amazon facebook_32 gplus_32 linkedin_32 pinterest_32 tumblr_32 twitter_32 website_32 youtube_32 email_32 rss_32

 The mission of the "Your Mark on the World Center" is to solve the world's biggest problems before 2045 by identifying and championing the work of experts who have created credible plans and programs to end them once and for all.
Crowdfunding for Social Good
Devin D. Thorpe
Devin Thorpe

Impact Investing

This category includes articles about people, firms and foundations that invest in social good by investing in social entrepreneurs, social impact or pay-for-success bonds, etc.

1 2 3 8

This Company Makes Halal Investing Easy

This post was originally produced for Forbes.

You can download an audio podcast here or subscribe via iTunes or Google Play.

Halal investing forbids investing in debt, making many traditional investment vehicles off-limits to Muslims seeking to follow Sharia guidance. As a result, many in the Muslim community have limited their investments to cash savings and real estate, leaving them poorly diversified. Junaid Wahedna decided to fix that.

Wahedna, who graduated from Columbia University and spent years working in finance in New York City, was in a good position to launch Wahed Invest, making Halal investing easy.

“I’ve been very, very fortunate to have a good education, the resources and wherewithal to be able to do something and so I felt quite personally responsible to give back,” Wahenda says. “What right do I have not to actually go in there and fix this problem?”

Wahenda reports raising $7 million from venture capitalists and angel investors.

Halal investing has not been especially difficult for wealthy investors. A variety of products and advisors have been available to the high-net-worth individuals for generations. The challenge has long been finding compliant investments for small investors.

Halal investment standards are fundamentally ethical investment standards. In addition to proscribing investments in debt and traditional fixed-income securities, the standards require investments to be in ethical companies.

“What we do is run an ethical filter over all our investments. So, what that means is we screen for excessive debt, alcohol, tobacco, firearms, pornographic material and a few other you know minor unethical things,” Wahedna explains.

One key to building a successful platform for ordinary investors to conform to Islamic investing standards was to give them access to sukuks, a Halal fixed income product traditionally sold in $200,000 minimum increments. “Sukuks are in essence Islamic bonds,” Wahedna explains. Yields closely parallel traditional fixed-income investments along the yield curve.

Wahed Invest allows ordinary investors to open an account with just $100 and to participate in Sukuk investments along with carefully screened equity investments.

Wahedna hopes to prove that ethical or religious investing needn’t come with a cost by efficient use of technology.

This is all enabled by technology commonly called robo advisors. Virtually all broker-dealers are employing some level of technology to facilitate investing today. By dropping the cost of managing an account to near zero, minimum account sizes drop even while allowing people to participate in more sophisticated investment strategies.

Wahed Invest has automated processes that calculate debt ratios, cash balances, and other keys to identify companies that meet ethical and Halal screens, the company also has a full-time Sharia review board and ethical review board that ensure Halal investment standards are followed.

Junaid Wahenda

But it isn’t all technology driven. Wahedna is proud of the firm’s annual “purification report,” which calculates earnings from “impermissible” sources, like excessive interest income from one of the companies in the portfolio. This gives investors an opportunity to purge those funds by donating to charity.

“This is just something we feel is necessary that people should have at the end of the year to see exactly what has happened,” he said.

The ethical standards of Halal investing are appealing not only to Muslims but to other investors with a similar ethical view. Still, the service solves a big problem for ordinary investors wishing to comply with Halal investment standards who haven’t had the option in the past.

“Clients tell us that ‘We are so happy we don’t have to just keep our money in cash!’” Wahedna says, noting that many customers are first-time investors.

Hundreds of nonprofits learned to successfully use online fundraising to reach–or surpass–their goals with my crowdfunding training. Get my free guide to attracting media attention.


Never miss another interview! Join Devin here!

Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

How Will You Increase Your Impact In 2018?

This post was originally produced for Forbes.

Frankly, I put this question, “How will you increase your impact in 2018?” to dozens of social entrepreneurs and others in the impact space to help me figure out how to increase my own. I hope you’ll read their answers with the same idea in mind.

The responses came in two general varieties. The first are statements and goals that could be replicated by virtually any social entrepreneur regardless of their specific mission or operating plan. The second variety included objectives that are somewhat more specific to their particular situation. You can read about the inspiring work from the second list here. The first set of responses follow below.

As I reviewed the responses, a few themes developed. Half a dozen people highlighted the importance of teamwork in one way or another. That was clearly a key takeaway from the list. Note that some people hit on several topics; I’ve tried to include their full remarks where possible.

For instance, Lisa Curtis, CEO and founder of Kuli Kuli said, “In 2018, we’re going to also be looking inward and seeing what we can do for our employees and the sustainability of our internal operations. We’re measuring this using the B Corp assessment.”

Lisa Curtis

Celeste Mergens, CEO and founder of Days for Girls International, said her goal was to have “weekly team sprint goals to help each team member focus on completing one achievable primary goal a week, keep other objectives moving forward and still have more personal life balance.”

Celeste Mergens in Kisii 2010

Similarly, Kenton Lee, founder of Because International which sells “The Shoe that Grows,” said his goal was “Investing in our team, measuring our impact with the kids more accurately, and hustling in more creative ways. Staying in start-up mode will keep things fresh and inventive. It’s all about the kids!”

Kenton Lee,, Because International

“Impact is about growth in 2018. We’re focusing on only 1 goal every 90 days and the team is all aligned towards that one thing. Then I’m showing the team how that one goal serves our mission,” said Andrea Shillington, the CEO and business soul architect at Brands for the Heart.

“It’s really quite simple–you have to invest in your people. We need to constantly create learning opportunities and develop new talents. Meaningful impact comes from a committed, yet challenged team,” said Jacob Lief, CEO and founder of Ubuntu Pathways.

Katherine Fife, Principal Consultant founder at Philanthropy Matters, LLC, said, “Engaging in more activities that utilize my strengths, and offloading activities to better utilize the strengths of others, will lead to increased impact and better efficiencies in 2018.”

Katherine Fife, Philanthropy Matters

A second idea that popped up several times in the responses from social entrepreneurs was surprising to me. Three of our responses de-emphasized growth and scale.

For example, Michael Lowe, President of Kidoodle.tv, said he would ” focus on quality of impact over scale of impact. Scale happens when quality is obvious.”

Michael Lowe, Kidoodle.TV

Similarly, Aaron Hurst, CEO and co-founder of Imperative, said, “I have spent a lot of time trying to increase my impact by thinking big. This year is the year of thinking small. How can I do one thing each day that matters to someone else? “

Aaron Hurst, Imperative

With a slightly different take, Ross Baird, President of Village Capital, said he would shift to “focusing more on how we innovate (how do we find, support, select ideas) than what the next big thing is.”

Ross Baird

Another theme that developed was the importance of introspection and personal time for having maximum impact.

Angela Parker, CEO and co-founder of Realized Worth, who shared a goal in that vein, saying her goal was a to “Alert, Orient, Act. My impact will increase when I challenge implicit bias by alerting to new ideas, orienting to what those ideas mean for me, and taking action toward new attitudes and behaviors.”

Steve Grizzell, managing director of InnoVentures, sounded thoroughly introspective with his goal, “I have begun to realize that Impact Investing is just part of a process of living a life of purpose. Why am I doing it? Is it just enough to do it because it feels good? How do I measure impact?”

Self-reflection was one of two objectives that Priyanka Bakaya, CEO and founder of Renewlogy set for 2018. “My two themes are i) find more ways to give back through community engagement, and ii) find more me time through meditating and journaling each day (I recommend 2 apps for this: Inscape & Grid Diary).”

