How 2020 Will Turn Us Into Better Impact Investors
One of the most reassuring things we’ve seen lately amidst the pandemic and the rallying for racial justice has been the way communities and industries have come together to give back and make an impact on those around them. But what will giving back and affecting change—both with our hearts and our wallets—look like once we emerge out of this?
On Thursday, Worth spoke to Etoy Ridgnal, global head of strategy and partnerships at the Will & Jada Smith Family Foundation, Liesel Pritzker Simmons, cofounder and principal of Blue Haven Initiative, Marcus Glover, founder of M. Glover Capital and Kathleen Entwistle, Managing Director at Morgan Stanley Private Wealth Management about the challenges of philanthropy and impact investing now and what doing good will look like as we move into the future.
“There’s lots of ways we can make impact,” Entwistle said. “It’s how we invest our money, it’s how we place a vote, it’s what we buy at the store, and it’s how we interact with others and how we open our hearts to where other people are and where we all need to go together.”
How 2020 Will Change Impact Investing, Philanthropy and How We Affect Change
The market has been volatile this year due to the COVID-19 outbreak, but impact investing wasn’t affected in the same way. In fact, according to a survey done by the Global Impact Investing Network, impact investors are cautiously optimistic despite the pandemic’s ramifications for the market; 63 percent are still committed to supporting the UN’s SDG goals with their investments, and just 16 percent said they think their portfolio will underperform when it comes to impact. But moreover, many impact investors don’t do so in an effort to see high returns.
“I think what you do with your money is a moral decision,” Pritzker Simmons said. “All of these decisions that we make—how we invest, how we spend our money, how we make it back—they have consequences and those consequences are moral, and they’re part of a structure and a system that we participate in. And so why I’m an impact investor essentially stems from that.”
“Some of the most hyper-wealthy people are the people with the most scarce mindset,” Glover said. “And so, in terms of their investment strategy, they’re not necessarily ruddering with a moral contemplation. There is this need for market rate returns at sort of a ‘by any means necessary’ type method. And I think within this conversation around impact, there are those of us who just wake up in the morning with a feeling of abundance in our heart and a feeling of enoughness and saying, ‘What can I do to improve the devastation that exists everywhere you turn in the world?’”
“It becomes very easy to decide language like ‘impact investing.’ I don’t even really know what that means, but I just know that I have a moral gut and I have a sense of what I’m unwilling to compromise on and I’m unwilling to sit side by side with, and for me, ending mass incarceration, divesting from prisons, jails and detention centers and reinvesting in community. It’s [a] pretty easy consideration to come to,” said Glover, who is board chair of Defy Ventures, a nonprofit that offers entrepreneurship, employment and leadership training programs for individuals with a criminal history.
“In my own individual portfolio, I’m always looking at businesses or ideas that are going to serve humanity, whether it’s wellness, approach to food, et cetera,” Ridgnal said.
Between the global pandemic and the nation’s rallying for racial justice, it has become critical to make sure that where you’re putting your money aligns with your values.
“As a private wealth advisor, it’s not about money. It’s not about dollars and cents,” Entwistle said. “It’s about understanding each person’s individual story and being able to really understand their priorities when it comes to their values and their goals, and what’s most important to them and then helping them align their resources to reflect that. So, I think that is really powerful. And I do say, money is power. We have the power to make change. We have the power to make impact. We have the power to make decisions that will put us and others around us in a better place. So, don’t be afraid of money; use it for good.”
Where We Go From Here
This year has certainly challenged what it means to affect change, both with our money and with our actions. And as we go forward, the question becomes “Where do we go from here?” Ridgnal recommends becoming a monthly donor to your favorite nonprofits.
“One of the things that we’re seeing as you look at the different organizations who’ve been receiving very large sums of money from the Black Lives Matter protest movement is because the funds are given for a specific purpose,” Ridgnal said. “They can’t use it across the board. So, they may have $20 million just sitting there because they’ve, you know, exhausted the use. Let’s say it’s a bail fund. They bailed out as many people as they can. Now they have $20 million just sitting there, but they can’t do anything with it. So, I would strongly encourage you to consider giving unrestricted funds, honestly for the rest of this year because COVID is going to be with us for a while, and we don’t have a vaccine coming soon. And so, there’s a very good chance that, at least for the next year, nonprofits especially are going to be struggling to recover from this. And so, become a monthly giver to your favorite local nonprofit, do the work, research, vet, figure out what areas you want to serve. Support organizations that you personally feel connected to and confident about in terms of their ability to deliver and then invest in those organizations for the long haul.”
“I just encourage folks to continue and deepen your giving if you can and really look locally. A lot of times, the money that we’re giving on a national level doesn’t always trickle down,” Ridgnal added. And if you haven’t delved into impact investing, now might just be the perfect time to start.
“You can get your market rate returns, but you can also really deeply impact the world and the way things need to be,” Glover said.