financial analysis.  Similarly, in response to criticism about the vast sums of capital held in university and foundation endowments there has been talk of changing tax policy. We simply don’t know what the future will bring but we need to monitor policy carefully.
  4. Stand up for our values: clearly we need to fight against the bigoted, racist, and xenophobic rhetoric Mr. Trump used on the campaign trail. On 60 Minutes he looked in the camera and told anyone who felt emboldened to act on these hateful words to “stop it”. We, in turn, can redouble our efforts to intentionally include Diversity, Equity and Inclusion (DEI) in all aspects of our work. See Leah Lundquist’s blog post for practical ideas for foundation leaders.
  5. Focus on what we can do. We have a lot of work to do making our communities safe, beautiful, thriving places to live, work and play. Let’s not get distracted by Twitter rants and the accompanying breathless media coverage. Instead, let’s get to work, harness the energy from the election for positive change and listen to the people who made their voices heard on November 8th.

Sometimes a good defense is the best offense and investing more philanthropic capital in line with mission makes sense no matter who is president.

Tweet me your thoughts @susan_hammel.

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What I'm doing now

The tide is turning: more people are thinking about their moral, social and environmental values when they shop, play, and invest. Impact investing is going mainstream with more robust and consistent impact measurement and monitoring happening every day. The blowback on ESG (Environmental, Social, Governance) makes true impact investing (which requires impact measurement) all the more relevant. Will changing how people view money change the world? Well, it isn’t a panacea for all that afflicts us but as they say, “follow the money”. Investors have power. Use yours wisely.