Priyanka Bakaya, Renewlogy

Two of the responses received focused on the importance of connecting with other like-minded people.

Karim Abouelnaga, CEO of Practice Makes Perfect, said, “I’m committed to starting or joining a mastermind group in 2018 to increase my impact, surrounding myself with other entrepreneurs who are ready to push each other to take our impact to the next level.”

Karim Abouelnaga with student

Similarly, Amy Cortese, author of Locavesting, made this part of her plan by “tuning out the noise and focusing on what’s important—limiting social media and mobile news. I do my best thinking on long walks, so I’ll build that in. Also more face time with people who inspire me.”

Amy Cortese

The importance of reviewing past results to optimize future results came up a few times. Liz Baker, executive director of GreaterGood.org, said, “January is a great time to review last year’s programs. Look at outcomes, and work backwards: If you didn’t meet goals, why? Start with desired impact, and refine program tactics to do more this year.”

Liz Baker, GreaterGood.org

Echoing that idea, Thane Kreiner, PhD, executive director of the Miller Center for Social Entrepreneurship, said he would “test playbooks to replicate proven social enterprise impact models.”

A couple of the respondents focused on personal productivity.

Kathleen Minogue, CEO and founder of Crowdfund Better, (with whom I have a business relationship) said, “Make a commitment to take action every week and keep a list to keep yourself honest. Even when life gets busy, you’ll have that commitment (and a written list) to keep you focused throughout the year.”

Nell Derick Debevoise, CEO and founder of Inspiring Capital, shared her take on productivity: “I’ve committed to blocking 7-10 am every morning on my calendar to get ONE important thing done toward my weekly and annual priorities, in an effort to be proactive and strategic rather than reactive.”

Nell Derick Debevois, courtesy of Inspiring Capital

The other insights received were similarly valuable but didn’t fall into themes or ideas.

Impact investor Morgan Simon said she would add political giving to her 2018 activities to increase her impact. “Markets won’t solve everything—philanthropic support for organizing and advocacy, and political giving, are essential complements to impact investing. In 2018 I will donate more systemically to organizing and politics.”

Morgan Simon

Judith Joan Walker, Director of Operations for African Clean Energy, said upgrading systems would be her strategy. “We will be pulling our extensive customer database into our newly upgraded CRM on Salesforce in order to accurately analyze the affordability and adoption barriers of our high tech energy products.”

Judith Walker

Nancy Pfund, Managing Partner and founder of DBL Partners, an early investor in Tesla, suggested something that almost everyone could do: “This year I’m reducing my food waste; 40% of our food is wasted, as is all of the water and energy required to make it. No shopping until leftovers are finished!”

Nancy Pfund, courtesy of DBL Partners

As you contemplate the ideas above, let us know in the comments below or on social media, what you’ll be doing to increase your impact in 2018.

Hundreds of nonprofits learned to successfully use online fundraising to reach–or surpass–their goals with my crowdfunding training. Get my free guide to attracting media attention.


Never miss another interview! Join Devin here!

Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

New ‘Impact Security’ Could Revolutionize Philanthropy

This post was originally produced for Forbes.

You can download an audio podcast here or subscribe via iTunes.

Catarina Schwab, 43, and Lindsay Beck have set out to completely revolutionize philanthropy. Their firm, NPX, Inc., has introduced a new security to Wall Street called the “Impact security,” which they hope will end the practice of funding nonprofits without impact.

Problems in philanthropy

Ted Williams, Managing Partner at Springbok Partners and an advisor to NPX, explained the problems in philanthropy today. “The nonprofit sector is woefully lacking creative destruction. Mediocre and weak organizations are still attracting funding and the best organizations are not accessing the funding they need to achieve real impact. The only way to get to a more efficient and robust nonprofit market is to reward good organizations and penalize bad ones. This will only occur when there are economic consequences tied to impact.”

For her part, Schwab says, “The nonprofit capital market is opaque and inefficient. It is a trillion-dollar industry and the money is being wasted. And it’s being wasted at the expense of human lives and the environment.”

Watch the interview with Schwab in the video player above.

Catarina Schwab

Impact Security

The impact security is intended to address this problem by inserting investors into the philanthropic capital market to better align the money with desired outcomes.

Nonprofits will issue impact securities in much the same way that corporations issue notes or bonds. The money will go to the nonprofit to fund a specific program with a measurable outcome or impact. The investors don’t get their return from the nonprofit but from a philanthropic guarantor instead. The guarantors are happy to take on this role because they want to give their money away but want it to go where it will have measurable impact.

Impact securities put the donors in a no-lose situation. If the program works and impact is verifiably measured according to the contract, the donors are happy to pay. They have funded something that actually did some good—no guessing, only measuring. On the other hand, if the project fails to achieve the intended results, the donors don’t pay and they keep their money to do good with it another day.

The nonprofit is happy with the arrangement. It gets the money for the program up front. This puts some new pressure to perform on nonprofits, but it is the sort of pressure that is already increasing in the philanthropic marketplace as donors increasingly look for measurable impact.

The investors are taking risk, but not as much as you might worry. The donors acting as guarantors will often put their money in a donor advised fund when the securities are issued so that the funds are already available to meet the guarantee if the outcomes are achieved.

Under longstanding Federal rules, nonprofit securities are not subject to SEC regulations, potentially making them less expensive to issue and allowing ordinary retail investors to participate, not such wealthy or “accredited” investors. This even opens the possibility of crowdfunding.

Measuring Impact

Measuring impact will be a challenge. Schwab says, “We can structure and execute an impact security for any nonprofit with measurable impact.” Still, it is often easier to measure intermediate outcomes than it is measure long-term impact.

Schwab says her model will increase the availability of measurement data and will thereby make measurement easier.

First Transaction: The Last Mile

The first transaction that NPX hopes to complete is an issuance for a nonprofit called The Last Mile that trains prisoners to code while in prison and even employs them to do it. The prisoners can earn $17 per hour, which compares favorably to the $0.94 per hour they earn from other work in prison. This allows them to leave prison with a nest egg, even though much of the money they earn goes to restitution and reimbursing the state for its costs. Some prisoners have even found six-figure jobs after being released from prison.

After working on the project for months, Schwab observed that people often say that prisoners deserve a second chance when they get out. She’s concluded that for many of them that isn’t fair. “This is their first chance; it’s not their second chance.” Some have simply never had an opportunity to get the education and training they need to survive as a contributing member of society. The Last Mile gives them this opportunity.

The impact security the nonprofit hopes to issue will fund a program at San Quentin. The impact that will be measured is straightforward: hours worked in the development shop. This output measure can be tracked easily and objectively. It does, however, ignore the question of whether the program achieves its stated, longer term objectives of helping with a successful reentry and reducing recidivism. Schwab notes that some of the prisoners will never leave but having a real job while in prison is still life-changing.

Prison statistics in the U.S. are staggering. While only 5% of the world’s population lives in the U.S., 25% of the world’s prisoners do. It costs five times as much to incarcerate someone as to educate them.

NPX hopes to help The Last Mile break the cycle and return productive people to society.

Schwab’s explains the premise of her work, “One simple change of linking money with impact changes everything.” Now she’s out to prove it.

Hundreds of nonprofits learned to successfully use online fundraising to reach–or surpass–their goals with my crowdfunding training. Get my free guide to attracting media attention.


Never miss another interview! Join Devin here!

Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

‘Wealth Building Isn’t Just For The Wealthy’

This post was originally produced for Forbes.

You can download an audio podcast here or subscribe via iTunes.

Jennifer Williams, a school teacher in Mississippi, has now paid off all nine of her payday loans and hasn’t had one outstanding now for two years. She’s a success story for Southern Bancorp.

Modeled on Shore Bank, which failed during the Great Recession, Southern Bancorp was organized by a collection of Arkansas’s most prominent people, including then Governor Bill Clinton and Rob Walton, a member of the Walton family. Unlike Shore Bank, Southern Bancorp is profitable and growing today.

“Governor Clinton wanted to create economic opportunities and stimulate the economy in Arkansas’s delta region, one of the most persistently poor communities in all of America,” says today’s CEO Darrin Williams. He notes that Hillary Clinton served on the founding board of directors for the bank.

When launched more than 30 years ago, the biggest worry was that what worked for Shore Bank in the urban environs of Chicago and later Detroit and Cleveland might not work in rural Arkansas and Mississippi. The acid test of the past decade suggests the model works just fine in the rural communities it serves.

The bank operates 46 branches in Arkansas and Mississippi, 37% of those branches are in “bank deserts” where the Southern Bancorp branch is either the only bank operating in the zip code or just one of two. What’s more, 28 percent of the population in the bank’s market lives below the federal poverty line.

Darrin Williams, CEO, Southern Bancorp

The CEO Williams explains the market and the bank’s strategy, “Often our competition is not another bank; often our competition is a payday lender or pawn shop or someone who provides alternative forms of capital or credit that really strip wealth. So, we really do a lot of outreach. We don’t wait for people to come to the bank. We take the bank to them.”

The market Southern Bancorp serves is vast, when considered at a global scale. According to the World Bank, about 2 billion people around the world are unbanked or underbanked. In the U.S., an FDIC report in 2015 showed 9 million households were unbanked and another 24.5 million households were underbanked.

Mr. Williams notes, “It’s expensive being poor.” Unbanked customers are forced to routinely pay for services that banked customers receive a low or no charge, from check cashing to check-writing privileges. Check cashing services charge up to 10 percent of the face value of a check and buying a money order costs several dollars.

To be an asset to the communities it serves, the $1.2 billion asset bank operates three related Community Development Finance Institutions or CDFIs. The bank holding company and the bank are the first two; the third is a nonprofit called Southern Bancorp Community Partners.

Mike Myers, vice president, CFO and Treasurer for the nonprofit Winrock International, which partners with Southern Bancorp on some efforts, says, “By providing financial capital in geographic areas too small for the big banks to be profitable, Southern protects the economically disadvantaged from predatory lenders (pawn shops, payday lenders, etc.) Additionally, Southern provides hands on financial counseling teaching people how to use credit rather than credit using them.”

Mr. Williams explains that the bank focuses on measures of net worth as that helps to break inter-generational poverty. For many, the difference is as simple as home ownership. The bank, he says, has three “big hairy audacious goals:”

  1. Help 10,000 people with home ownership
  2. Help create 100,000 jobs
  3. Empower 1 million to save money

He was quick to point out that helping people save money will come primarily as a result of the bank’s advocacy work rather than from providing savings accounts to 1 million people.

Mr. Williams has his work cut out for him. “We know that so many people just distrust banks.”

He explains that a typical overdraft fee of $25 or $30 throws customers for a loop. They don’t always appreciate that the bank provided a short-term credit facility and that the service should come with a fee. The effective interest rate on such overdrafts can, in fact, be every bit as penurious as the payday lenders Ms. Williams, no relation to the CEO, has learned to avoid.

One way that Southern Bancorp is working to address unanticipated fees is to create a checkless checking account. Customers get access to their money via a debit card. If the funds in the account are inadequate for the transaction, it is declined and no fees are charged. In this way, the customer picks up right where she left off after the next deposit. The bank offers several accounts with no minimum balance and no or low monthly fees.

The 380-employee bank makes a point to bank customers who have had trouble with banks in the past to help them get back on better financial footing. Banks customarily use ChexSystems to identify customers who’ve had accounts closed by other banks, typically refusing to open new accounts for them. Southern Bancorp uses the system only to screen for fraud. Everyone else is welcome, Mr. Williams says.

One key to the bank’s success is financial education. That’s how Ms. Williams first connected with Southern Bancorp. “My friend and I were looking through the newspaper one day and saw an advertisement for a credit counseling class offered by Southern Bancorp. We called and enquired about the class and began the class immediately,” she reports.

“By combining traditional banking and lending services with financial development tools ranging from credit counseling to public policy advocacy, Southern Bancorp helps underserved families and communities grow financially stronger – regardless of zip code,” Mr. Williams notes.

Mr. Williams, who was a litigator and also served in the Arkansas House of Representatives before joining Southern Bancorp as CEO, likes to ask, “Do you know where your money spends the night?”

He points out that every deposit in the bank is a simple form of impact investment. Not only does the bank use the money to make traditional loans to people in the communities it serves but also makes investments in school bonds, water bonds and other community infrastructure. “I would submit your bank account really is a primary way that you can live your values.”

The bank takes deposits from all around the country from people who want to support the bank’s mission. Mr. Williams points out that the bank is working on a new platform to make it easier for customers outside of the bank’s service area to make deposits there.

The bank is presently raising additional capital to support its growth and impact.

“We believe that wealth building isn’t just for the wealthy. So, we are wealth builders for everyone,” Mr. Williams says.

Myers praises Southern’s work: “Look at the impact…the number of loans less than $10,000, the EIC amounts recovered through free tax preparation, the jobs created and supported, home ownership leading to wealth generation. No other organization in the region has the mission, the tools, the approach, the passion…or the impact. If Southern does not do it, who will?”

Ms. Williams is a fan, too. “I feel that Southern Bancorp really cares about their customers. I feel that they put so much work into getting the word out about credit counselling and helping people build their credit. They make you feel comfortable and willing to share your information with them. Even after the classes, on many occasions, Mrs. Harris has called to check on my progress, and encouraged me to keep going and working on my credit. I feel that Southern Bancorp goes well beyond the basic duties of the typical services provided by banks.

Over 1 million people have read my books; have you? Check out my free webinar exposing the three myths that impair and two keys for crowdfunding success.


Never miss another interview! Join Devin here!

Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

Impact Investor: You Don’t Have To Give Up Returns To Do Good

This post was originally produced for Forbes.

You can download an audio podcast here or subscribe via iTunes.

One of the most controversial topics in impact investing is whether it is possible or fair to expect market returns on investments that do good. Gloria Nelund, chairman and CEO of TriLinc Global, says yes.

Nelund says her firm, which manages about $320 million, is designed to prove it. “The whole firm is really dedicated to creating and sponsoring funds that will prove to investors that they don’t have to give up investment returns to do good.”

TriLinc is a private investment fund that lends money to small businesses, including businesses in the developing world. To do business effectively in frontier and emerging markets, the firm partners with local experts.

Nelund explains, “We created a partner model where we went out and found the best private debt fund managers in the world in the countries where we wanted to invest and we developed a partnership with them where they would originate loans for us. We actually co-underwrite and co-structure all of the loans.”

Gloria Nelund, TriLinc Global

TriLinc typically funds the loans directly to the businesses; local partners do not act as intermediaries. Some of the loans are sufficiently large that TriLinc reaches out to other funds to complete the financing.

