Bridging the Gap Between Philanthropy and Impact Investing

Bridging the Gap Between Philanthropy and Impact Investing

Many philanthropists would like to dip a toe into impact investing, but they’re not sure where to start.  Below are a few organizations and projects that combine the best of nonprofits and social enterprise.  Many can accept both donations and investments (not all are currently accepting investments).

  1. Impact Assets – make a tax-deductible charitable donation and they will invest your donation in the social enterprise of your choice – investment returns grow the pool of investable assets
  2. SheEO – make a tax-deductible charitable donation and then help choose women entrepreneurs that will receive investment out of the the donated funds
  3. Force for Good Fund – 501(c)(3) investment fund offering eight-year revenue sharing notes – investing in social enterprises with a focus on women and people of color
  4. Economic Development and Financing Corporation – a nonprofit CDFI in Mendocino that raised money from the general public in California to invest in a start up wool mill
  5. RSF Social Finance – nonprofit offering investment notes to the general public – considered very low risk
  6. Nia House, a school in Berkeley – offered notes to the families it serves to build an addition; used community notes to leverage grants and institutional loans
  7. Beneficial State Bank is a for-profit bank whose stock is owned by a nonprofit foundation – bank profits go to the foundation so that it can make community grants – a great place to park your money!

Please share your examples!

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A Great Way to Make a Small Change

A Great Way to Make a Small Change

Eve Picker was introduced to the concept of real estate crowdfunding in 2012.  As a real estate developer who focused on underutilized assets in struggling neighborhoods, she had long wrestled with the impediments to financing projects that banks thought were too risky.  When the JOBS Act passed, Eve recognized an opportunity to finance impactful projects with the help of the very people who populate these struggling neighborhoods and cities.  And so she launched the real estate equity crowdfunding platform, Small Change.  The platform is not just about investing for a return, but it’s about investing to do some good.

Small Change focuses on catalyzing neighborhood projects that make their communities and cities better. It’s the nation’s first Funding Portal dedicated to funding real estate projects.

When I first met Eve, I recognized her as a direct descendant of one of my heroes, Jane Jacobs, a brave and tireless advocate for great cities.

The Small Change platform includes a proprietary “Change Index” to encourage investing in real estate projects that change cities and neighborhoods for the better by increasing walkability and bike-ability, public transit access, access to green space, and other measures of improvements to quality of life.

To learn more about Eve, check out her awesome TedX talk about the cure for the common city.

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How would a President Trump affect small business finance?

How would a President Trump affect small business finance?

One thing is certain.  Trump has an awkward relationship with the chair of the Securities and Exchange Commission, Mary Jo White.

According to this fascinating article in the Washington Post, Mary Jo White, when in private practice, deposed the Donald on behalf of her client, a New York Times reporter that Trump had sued for writing that his net worth was far less than what he claimed.

Apparently the deposition was quite challenging for Trump – he was caught in about 30 lies.

So, Mary Joe White is not likely to be our SEC chair for much longer.

What else might happen?

At a recent crowdfunding conference, some of the speakers expressed optimism that deregulation will make capital raising and secondary trading easier for small business.  It is certainly true that it has become so expensive to be a public company that very few companies are choosing to go public these days and some are choosing to go private.

It’s hard to know what might change under a Trump presidency, but one possibility is that the restrictions on who can invest in a small business could be loosened.

As the Republican member of the SEC says, “I want to move beyond the artificial distinction between so-called “accredited” and “non-accredited” investors and challenge the notion that non-accredited investors are “being protected” when the government prohibits them from investing in high-risk securities. . . .  Because most investors are risk averse, riskier securities must offer investors higher returns. This means that prohibiting non-accredited investors from investing in high-risk securities is the same thing as prohibiting them from investing in high-return securities. . . .  [E]ven a well-intentioned investor protection policy can ultimately harm the very investors the policy is intended to protect. . . .  Remarkably, if you think about it, by allowing only high-income and high-net-worth individuals to reap the risk and return benefits from investing in certain securities, the government may actually exacerbate wealth inequality.”

What do you think?  How do we balance the need to protect “un-sophisticated” investors with the need to make it possible for small businesses to raise capital from their communities, customers, and fans?

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The Party is Over – Time to Invest Local

The Party is Over – Time to Invest Local

I was lucky enough to participate in the “Battle in Seattle” – a giant protest again globalization at the meeting of the World Trade Organization.  The protesters were worried that trade agreements would massively shift wealth to giant multinational corporations and away from workers and communities and we were right.

Well, now those who partied for the last 25 years are starting to worry.  Finally, governments are listening to the cries of citizens about the redistribution of wealth to the richest 0.1%.  “Some big global investors worry that the broad slowdown in world trade and growing populist opposition to new trade agreements are undermining corporate profits and could be the next big drag on the stock market,” according to the Wall Street Journal.

“U.S. equity prices have been supported for the past three decades by an acceleration of global trade and a freer flow of capital. . . .  But now there is worry that the party is ending. “We believe globalization has probably reached its peak,” said Marino Valensise, head of the multiasset team at Barings, a member of the MassMutual Financial Group with $275 billion in assets under management.

One expert expects that if the trend continues, stocks traded on Wall Street could fall by 17%.

It might be a good time to start shifting your money to the parts of the economy that do not depend on liberal global trade deals!  How about your local camp, restaurant, or newspaper?

Let’s start investing in the real economy, rather than the opaque, complex, financialized Wall Street economy.

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