A Fresh Frame on Impact Investing for Philanthropists

Nancy Reid, Impact Strategist and Phīla Collaborator

By Nancy Reid, Impact Strategist

Will you join me in a thought experiment?

What if, instead of asking ourselves what kinds of giving the tax code permits and rewards, we asked ourselves a different set of questions?

What if we asked ourselves: how do we want to invest in community, economy, and ecology?  What mechanisms might we put in place now to support communities and ecologies two or three or seven generations from now?

And based on that vision, what kinds of funding will be most effective in bringing about the change we most wish to see in the world?

For example, if we want to eliminate ocean plastics, surely we need policy to regulate waste streams, and public and philanthropic capital to fund the thankless work of cleaning up rivers around the world.  But I don’t see a solution to this problem that doesn’t also rely on innovation and change within the private sector.

We need to accelerate funding of startups using new technologies to reduce and displace plastics across form functions.  And then we need venture capitalists poised to support those technologies and scale them across industries.  And then?  We need large public companies, particularly in consumer packaged goods, to see these innovations as a competitive advantage and acquire those technologies to replace plastics at the start of the product cycle.  

So while a wealthy person might look at the problem and begin to research environmental nonprofits, what if that person also thought of herself as an investor?  She might also become an angel investor in green technologies, reallocate part of her private investing portfolio to venture funds with explicit focus on accelerating technologies that mitigate or resolve environmental problems, or invest in an activist public equities fund that uses shareholder power to advocate for improved environmental policies at large public corporations.  

In another example, a philanthropist focused on racial equity might be inclined to donate to BIPOC-led community nonprofits or  make grants to HBCUs. And these efforts are powerful ways to support communities of color. But as long as payday lenders are the most available lenders in underserved communities, and Black homeowners continue to receive lower valuations for their homes, and less than 1% of venture capital goes to fund companies led by diverse teams, our country’s racial wealth gap and discrepancies in outcomes will remain intolerably vast.  

An investor willing to mobilize investment capital to support their philanthropic goals, however, might reallocate portions of their investment portfolio to buy CD’s at Black-owned banks actively lending in Black communities.  They might find investments that fund the conversion of private companies to employee ownership in communities of color.  They might buy a broad index of publicly traded stocks run by an asset manager who actively votes shareholder proxies and advocates for inclusive HR policies and environmental justice in urban areas. 

We are not financial advisors, and unfortunately we can’t recommend specific investments.  But wealthy clients who choose to mobilize some portion of their investable wealth have the option to design an investment approach that allocates money to:

• Finance only (conventional investing)

• Finance first (ESG and other “socially responsible” approaches, of which many are performative, so beware)

• Thematic (attempting to achieve strong financial returns and strong positive impact)

• Impact first (investing made primarily to advance an issue area, with high financial risk or below-market financial returns)

• Impact only (traditional philanthropy)

We help clients think through the logistics and tradeoffs involved in each of these approaches, and coordinate with clients’ investment advisors to see what’s possible, in order to build an integrated capital strategy that funds innovation and problem-solving in our communities and on this planet.

This work requires that we examine our assumptions about the purpose of investing, which can cause nervousness.  But doesn’t the future require us to expand our beliefs about what’s possible?  Many investors find that the impact they can have by mobilizing an array of capital sources lasts far longer than the discomfort of examining our assumptions about the purpose of wealth.  A trusted guide can even help make the journey well worth taking.

It’s Time to Retire the Term “High Net Worth”

By Nancy Reid and Stephanie Ellis-Smith

Here’s something radical for you to consider: let’s retire the phrase “high net worth” (HNW), and the even more obnoxious, “ultra high net worth” (UHNW). Despite their ubiquity in the wealth advisory industry, it's time to move beyond them. As an alternative, let’s name it what it is: wealth instead of worth. 

Our team is dedicated to the proposition that all lives are inherently worthy and have equal value. We envision a world in which a person's “worth" is independent of their balance sheet and where individual sovereignty is conferred by a person's humanity, and not by their assets.

Given that vision, should we allow our language to suggest that the world’s poor are of less worth than the rich? Of course not, and we know that anyone reading this is probably having a visceral reaction to that thought experiment. Conversely, by that same logic, should we allow our language to suggest that the value of a wealthy person is equal to, or enhanced by, their money? That is not specifically what we want to impart when we say “high net worth”, but our language, to say nothing of our culture, suggests this implicitly. 

So it’s not a leap to understand why many people in wealthy families, especially the rising gen, have struggled with their self-worth. For many of our clients, to be treated with inflated importance because of their wealth feels inauthentic and hollow. Who among us loves to be praised for something that has little to do with who we truly are?