Nelund highlights a loan to Corporacion Prodesa, S.R.L., a manufacturer of affordable disposable diapers in Peru, as an example of the firm’s impact. The company’s founder, a Peruvian American who worked at Kimberly Clark identified hygiene problems associated with cloth diapers being used in Peru and utilized abandoned technology to produce diapers low and moderate-income families there could afford.

The company not only solves a social problem in the developing world but also provides jobs that raise the standard of living for the community.

Nelund says, “When they were really struggling at one point and we were working with them to try to restructure everything, his biggest concern was the people in the community losing their jobs because it was so important to them and their families.”

The loan of about $3 million represented about 2.1% of the funds’ assets, according to the 2015 10K filed with the SEC and has an interest rate of 15.5-15.6%. The firm’s loans have interest rates ranging from more than 8% to just less than 18%. The loans are made in Central and South America and in Africa.

Nelund explains the investment strategy. “We have a private debt strategy that makes loans to growth stage companies that meet certain environmental social and governance standards and who are committed to creating impact and then we provide loans to those companies so that they can grow and they can create more jobs and they can pay higher wages.”

While Nelund admits that some projects require non-investment capital—philanthropic or aid forms of capital—she sees market rate impact investing as the key to attracting sufficient capital to solve big problems. She says, “You should hold companies to the same [return] standard regardless of the impact they create.”

Matthew Weatherley-White, co-founder and managing director of The Caprock Group, who has invested in the funds, highlights two features of the TriLinc funds. First, he notes that retail investors have been invited to participate in the funds via public offerings—most impact investments are limited to accredited or institutional investors. The other point he highlights is the firm’s focus on doing things better. “This isn’t about perfect. It is about steadily raising the bar.”

Jeff Shafer, co-founder of CommonGood Capital, praises Tirlinc’s team and procedures for sourcing deals outside the US with an emphasis on impact. He adds, “Since investing today in the US is dominated by the left brain, market rate returns and proof of positive impact are critical to mobilizing large amounts of capital.”

Dr. Patricia Dinneen, senior advisor, EMPEA and chair of Impact Investing Council, agrees with Shafer’s analysis. Like Weatherley-White, Shafer and Nelund, she concludes that impact investing at market rates is possible. “TriLinc Global provides credible and convincing evidence that you can achieve both financial returns and social benefits.”

Over 1 million people have read my books; have you? Check out my free webinar exposing the three myths that impair and two keys for crowdfunding success.


Never miss another interview! Join Devin here!

Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

How To Start Impact Investing With Just $50 And Five Minutes

This post was originally produced for Forbes.

You can download an audio podcast here or subscribe via iTunes.

Fifty bucks and five minutes will make you an impact investor. I did it. So can you.

Swell Investing is a new impact investing platform created by social intrapreneur Dave Fanger, 40, of Pacific Life. The idea came, Fanger says, five years ago, thinking about how consumers were increasingly making buying decisions based on social impact and thought there ought to be a way for investors to do the same.

What he came up with incorporated the latest fintech tools for investing, commonly known as robo-advisors paired with impact data to make informed decisions about impact. The technology allows for accounts as small as $50 with annual fees of just 75 basis points or 37.5 cents on a $50 account.

The average account size is just $4,000, suggesting that most investors on the platform are small, some of who are starting with the minimum required investment.

Impact Investing:

Fanger says, “We define impact investing as identifying and investing in companies that are actively deriving revenue from the way that they are solving global and environmental challenges.”

That is distinct from traditional public securities investment strategies known as socially responsible investing, ESG or environmentally, socially and corporate governance investing strategies, that focus on a broader range of companies that are governed well and seek to mitigate their impact on the planet.

Swell Investing presenting puts its customers in their choice of six impact portfolios: green tech, renewable energy, clean water, zero waste, healthy living and disease eradication. The combined funds have about 300 companies, a small subset of the 4,000+ publicly traded companies in the U.S. markets.

The portfolios are intended to line up with one or more of the United Nations 17 Sustainable Development Goals focused on eradicating extreme poverty by 2030.

One key fact about impact investing is that it has traditionally been available only to wealthy investors. Swell Investing is part of a movement to make impact investing available to ordinary investors.

Mike Wynholds, CEO of Carbon Five, helped build out the product. “I think Swell Investing meets in the middle of two separate trends that are important people: low-cost investment advice (robo-advisors, etc) and being responsible stewards of our planet. Swell gives people a way to do something they have to do–saving money–while also doing something they want to do – saving the planet.”

Bryan Walker, partner and managing director at IDEO San Francisco, concurs. “Swell offers a solution for investors who want double impact: financial and social investing. Swell provides a new way for socially conscious consumers to invest without sacrificing the value of their investment.”

Fanger’s focus on impact investing grew out of his superpower: empathy. He says, “I had [type 1 diabetes] since age eight and just living through that and managing this disease has shown me that there’s more going on in life besides what you see on the surface with folks.”

Walker saw that in Fanger early on. “From our very first conversation, I was excited by his true personal passion around the idea.”

Still, Swell Investing is not a philanthropy or merely a corporate social responsibility initiative. Fanger is building this business to make money.

Fanger sees the companies the firm invests in growing and the interest in impact investing among ordinary investors along with it, allowing the firm to scale up assets under management.

IDEO’s Walker says human-centered design will contribute to the firm’s growth. “IDEO brought a human-centered design approach to Swell’s development, which means that design choices were informed by consumer feedback. The team today continues with this approach, engaging with investors to get their feedback on a weekly basis as Swell continues to grow and develop new features.”

Walker boasts that when IDEO’s engagement with Swell ended, he decided to personally invest in Swell because he believes in the company.

The technology is key. It allows for individual investors to hold in separate accounts tiny, fractional interests in companies like Tesla. Fanger also insists the company uses the latest in security to protect those assets.

The company is not yet profitable after launching late in the spring of 2017 and has twenty employees.

Carbon Five’s Wyhholds sees good things in Swell’s future.

“From what I can tell Swell is off to a great start. The key for both the viability of the business and the impact it will have on the world is scale, and while it’s still early on, Swell is growing faster than its competitors did at this stage.”

Over 1 million people have read my books; have you? Check out my free webinar exposing the three myths that impair and two keys for crowdfunding success.


Never miss another interview! Join Devin here!

Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

3 Players That Exemplify The Complexity Of The Impact Investing Ecosystem

This post was originally produced for Forbes.

You can download an audio podcast here or subscribe via iTunes.

Three impact investment players provide an interesting view of the broader impact investing ecosystem and how all the parts work together. Their approach helps to make capital more available to social entrepreneurs and investment opportunities open to more investors, including some ordinary investors.

The three include Impact Assets, New Media Ventures and Better Ventures. Impact Assets, a nonprofit asset manager holding exclusively philanthropic capital, serves as a hub in this part of the impact investing world. New Media Ventures and Better Ventures use Impact Assets in strategic but almost opposite ways.

Impact Assets and Donor Advised Funds

Impact Assets provides a place for donors to place philanthropic capital in what is known as a donor advised fund or DAF. As the name implies, funds contributed to a DAF are donations where the donor gets to advise on the final disposition of the funds. DAFs work like small foundations with fewer restrictions and generally more flexibility. Most DAFs don’t give the donor much influence over the investments, only the final charitable distribution.

Impact Assets is different. Built from the ground up to facilitate impact investments, donors also have significant flexibility in advising Impact Assets on the investment strategy. The only investment options available through Impact Assets are impact investments.

