All Things Impact.

private capital & the public good

All Things Impact for January 13: robo-advisors + impact; nonprofit resilience in the Trump era; “Giving Pledge 2.0”

Brian WalshComment

Hi friends,

Happy New Year!  Welcome to All Things Impact, a newsletter of interesting things I've seen from across the spectrum of impact: responsible investing (in the public markets),  impact investing (in the private markets), effective philanthropy, and a wildcard topic. For previous posts, to subscribe, and for more information, please visit All Things Impact.

Here are four links worth your time (plus items of note, job postings, and a calendar of upcoming events):

1. Responsible investing: robo-advisors + sustainable investing products = future of wealth management?

Two long-term trends I'm tracking are the rise of so-called "robo-advisors" (low-fee online wealth management companies which use automation and algorithms instead of an army of humans to manage and efficiently balance investment portfolios) and the increasing demand from asset owners for impact/responsible/sustainable investment products.

There are now several companies trying to operate at this intersection, and I’m going to begin tracking them here:

Know of others? Please let me know.

2. Impact Investing: "hard-nosed financial giants want to make money"
The Economist reports from the Global Impact Investing Network’s conference in Amsterdam late last year:

“In the past two years BlackRock, the world’s biggest asset manager, launched a new division called “Impact”; Goldman Sachs, an investment bank, acquired an impact-investment firm, Imprint Capital; and two American private-equity firms, Bain Capital and TPG, launched impact funds. The main driver of all this activity is investor demand. Deborah Winshel, boss of BlackRock Impact, points to the transfer of wealth to women and the young, whose investment goals, she says, transcend mere financial returns. Among institutions, sources of demand have moved beyond charitable foundations to hard-bitten pension funds and insurers.

Definitional squabbles still plague the impact community….The industry is also held back by a restricted choice of asset classes, and by the limited scale of investment opportunities. According to a survey by the Global Impact Investing Network…investors were managing $36bn in impact investments in 2015. But the median size of investment remained just $12m…

Cynics may still dismiss impact investing as faddish window-dressing. Of Zurich’s $250bn-plus in assets under management, only $7bn-worth are classified as impact investments. At Goldman’s asset-management arm, impact and ESG-integrated investments combined only make up $6.7bn out of a total $1.35trn in assets under management.

But that is to ignore the scale and progress that large institutional investors have brought to impact investing. Although $7bn is a tiny slice of Goldman’s portfolio, it is huge compared with the investments of even well-established impact specialists, such as LeapFrog, whose commitments total around $1bn. And the entry of hard-nosed financial giants sends an important message about impact investing: that they see it as profitable for themselves and their clients. It is not enough to make investors feel good about themselves; they also want to make money.”


3. Effective Philanthropy:  Four Steps for Building Nonprofit Resilience in the Trump Era
Writing in the Chronicle of Philanthropy, my friend and former colleague Tom Watson opines that in the Trump era, “the key to nonprofit action is to build resilience — our collective ability to adapt and plan and collaborate over the next year — instead of reacting in the short term.”

He goes on:

"1. Review your case for support and action.

We all rely on case statements to form the bedrock of our message for activism, marketing, and fundraising. It’s the language that describes our work, our goals, and our impact. But is that language calibrated for an American society that’s now facing the threat of upheaval greater than at any time since the depths of the Great Depression? In most cases, I’d say no.

Smart nonprofit leaders will review their case statements early in 2017 and make sure that they accurately reflect not only the organization’s programs and goals but the changing atmosphere…

2. Revisit your strategic plan. 
Strong nonprofit strategic plans rely on measures that show whether your approach to change is making progress. They don’t live on dusty shelves as the nifty product of a smart consultant but on the working agendas of senior staff and board-committee meetings throughout the year. Good strategic planning yields more organizational resilience because it’s inherently flexible and allows senior leaders to pursue large-scale goals and impact while adjusting for challenges and opportunities.

This is a time to review that plan (or if you’re in the midst of a planning cycle, adjust for a changing world order). Are the underlying assumptions still correct? Is the budget reasonable? Are your priorities the right ones? Does your approach to change hold up in a civil society under extreme stress from a radical administration?...

3. Hold leadership discussions. 
Speaking of leadership, these are times to convene often and discuss everything. The best meetings I’ve attended since the election don’t hide behind vagaries and euphemisms; strong leaders (both executives and board members) are explicit about what worries them and where they believe the challenges and opportunities lie. In some ways, the Trump presidency and its potential threats to civil liberty and our system of government can help a canny nonprofit leader draw her leadership closer together…

4. Renew partnerships. 
Real resilience relies increasingly on multiple players, coalitions, and even large-scale networks — and it’s impossible to make a real impact without them. This is a time to strengthen our partnerships with major donors, with other nonprofits, with government, and with corporate supporters. In truth, we should all spend more resources on this anyway because the world we work in is so interconnected that very few nonprofits can achieve much as programmatic islands. But the perceived crisis in civil society demands more attention and more fruitful connections. The human element is in this important as well: Your own personal resilience as a nonprofit leader can only increase by sharing your anxiety and working shoulder to shoulder with caring allies..."


4. Wildcard: Giving Pledge 2.0 - "How liberals should spend their Trump-gotten gains"
Since Election Day, the Dow has been up almost 9%. Writing in CNN, John MacIntosh of SeaChange Capital Partners argues that wealthy people who oppose President Elect Donald Trump should “commit to spend the majority of any stock market gains earned from Election Day to the inauguration fighting those policies of the Trump administration that are most antithetical to your values.” He calls it the “Giving Pledge 2.0

“[T]he additional profits are just the extra money that corporations will be allowed to extract from the American people under the Trump administration. An extraction that is particularly objectionable since corporate profits are already at an all-time high (as a percentage of GDP) and the money will be taken from those who can least afford it: subprime borrowers (Goldman and the banks are up), young people (for-profit education organizations are up), future generations (if corporate taxes go down now, taxes will have to go up later), those living in climate-exposed areas (oil stocks are up) and other vulnerable citizens (for-profit prisons are up).

So to me, my post-Election Day profits are just the present value of other people's future misery…

Anyone affluent enough to have meaningful stock market investments won't need extra money under a Trump administration. Our taxes will go down, and we don't need the things -- affordable health insurance, reproductive health services, Medicaid, fair treatment by the police -- that are poised to get very tough over the next four years. So that leaves only one option: Give the money back…

One way is to set up a donor-advised fund at your broker or community foundation (e.g., the "Keep America Decent Fund"). After the inauguration, simply donate 50% (or more) of gains you've made since Election Day to the fund and then spend it down over the next four years by supporting nonprofits most aligned with your values.”


5. Items of Note

6. Job Postings

7. Upcoming Events
Feb 7-8 Data on Purpose (Stanford University) Effective Philanthropy
Feb 15 The Economist: Mainstreaming Purpose-Driven Finance (NYC) Impact Investing
March 30 Impact 2 (Paris) Impact Investing
April 4-6 Center for Effective Philanthropy (Boston) Effective Philanthropy
April 7 Wharton Social Impact Conference (Philadelphia) Impact Investing
May 31 - June 1 Grantmakers for Effective Organizations (Chicago) Effective Philanthropy

That’s it for this week. Help me spread the word about #AllThingsImpact to your friends and colleagues, who can sign up to receive this newsletter at All Things Impact. Please also send me any job postings, items of note, upcoming events, or compelling links you discover in your own journeys across the web (even things like this dog who wants you to leave the internet to play with him).

Until next time, thanks for reading!

Brian Walsh
Head of Impact at LiquidnetFull Bio.