Moreover, these terms are imprecise. Some organizations define HNW as having assets between $5 and $50 million, and UHNW as assets north of $50+. Others define those categories completely differently. These strata help the wealth advisory community organize themselves and communicate among each other around service offerings. But those euphemisms are not client-centered. It’s more comfortable for some folks to hide behind shorthand euphemisms rather than speak openly about what wealth is and its purpose. Aren’t we all better served by more precise language?

And in a line of work in which we counsel the wealthy to distribute or reinvest their money in ways that are transformative to the people and issues that matter most in the world, we’d be doing a disservice to our clients if helping them reduce their net-wealth resulted in their experiencing a diminished self-worth. To our ongoing delight, the opposite is quite often what happens. Clients are happiest even–– and especially– when they can reduce their taxable estate AND have a significant social impact. In fact, they end up with a GREATER sense of self-worth.

So while it may be a little corny or even a little radical, let’s retire “high net worth” from our lexicon and replace it with a more precise term. Let’s call wealth what it is, and focus our attention and our resources on bringing forth a world in which “worth” is the birthright of every human on the planet and wealth is merely a tool by which our clients can make that birthright a reality for everyone.

An Impact Investing Learning Circle for Women

Photo by SolStock/iStock / Getty Images

Are you a woman who wants to align your investments with your values? Do you want to learn more about impact investing and take action? Do you enjoy spending time with like-minded peers? If so, join us in an investing learning group for women who want to align their investments with their values, deepen their understanding of impact investing, and have fun with other smart and curious women just like you.

Women’s leadership drives commerce, politics, activism, and culture. But when it comes to our finances—taking full ownership of our investment choices, bringing our values to the fore of financial decision-making—we still have a way to go. Men continue to make the majority of household investment decisions, and although women are largely interested in impact investing, only a small percentage are actually doing it. But here’s the good news: impact investing is fast becoming a mainstream investment strategy, and women control increasing amounts of wealth. I believe that these two forces have the power to change capital markets for the better, but that can only happen if we all take action—if we harness our investable assets in service of a better world. If you like how this sounds, read on!

For some time now I have been following a national movement called Invest for Better. Given this particular moment in society, it seems like the right time to become more intentional about how we’re using (or not) our investments as another driver of social change. I decided to partner with Janell Johnson, another philanthropy professional, to convene an Invest for Better Circle for women who have investable assets and are ready to activate them for social/environmental change. 

Clients and others have consistently been asking me about how they can align and invest ALL of their assets around their values—not just funds earmarked for philanthropy. While I am not an investment person by any means (and this group will not do any investing or give financial advice), I am a convener and I know how to bring the right folks together to create an enriching learning environment. I’m hoping this one would hit the right spot at the right time for many.

The aim is to learn from experts and peers about what it means to effectively integrate our portfolio with our personal goals and societal needs. This all came about because both Janell and I are curious about how to coordinate investments with our philanthropy and philosophy. And we realize we aren’t the only ones.

Here is how we envision the group will work. Janell will be the group leader, and with the support of Invest for Better, there will be a structured curriculum, story-telling and information sharing about finances and investing. The meetings will be virtual, and we will also have an online space for us to share resources, ideas, and experiences. Experts in the impact world will be invited as guest presenters, but there will be no commercial pitches or investment advice.  

Our group of no more than 10 women will meet monthly either from September-March, or October-April, depending on availability. Each month will feature a presentation by an expert in the field related to the topic of the month and a group discussion. Here’s a preliminary calendar for the curriculum:

September Topic: What exactly is impact investing? Discussion: clarifying your goals and values.

October Topic: Investing in public markets (ESG and shareholder activism). Discussion: understanding and assessing your current holdings. 

November Topic: Community development institutions and cash. Discussion: identifying obstacles to action.

January Topic: Private equity and angel investing. Discussion: understanding your appetite for risk.

February Topic: Real assets. Discussion: determining how can you measure impact.

March Topic: Developing an investment philosophy or Investment Policy Statement. Discussion: defining your additional planning needs.

Membership is by invitation only. The price will be $300-$500 for all 6 sessions to cover facilitation and speaker fees (exact amount will be determined based on number of participants). Once again, there will be no group investing of funds or investment advice given other than general information about the field. These sessions are solely for women to learn, connect, and become more financially empowered in a supportive environment—TOGETHER.

The goal is to make it easier for you to get started on your impact investing journey.  What good can your dollars do while still providing the security you need? What concrete steps can you take to overcome gender barriers around money and truly control your finances? How can you align your investments and your values in service of a better world? Let’s find out the answers to these questions and more this fall! Please contact Janell if you would like to join, invite others, or have further questions. I hope you’ll join us!