Rick Moss, Better Ventures

Rick Moss, founder and managing director of Better Ventures, approached Impact Assets to access some of the capital. Individual donor advisors or clients were given the opportunity to put as little as $25,000 to work in the fund through Impact Assets. Apart from Impact Assets, the minimum investment was $500,000. This works because only Impact Assets is legally an investor in the fund. The individual donors get their information from Impact Assets and are not recorded as investors in the Better Ventures fund. Moss doesn’t have to worry about the number of individual investors participating because he doesn’t have to deal with them.

Tim Freundlich, president of Impact Assets, says you don’t have to be Bill Gates to have sophisticated impact investment options like big foundations see. The nonprofit has about 850 DAFs with an aggregate value of $350 million under management. Hundreds of the accounts are in “the $5,000 range.”

New Media Ventures, led by Julie Menter, its principal, also operates as a 501(c)(3) charity. To create a vehicle for making impact investments and grants, it opened a DAF at Impact Assets. The investors in New Media Ventures get a tax deduction when they make the contribution to the fund and will not have the capital returned to them. New Media Ventures uses the money both to make grants to nonprofits it supports and impact investments in for-profit ventures it decides to back. They can do both via the Impact Assets DAF.

How Impact Assets Supports Both Better Ventures and New Media Ventures

Freundlich explains that Impact Assets does professional due diligence so that its donor advisors don’t have to worry about doing it themselves. For the clients, the risk is mitigated somewhat by the fact that the money is legally a charitable contribution and can’t be withdrawn by the donor for noncharitable purposes.

Impact Assets has a broad range of investments across all asset classes and across all geographies. The company can’t hope to manage all those investments directly. Instead, the firm has brought in 55 funds like Better Ventures to make direct impact investments. The donor advisors can choose whether they want their DAFs to invest and if so how much, subject to the constraints of minimum investment sizes.

Impact Assets also has relationships with about ten firms like New Media Ventures, where they have assets in donor advised funds from which they make impact investments, grants or both.

Tim Freundlich, Impact Assets

Freundlich says not only that Impact Assets was built from the ground up to facilitate impact investing but also that the democratization of impact investing is important. You don’t need to be an accredited investor to establish a DAF and to begin making investments. That said, he acknowledges that to participate in the most sophisticated investment options you may need an account with $200,000 to $2 million. Still, at that level, donors get access to investments that otherwise may be open only to institutions and individual investors with greater than $25 million in net worth.

In addition to the relationships with asset managers like Better Ventures, Freundlich says Impact Assets does make direct investments in social ventures but only on behalf of clients. Last month, he says, the firm made six such investments at the request of donor advisors.

Investment Strategy

Certainly, among the readers of this article will be some who are interested in the investment strategy for both New Media Ventures and Better Ventures.

Menter’s New Media Ventures developed her vision for investing after realizing that business as usual could solve some but not all the world’s problems. She recognized that our beliefs are influenced by the media we consume and so she wanted to invest in and support media companies and nonprofits that support her progressive view of the world. She’s raised $2.6 million to do so and has invested in “nine or ten” media companies.

She describes three buckets into which the firm invests or makes grants. The first is media, companies like Upworthy, Daily Kos and Blavity. The second bucket is what she describes as movements and the technology to support movements. Examples of investments in this arena include Indivisible, Swing Left and Sister District. The third and final bucket she describes as non-partisan civic engagement platforms like Vote.org and Turbo Vote.

“We’re interested in how we essentially bring the levers of power into the hands of more people and we believe that over time that will create a more just, environmentally friendly world,” she says.

She acknowledges that the media space is challenging. “It’s still not clear how you make money in media.” She hastens to add, however, that Young Turks just raised $20 million, suggesting hope for the media industry.

Moss’s Better Ventures begins with this: “Our basic investment thesis is that mission-driven entrepreneurs outperform.” He believes that passionate entrepreneurs will work harder.

He focuses on firms that have impact with every sale so “the bigger they get the more good they do.”

Moss indicates that they look to invest in companies that have at least two founders that are solving an important problem. He notes that the companies don’t need to have a lot of revenue or historical growth. Typically, they have an MVP or minimum viable product in the market before Better Ventures invests.

Message to Those Passed Over

Most people don’t get investments. Moss acknowledges that when he started the fund he expected to be writing checks all day and instead ended up saying “no” all day.

To the companies he likes but doesn’t invest in, he usually says, keep making progress. He finds they come to him too early, before they are ready for his investment. He encourages them to raise money from family and friends and from angel investors first.

Menter reflects on the difficult “power dynamics.” She says, “I have all the power yet the entrepreneur is actually the one who’s actually making the world a better place.” Motivated by this philosophy, she says she’s developed the ability to deliver bad news well.

She tries to give specific feedback, identifies gaps in the team, business model or marketing strategy that need to be closed. She also encourages social entrepreneurs to get creative with funding, recognizing that not everyone has a network that will support them financially. Some, she points out, finance a startup by winning lots of business plan competitions, others keep their day job to support the work until outside financing comes in.

Evolution of Impact Investing

Freundlich has been working in impact investing for 20 years. A lot has changed in that time with a great deal more attention and capital devoted to the space today. Of the momentum in the impact space he says, “I remember 20 years ago thinking that it was like watching icebergs melt.” He reminds himself—and the audience—that others in the sector had been there for 20 years before he got there.

He sees the entrepreneurs as the real heroes, echoing Menter’s remarks. “Every single one of these tenacious, crazy people who are living a dream, eating ramen soup with the extra job while they crowdfund their way into some amazing venture… deserve the most support and admiration.”

He also admires the successful entrepreneurs like Seth Goldman of Honestea who sold his business to Coca-Cola and now gives back by investing much of his capital in startups and by serving actively on boards.

Business Models

The three firms profiled in this piece participate synergistically and differently within the impact investing space. Impact Assets, a 501(c)(3) nonprofit, earns fees from the clients that contribute to donor advised funds, much of which is tied to the size of the portfolio.

Julie Menter, New Media Ventures

New Media Ventures gets donations, earns some revenue from events and service contracts, plus takes a percentage of the donations to the NMV Innovation Fund. The nonprofit operates with just three full-time employees with the help of some contractors and volunteers. Menter describes the firm as an impact first investor.

Better Ventures relies on venture capital returns for its operating revenue. The seed fund has $21 million under management. He notes that the operates are profitable today. Moss says the firm seeks to back those who can achieve impact on a massive scale using technology. He says, he like to give founders a safe place to admit they care more about doing good in the world than they do about making money.

These three impact investing players don’t encompass and represent the entire spectrum of activity within the impact investing arena but they do help to demonstrate the breadth of approaches, business models and the necessary collaboration that make it work.

Over 1 million people have read my books; have you? Check out my free webinar exposing the three myths that impair and two keys for crowdfunding success.


Never miss another interview! Join Devin here!

Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

 

The Role Of Entrepreneurship In Ending Poverty And Homelessness

This post was originally produced for Forbes.

You can download an audio podcast here or subscribe via iTunes.

“Social entrepreneurship has proven to provide impactful innovations for poverty alleviation ,” says Abby Maxman, President of OxFam America. Maxman was among a diverse group of people working on poverty eradication who contributed to a recent roundtable discussion on ending extreme poverty and homelessness.

The idea of ending poverty seemed absurd a generation ago. Today, the idea has been enshrined officially in the United Nations Sustainable Development Goals or SDGs as something the world should achieve by 2030. The roundtable participants addressed a range of topics, including a focus on how social entrepreneurs would help achieve the SDGs. Watch the 80-minute discussion in the video player above.

Judith Walker, the chief operating officer for African Clean Energy, which sells clean cookstoves that generate electricity, explains the need for social entrepreneurs to see problems as opportunities. “Energy costs are very high compared to income in the markets we deal with, meaning its either not realistically accessible or almost certainly not reliable. This should be seen as an opportunity to improve the goods and services available in order to relieve burden and create other options for those struggling with any or consistent income.”

Judith Walker

She adds, “Where we see the most potential for impact is actually by catalyzing this potential by having access to the most desperately needed energy.” What customers are able to do to improve their own lives with the tools inspires her to continue working.

Why Entrepreneurs Should Care About Ending Poverty

Entrepreneurs solve problems. Social entrepreneurs solve problems that matter. Eradicating poverty pegs the mattering meter.

Haiti’s former Prime Minister, Laurent Lamothe, is now an active impact investor, supporting social entrepreneurs in Haiti. Everyone benefits from helping the poor. “Poverty is not solely the problem of the poor, the same way as climate change is not solely the problem of one country. It has consequences and implications for all of us because we live in an increasingly open and interdependent world. Improving the prospects of the most disadvantaged will improve prospects for all. ”

Anne Kjaer Riechert, a recipient of a Rotary Peace Fellowship and social entrepreneur in Germany, founded the ReDI School of Digital Integration to teach refugees, mostly from Syria, how to code. She says our focus shouldn’t be on helping people living below an arbitrary income threshold but on the income gap itself. “Poverty is relative. It is not a question of income, but the gap between the ‘haves’ and the ‘have-nots. ’”

Anne Riechert

OxFam’s Maxman agrees. “Our research has shown that since 2000, the poorest half of the world has received just 1% of the total increase in global wealth, while the top 1% received 50% of the increase. Inequality is bad for us all – socially, morally, ethically, economically and politically.”

Why Social Entrepreneurship is a Key Part of the Solution to Poverty

Entrepreneurship—especially social entrepreneurship—brings value to the fight against poverty that other players—governments, corporations and non-governmental organizations (NGOs) don’t.

Alicia Wallace, president of All Across Africa, which sources handicrafts in Rwanda for sale in the United States, points out the speed of entrepreneurship. “Entrepreneurship can be harnessed to fuel positive, sustainable global impact much faster than any other form of social good .”

“I definitely see competition as creating an urgency for solving poverty and homelessness,” she adds, helping to explain why entrepreneurs can have faster impact.

Social entrepreneurs have a unique mindset, according to Arlene Samen, founder of One Heart World-Wide, a nonprofit that uses a grassroots approach to improving maternal and child health in Nepal and Tibet. “Social entrepreneurs never give up, they think outside the box and are willing to empower ‘others’ to help solve their own challenges.”

Carla Javits is the CEO of REDF, a nonprofit that invests in social enterprises that serve people who are often considered unemployable, including those who have completed jail and prison sentences, recovering addicts and people who have experienced homelessness.

Javits says social entrepreneurs are flexible. “By developing new models that cut across and blend the assets of various sectors without being stuck in orthodoxies about what each sector can or should do, social entrepreneurship opens up new possibilities to solve stubborn, seemingly insurmountable challenges.”

She also points out that social entrepreneurs think outside the box of either operating as a nonprofit surviving on donations and grants or being fully supported by revenues. Operating in that middle space creates opportunities for social entrepreneurs to leverage donor dollars with revenue generating services.

Effective social entrepreneurs relieve burdens by selling products that customers need to improve their lives. The profits from the sales create sustainable impact and provide returns to investors.

Mari Kuraishi, CEO and founder of Global Giving, a crowdfunding site for nonprofits serving communities in the developing world, points out that social entrepreneurs can experiment and then scale up. “Social entrepreneurship can play a big role in experimenting within smaller jurisdictions and communities to demonstrate how to overcome issues like poverty and homelessness.”

Mari Kuraishi

She also notes that such innovators may be able to attract resources even when government grants are not available. “When political will is missing, it’s possible–but by no means a sure thing–for social enterprises to get access to the kind of resource flow that might begin to make a dent.”

Javits agrees, noting that the use of hybrid solutions can reduce public costs with other benefits to the community and the beneficiaries. “Social entrepreneurs identify hybrid solutions that can reduce but not eliminate public costs, increase individual initiative, and generate much greater value for all of us.”

Haiti’s Lamothe cautions, however, that social entrepreneurship got its start decades ago and we’re still dealing with some of the same challenges. “Poverty is a complex issue and, since the advent of social entrepreneurship in the 70s, no social enterprise has been capable of solving poverty all by itself. After decades of social entrepreneurship, it becomes obvious to me, as to many others, that reducing poverty takes a concerted, cross-sector effort that focuses holistically and long-term on the problem.”

Social entrepreneurship is becoming a primary weapon in the war on poverty but it isn’t a magic bullet.

What Social Entrepreneurs Can Do to Help

Having established that social entrepreneurs have the ability and flexibility to contribute meaningfully to the end of poverty and homelessness, let’s look at some specific things that they can do that can help to end poverty.

All Across Africa’s Alicia Wallace says one key is to equitably divide the gains and benefits. In her model, the US corporate customers are not the beneficiaries—the artisans in Africa are. She expects the corporate customers to pay fair prices for the products that will in turn allow her to pay fair wages to the largely female workforce producing mostly baskets.

African Clean Energy’s Walker agrees, though her lens is slightly different. Her customers in Africa are her beneficiaries. She explains, “We need to consider the beneficiaries as customers, and treat them with the respect they deserve, rather than just as victims or poor. ”

The division of value among entrepreneurs, customers and investors “only needs to be a little more balanced,” she says.

James Mayfield, the founder of CHOICE Humanitarian, highlights the power of income opportunities for the extreme poor. “The key to the eradication of poverty is the creation of income and employment enhancement programs. Such programs are best stimulated by the poor themselves supported by organizations that facilitate social-oriented enterprises.”

Dr. James Mayfield

After more than 30 years in the field, Mayfield highlights the importance of empowering women with income. “The missing ingredient in many unsuccessful poverty eradication programs is the importance of women participating in village decision-making , especially their role in ensuring village leaders are willing to adhere to the villager-determined core values that emphasize behaviors showing among other things integrity, generosity, service, tolerance.”

John Hewko, the general secretary—the professional head—of Rotary International, who has built his career almost entirely in international development, says that the way people think about their entrepreneurial prospects is as important as their structural access. He cites a report that women in Latin America have lower confidence in their own abilities and have a higher fear of failure. Providing training and encouragement is as important as providing access to financing.

Mark Horvath, an advocate for the homeless and producer of the popular YouTube show Invisible People, points out one limitation that impairs the work of nonprofits. Well-funded Silicon Valley companies provide lavish coffee stations with fresh fruit while nonprofits provide access to a coffee station with an honor jar for people to contribute money to keep it supplied.

Mark Horvath

He sees the problem as limiting the effectiveness of nonprofit social enterprises because foundations are risk adverse not funding new ideas or allowing autonomy for a nonprofit to do what they do best.

Government’s Role in Supporting Social Entrepreneurs

One surprising theme that developed in the discussion among these advocates for ending poverty was the need for governments to structurally support social enterprises.

Riechert, the young entrepreneur who founded the coding school for refugees in Germany, says, “I would love that there would be more collaboration between the government learning from the social entrepreneurs and entrepreneurs getting more capital from the government to continue growing and scaling their solutions.”