The Joy of Convening in Houston: Reflections on Collective Giving

A few weeks ago my friend Laura Midgley and I went to Houston for the Community Investment Network (CIN) conference, which celebrated its 15th anniversary by reflecting on its legacy of building up communities through investing their time, talent, treasure, and testimony (using our collective voice for change). CIN is national network of giving circles impacting communities of color. It connects and strengthens African-Americans and other donors of color by leveraging their collective resources to create the change THEY wish to see. The majority of their members are African-American from the Southeast.

While I had some familiarity with giving circles in general, I was new to this organization and was introduced to it by Laura, who has been a leader in the collective giving movement in her roles as a long-time trustee of the Washington Women’s Foundation and as a board member and co-founder of Catalist, another national network of collective giving organizations.

Laura went to Houston with the specific mission to further Catalist's relationship with CIN.  Five networks in collective giving— The Latino Community Foundation, Amplifier (giving circles based on Jewish values), the Asian Women’s Giving Circle, Catalist, and CIN—have collaborated on a co-design project aimed at accelerating the size and impact of the giving circle sector on community transformation. (Read about the co-design work funded by the Bill and Melinda Gates Foundation.) The missions of these five networks of collective giving groups are closely aligned, so rather than compete, they collaborate. We all use conferences to inspire affiliates to dig deeper into this work and to prepare the leaders to go home to their communities feeling elevated. Sometimes this work can be wonky but we came home from Houston reminded it must always be joyful. 

I went to Houston strictly to listen, learn, and observe. Though I am a member of the Washington Women’s Foundation, I don’t have much first-hand experience with giving circles, but have always been impressed with their personal engagement in their communities and the members’ commitment to learning and each other. My work as a philanthropic advisor has been limited to high-net-worth individuals and families who are looking to become more strategic and dedicated in their charitable giving. Working with family groups is in some ways similar to a giving circle, but there is something uniquely special about a group of unrelated people voluntarily pooling their money to make investments in their local community. 

We anticipated meeting new colleagues and reconnecting with fellow philanthropists who give through collective giving grantmaking, pooling funds for community impact. But a genuinely worthwhile conference should do more than provide a few new tools and a pile of business cards.  Our goals for traveling to Houston varied, but we both were delighted that our trip to Houston yielded an unexpected joyfulness that rejuvenated us.

What struck us the most was the level of joy and camaraderie we observed, not just within each giving circle, but among them as well. Participants gathered to share stories and best practices and to learn. Their dedication to the work and communing with a cohort of like-minded people produced a powerful aura of goodwill that was hard to ignore.

I know for Laura, the joy came from stepping back from the work and taking stock of why and how we show up for the communities to which we belong and care about in the first place. In the opening session, Linetta Gilbert, formerly of the Ford Foundation and a founding visionary of CIN, spoke meaningfully about how to blend institutional philanthropy with individual philanthropy. And of course, this is exactly what collective giving groups do – inform the individual through group experience and then elevate the impact through collective giving. Ms. Gilbert spoke about the value of a listening tour and the power of starting any foray into philanthropy by asking “Who is absent?” How can we as philanthropists elevate community by seeking out the voices of those left out of the traditional philanthropic power dynamic?  

Ms. Gilbert and her co-presenter Darryll Lester, CIN’s founder, said of the partnership between funders and grantees: "Spend time with each other to get to know one another before doing business". Too often institutions begin the relationship with a transaction – the grant or the donation. Starting that way sets the tone for it to become forever framed and dominated by that transaction. At The Ford Foundation and now in her recent work, Ms. Gilbert invests in relationships first. Doing so allows us to understand the landscape behind the issue and to better allocate our resources and energy. It became clear to us that it is only from this level of engagement that we can begin to envision how all American communities can grow and thrive equitably.

 As for me, I found a deep sense of joy simply from the conference’s theme: “We are Philanthropists”. It was empowering for me to be among African-Americans who proudly claim the mantle. While many debate whether the sector is hopelessly corrupt and ineffective, CIN’s giving circles harness all that is right with philanthropy and brings it into the Black community on their own terms. Circles represented at the conference gave to individuals (from Black men and boys mentorship groups to struggling entrepreneurs or artists) and to traditional organizations. They also came to learn about innovative programs going on nationally that they could bring back to their circles to learn from or adapt for their own community.

 The learning components tapped neatly into the spirit of the conference: community-based and Black-centered. Speakers who brought their expertise to CIN included land trust advocates from the South speaking about building land sovereignty for displaced black and indigenous people, representatives from Black community foundations talking about how and where to invest a circle’s funds, and community-owned grocery store investors on how to eliminate food deserts. I left inspired not just by the work, but by the communion of the network.

CIN’s giving circles, especially those in CIN, embody the best tenets of philanthropy. People pooling resources, sharing knowledge, and offering a hand up to those who need it brings out the best in all of us. I wish this blog could share the warmth of the hugs we received or the sounds of laughter we heard during those two days. Such a jolt of energy renewed my spirit and my commitment to helping people find joy in their giving through deep engagement and understanding. 

I hope this blog piqued your curiosity about giving circles. Feel free to contact me to learn how you can join an established circle or start one of your own. And check out Catalist’s conference PowerUP! The Spark That Ignites Change, which will be held in Seattle February 23-25, 2020. Laura Midgley is the co-chair of this conference and I will be presenting on women of color philanthropists.

"What Do You Do?" 5 Things to Know About Philanthropic Advisors

When I meet people for the first time and they ask what I do, I get a thrill in the telling. They often have their own vague ideas, but after hearing my answer, I invariably hear “Wow, you have an amazing job!” Oh yeah. I absolutely do.

This blog about what I do as a philanthropic advisor and why working with someone like me can be, dare I say, not only incredibly rewarding, but also fun. This post is written for major donors, of course, but also for financial advisors, trust and estate attorneys, tax specialists, and any professional working with charitably-minded, high-net-worth individuals who may be “stuck” when it comes to their giving.

Before I dive headlong into the details of the work, I will first answer a basic question: “What exactly IS a philanthropic advisor?” Well, we are those professional advisors you hire to help guide the charitable aspects of your life. We are thought partners to individuals, couples, families and estates who want to become more intentional and impact-focused with their giving. We advise on appropriate giving vehicles, help you discover both empirically and emotionally what you care most deeply about, and help you understand your impact. But that’s just the tip of iceberg. We do so much more.

Some philanthropic advisors specialize in issue areas (international giving, women and girls, etc.) or specific types of philanthropy (effective altruism, social justice, collective giving). Others specialize in different types of clientele (women, international families, the mega-wealthy, novices, companies small and large, etc.). Regardless, all are dedicated to making giving more meaningful and productive for the donor as well as the beneficiary.

And now, here are five things to know about what I (and Philanthropic Advisors in general) do:

1.   We know the field. The world of philanthropy is incredibly diverse and complex. Philanthropic Advisors are knowledgeable about giving vehicles, strategies, and opportunities that can make giving to charity joyful and meaningful. We are here to answer questions: Should you establish a Donor Advised Fund, a foundation, or both? Can you donate land, art, or real estate to fund your giving? To whom shall your gift be given, when, and under what terms? We are skilled at working with financial advisors and attorneys to help you sort out the best options available so that you make the wisest possible decision to meet your charitable goals.

2.   We know the issues. Philanthropic Advisors stay on top of the issues to help advise their clients on best practices in the field of giving. We are polymaths. We are able to take deep dives with you into your issue area, help you discern the best organizations with whom to engage and how, and even make strategic introductions to help you develop your own learning community. And when we don’t have the answer, we have deep and wide connections to professionals who do. 

3.   We help you get at the “Why”. When you’re ready to get more intentional with your giving, and maybe increase the size of your gifts, it’s no longer enough to just “write a check”, giving on the fly. At some point, it becomes necessary to become more strategic in affecting positive change. We ask deep and meaningful questions to help you discern the “why” of your giving. At Phila Engaged Giving, after an in-depth Discovery Period, you will receive a comprehensive Wealth and Giving Planthat outlines your mission, vision and values; a giving budget, and the specific methods you will employ to achieve your goals.

4.   We facilitate the tough conversations. Are your family members aware of their potential inheritance, or how to manage it? Is your multi-generational family all on the same page about who you’re giving to and why? For some, these can be touchy topics, but Philanthropic Advisors are skilled at facilitating these conversations with grace and knowledge. We can help your family grow closer by planning and reflecting on values and interests that lead to intentional decisions as philanthropists. 

5.   We help you stay focused. We all have busy lives juggling work, family, school, and so much more. We know you care about the non-profits you are committed to and want to do more with your giving, but let’s face it. That noble goal is pretty easily lost in the hustle that is our daily grind. Philanthropic Advisors are here to remind you of important deadlines, opportunities, optimal times to give. We keep our eye on the ball so you don’t have to.

You likely have already hired lawyers, an accountant, and financial advisors (if you haven’t, call me) and those relationships are fairly well-understood. However, as philanthropy is getting ever more attention with the looming great wealth transfer, philanthropic advisors, like Phila Engaged Giving, are becoming necessary to understand the connection between money and meaning. If you are charitably-minded and are able to donate a sizeable amount each year ($100,000 or more), you should consider adding a strategic Philanthropic Advisor to your team. Doing so will help you reach the next level of charitable giving and expose you to a new world of meaningful opportunities.