Relatively small amounts of capital infused in a revenue-generating business can have the impact of allowing the enterprise to scale. The closer the business is to complete self-funding, the higher the impact of grants or patient investments.

She notes, too, after her recent visit to the Zaatari refugee camp in Jordan that government policies in the camps inhibit the ability of the people there to care and provide for themselves. The government doesn’t allow refugees there to engage in any entrepreneurship.

“I would love to see a big change because if refugee was actually seen as an asset and it’s an opportunity for the Jordanian people to make money and to have more cash flow into the country by having these entrepreneurs coming from outside. I think everyone would stand to benefit from it,” she says.

Eytan Stibbe, the founder of Vital Capital, an impact investor actively serving in Sub-Saharan Africa, has achieved remarkable scale, building tens of thousands of moderate-income housing units. He says, “What we found is that the most important issue is sharing in order to reach scale in working with the government. And we try to cooperate with the government so that the interests are aligned. That’s the only way we can reach scale.”

Katie Meyler, the founder of More Than Me, a social enterprise that partners with the government in Liberia to operate primary schools. “We can only reach the masses of people who live without [education] through a public-private partnership.

Haiti’s Lamothe, sees a different but still complementary role for government. Noting that governments in the developing world are often as resource constrained as their people, the government can be a sort of GPS guide to where the problems and opportunities for social entrepreneurs are.

Laurent S. Lamothe, former Prime Minister of HaitiWorld Initiative

The Examples of Social Entrepreneurship Reducing Poverty

To emphasize the point that the members of the roundtable are not approaching this topic from ivory towers but instead they come from the field, bringing on the ground perspectives, let’s look at some of the projects and enterprises they are running.

Riechert founded her coding school for refugees after 800,000 arrived in Germany in 2015, overwhelming government resources. She noted that even after they arrived, Germany had 51,000 open jobs in the I.T. field. The economy was constrained by a lack of available talent. So, she launched her school training refugees to fill those vacant positions. Her students quickly coded an app called Bureaucrazy to help other refugees navigate the German bureaucracy.

Samen, whose grassroots efforts in Nepal and Tibet have made dramatic improvements in maternal and child health, says her One Heart World-Wide is a beneficiary of a social enterprise in Australia called Thankyou that donates 100 percent of its profits to charities. The company sells water, body care, food and baby care products.

Samen says, “They set it up that, so when you buy the product it has a code bar and you can actually see where your money is going to be invested.” She would like to see this model grow and replicate.

Javits, whose entire business model focuses on funding social enterprises serving people who are at risk of homelessness, offers an example.

“Nonprofits that provide services to people experiencing homelessness have started new businesses in property management that employ their clients, paying them wages, and preparing them for long-term employment. By selling their services like a business, while hiring people who most companies would not give a chance, offering a more supportive work environment, and investing 100% of their ‘profits’ in their employees’ success and well-being, the social entrepreneurs who start these enterprises offer a more sustainable approach that gets to the root of the problem.”

Carla Javits

Rotary’s Hewko points to a microlending program supported by Rotary in the Esmeraldas Province of Ecuador. “Borrowers are organized into credit groups, and cross-guarantee each other’s loans. With credit officers working locally, the people who benefit – primarily poor women and youth – gain more confidence to start businesses, and are more likely to repay the loans. They also receive vocational, business and personal development training from NGOs including Rotary, FUDECE and the Grameen Cooperative, and SECAP, a government training organization.”

Haiti’s Lamothe highlights the work in a small fishing village in Haiti destroyed by Hurricane Matthew in 2016. Working with a group of nonprofits, including the Carlos Slim Foundation, Happy Hearts and Sean Penn’s foundation, have been replacing tools of the trade—fishing lines and boats—lost in the hurricane. They’ve also been helping the villagers get access to buyers, connecting them to restaurants and supermarkets. “Their revenues have gone from about you know $1000 US per month for the whole village to right now it’s ten times more.”

Impact investor Morgan Simon, author of Real Impact, offers up her favorite example. “One of the projects I’m a big fan of is the Working World, which provides finance for worker-owned cooperatives and they do so through a non-extractive model.”

She credits Brendan Martin, the founder of Working World, with coining the term “non-extractive financing.” He defines this concept as being loans that can be serviced entirely by the projects they fund with surplus left over. None of the existing resources of the borrower need be devoted to debt service.

“They’ve funded over a thousand loans with the 99 percent repayment,” Simon concludes.

Expanding Social Enterprise Concepts to the Broader Economy

As the group discussed the challenges of eradicating poverty, another theme developed: the need to get the broader economy to apply more of the guiding principles of social entrepreneurship.

Rotary’s Hewko put it this way, “I think the big question here is: How do we channel the private sector? That’s really where the money is—in the private sector—and the long term sustainable solution is vibrant economic systems and economies that work.”

Not only is it important to put people to work but there needs to be a greater social awareness employed by more companies.

John Hewko

He continues, “How do you inculcate into core business models the idea of social good, so social good becomes part of the core business model of a corporation, for example, as opposed to just for corporate social responsibility which we’re doing today?”

He then goes a step further and suggests that we need a mechanism to reflect positive social impact in share prices in the stock market. “That’s not easy but that’s the holy–that’s the Holy Grail.”

Hewko highlights the leadership of Paul Polman at Unilever and others who are “beginning to think very seriously about how we work to change core business models where social good becomes not just something good we do on the side but part of our everyday business.”

Speaking of poverty and homelessness, Hewko concludes, “These problems all need to be addressed in a cohesive fashion with private sector, civil society and government working hand in glove.”

Walker, of African Clean Energy, agrees. “I do believe that the business models of nonprofits and of for-profits and everything should actually become more similar more like each other.”

Concerns and Opportunities

Still, there are some concerns about the challenges ahead in eradicating poverty and homelessness.

Horvath, the homeless advocate who was himself homeless for a time, worries that nonprofits are often forced to follow money over mission and aptitude. “What I’m seeing in the homeless services sector is and I like to say it like this maybe I’m a farmer and I grow apples. I’m really good at it but all of the money is over in oranges. I’m not so good at oranges but I’m going to start growing oranges even though I can’t do it really well because I’ve got staff to pay and I’ve got an electric bill and everything else. So you have all these people just going after the money instead of really addressing fighting poverty and homelessness.”

The United Nations Resident Coordinator and UNDP Resident Representative in Kenya, Siddharth Chatterjee, explains the challenge and opportunity ahead for Africa.

“Africa, for example, will see its population double from the current 1.1 billion to around 2.3 billion by 2050. Over 70% of its population is less than 30 and its median age is 19. One hundred million new jobs per year need to be created in Africa to cater to this looming ‘youth bulge.’ It could prove to be a demographic dividend or a disaster.”

Chatterjee is an optimist, however. He says, “Africa is going to be the new market of the future and if we invest now, not only will we overcome poverty and homelessness but contribute to reduced fragility and instability, advance peace and economic growth and reduce the burden of economic migrants to the West and the US.”

We’ve Got This

Generally speaking, the group was optimistic about prospects for eliminating poverty and homelessness.

REDF’s Javits says, “ Something we can do in our lifetime is to end homelessness for the vast majority of the hundreds of thousands who have no stable home each night. ”

Arlene Samen

Samen, who has spent her career among the poor in Nepal and Tibet, says simply, “ It can be done. ”

This article, which is published originally for Forbes, will become part of a book with the working title Thirty Years to Peace.

#30YTP

Over 1 million people have read my books; have you? Learn more about my courses on entrepreneurship, crowdfunding and corporate social responsibility here.


Never miss another interview! Join Devin here!

Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

It Shouldn’t Be Easier To Find Your Mate Than To Find A Co-Investor Online

This post was originally produced for Forbes.

You can download an audio podcast here or subscribe via iTunes.

Last summer, at a meeting of Seattle impact investors, one of the members said she didn’t have need for additional deal flow–investment opportunities–what she needed, she said, according to Nancy Reid, director of the Seattle Impact Investing Group, is a way to build an investor syndicate. “What we need is investor flow.”

Michael ‘Luni’ Libes, 47, and Matt Eldridge, 48, who heard that need and set out to create a nonprofit, online platform called Investorflow.org to address the concern.

Matt Eldridge, co-founder and COO of Investorflow.org

“Impact investors are spread around the world, investing all around the globe. This makes it incredibly difficult for those seeking funding to find these investors. It also means that investors tend not to know each other,” Libes said, framing the discussion.

Watch the full interview with Libes and Eldridge at the top of this article.

He points out the investors typically have specific areas of focus, so even if you have dozens of impact investors in a room, chances are there still isn’t a critical mass of interest for any particular deal.

There is a wide range of possible interests for impact investing, he notes. “The UN has organized 17 distinct sustainability goals, but number 1, No Poverty, includes everything from the poorest billion people to affordable housing in New York City.”

“Meanwhile, in reality, most impact investments come from investors talking to other investors, not from companies pitching investors. The problem isn’t a lack of dealflow, nor a lack of crowd. The problem is efficiently matching the right deal to the right investor, one investor to another. Or more simply… the problem isn’t dealflow but investorflow,” Libes says.

Michael ‘Luni’ Libes, Investorflow.org

The investing community is ready for a new solution, Reid suggests. “Fundraising is still awkward.” That is true even for investors. “It can be an uncomfortable dynamic,” she adds.

“Fundraising is also still unbelievably slow and difficult! It’s way easier to find the right babysitter or landscaper or date than it is to find the right co-investors, which is bizarre,” Reid concludes.

Janine Firpo, the impact investor Reid mentioned who coined the phrase investor flow, emphasizes that impact investing is best done in teams. “What I believed we needed was an ‘investor flow’ solution that could put trusted investors together to share deals. Aside from a few very wealthy and committed individuals, this type of investing is not a solo activity. It takes a community. Luni made the idea of an investor flow a reality.”

“The solution is investorflow.org, an online network where impact investors can hear about deals that fit their particular interests, vetted by fellow investors. All the deals are posted by investors seeking co-investors, not by entrepreneurs or fund managers,” Libes explains.

Libes says the site already has 157 investors signed up with 14 deals in the review pipeline. As yet, no deals have closed. Deals are coming in at a rate of about one per week. Still, there aren’t enough investors. “We think at somewhere between here and 1,000 we’ll have a critical mass where when there’s deal posted there will always be someone interested,” Libes says.

This idea represents some fresh thinking in the impact investing world. It will be interesting to see if the site reaches the “critical mass” needed to start funding deals regularly.


Never miss another interview! Join Devin here!

Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

 

How To Be Successful With Affordable Housing Without Being Evil

This post was originally produced for Forbes.

You can download an audio podcast here or subscribe via iTunes.

“Our nation is in the midst of a true affordability crisis.” Daryl Carter, founder, chairman and CEO of Avanath Capital Management, sees that as both a problem and an opportunity. He’s found a way to deliver returns to investors while serving working families at the same time, that is, without being evil.

Let’s start by looking at the problem. “The median income of a renter in the United States is $36,000. To be considered affordable, renters should be spending no more than a third of their income toward rent. However,” Carter says, “in many coastal markets such as Los Angeles and New York, over half of all renter households are allocating more than 50% of their income toward rent.”

That threshold matters, because if you are paying more than half of your income in rent, it is difficult to also provide food, healthcare and education for the people living under that roof. “Historically, the reason that many neighborhoods have declined, whether it’s Detroit or Oakland, is not because of who lives there, but rather because there is a lack of investment in those areas,” Carter says.

Watch my entire interview with Carter in the video at the top of this article.

Carter points to an estimate from the Joint Center for Housing Studies that indicates that two million rent-controlled units will expire over the next decade. Most of these are supported by Low Income Housing Tax Credits. He says, “These units are at-risk for redevelopment into market-rate apartments.”

The problem gets worse. Every year, about 100,000 rental units are lost to obsolescence or failure to meet building codes. Most of those units are—or were—affordable.

Carter sums up the situation this way: “The bottom line is: people need quality, affordable places to live – now.”

“Targeting this asset pool is an additional source of investment opportunity for Avanath,” Carter says.

Carter says he is a beneficiary of affordable housing. “My journey as a social entrepreneur began on Detroit’s West Side, in a working class, African American neighborhood. My father, an autoworker, and my mother, a nanny, moved to Detroit to pursue the economic dream tied to the auto industry. With a combined income of $10,000 per year, they purchased a small two-bedroom bungalow in the 60s for $15,000. Their monthly mortgage payment was $130 per month or 16% of their monthly income of $833 per month.”

“While not picture perfect, this home provided a stable setting for my family to pursue the American Dream. My home incubated my dreams of the University of Michigan, MIT, and Avanath long before I had any thought about them. Today, this same dream is simply implausible for much of the population, based on a rampant rise in the price of housing in our nation,” he continued.

That foundation helped to motivate and inspire Avanath’s strategy of bringing institutional capital into areas where affordable housing is most needed.

Daryl J. Carter, Avanath Capital Management

One of the lessons Carter has learned is that keeping good residents helps to foster a successful community. This is a stark contrast to other investors, whom he says often seek to create a “new resident profile.”

Avanath, like other developers, will invest in upgrading the projects they buy. “When we renovate, we raise the rents but we raise the rents to a level that is affordable for the residents that are there. And we try to do what I call ‘smart renovations’ where we put in things like washers and dryers that benefit that family.”

He admits that they don’t do everything they might so they can keep rental rates lower. He says that when he shows his investors the projects, they’ll ask why the popcorn ceilings from the 60s or 70s haven’t been replaced. “They’ll say, ‘It would be great if you can get rid of it.’ And we say, ‘Yeah, it would be great but I’d have to charge $40 more rent.’”

The Avanath strategy for getting good investor returns include buying the properties on good terms. “We buy it on a very favorable basis because in many respects it’s been abandoned by the previous owner.”

Once purchased, Avanath works with the residents and the community, including elected officials to take what Carter calls a “holistic approach.” Not only does the company invest in the buildings but also in things like afterschool programs that will add value.

Carter explains the strategy, “Our investment strategy is to preserve the existing supply of affordable housing and add value to our communities by investing in capital improvements that enhance asset quality without sacrificing affordability.”

“Safe, clean, and affordable housing is the foundation for economically viable neighborhoods,” Carter says, speaking from experience.

“By acquiring affordable and workforce housing, making strategic improvements that increase quality of life without sacrificing affordability, and then investing in social programming such as on-site tutoring, sports programs and financial literacy courses, we are giving residents more than just a place to stay – we are giving them lifestyles, aspirations, and a path toward success.”

“Through this work, we have been successful in advancing positive social change, while also generating attractive, risk-adjusted returns to our investors. It is important to our mission to deliver returns that rival other commercial real estate investments.”


Never miss another interview! Join Devin here!

Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

1 2 3 8
Never miss another interview! Join Devin here!
Subscribe to news from YourMarkOnTheWorld.com
* = required field
Content I want: