With the generous support of a grant from Mission Throttle, and in partnership with Mission Investor Exchange, The Philanthropic Initiative (TPI) is conducting research on women’s participation and leadership in impact investing. As part of this scan, TPI interviewed leading practitioner Kristin Hull of Green Alpha Advisors and Nia Community Investments on her views of women in the field of impact investing. Below is Part 1 of this interview. These findings are being shared this week in Baltimore at The Mission Investors Exchange National Conference, Seizing the Momentum.
TPI: Why do you think impact investing is important?
KH: The Impact Investing movement has the potential to catalyze many important changes in our economy and our world. The understanding that all of our money can be activated and leveraged to achieve more than simply a financial goal is actually a revolutionary concept, and is gaining traction. The practice of consciously investing one’s assets in companies and institutions that match our views of “the world we want to live in” holds one of the keys to creating a sustainable economy. By taking into account things that have in past decades been considered externalities, and paying attention to social, environmental and governance factors as material to our investments, we as individuals and investors get to move the dial in big ways. This awakening on the part of investors, and their subsequent call for attention to environmental and social outputs of business will help shift our economy to be both more sustainable and more just.
Impact investing allows us to let go of the much outdated Modern Portfolio Theory, and invites us to include recent scientific data about our earth’s inherent limitations in order to evaluate both risk as well as potential returns. By engaging in impact investing we are called to update our investment thesis and guidelines, potentially lowering risk by supporting sustainable, planet-friendly, and just businesses.
TPI: What is your personal experience in the field?
KH: I entered the field of impact investing somewhat inadvertently in 2007. I was attending my first philanthropy conference, The Global Philanthropy Forum. My family had sold the business my father started and set up a foundation with some of the proceeds from the sale. I knew almost nothing about philanthropy and expected to learn strategy and best practices, such as how to address root causes of injustices, the advantages of granting either local or abroad, etc. I noticed a session entitled “2%” and not having any idea what that was, I went in and sat at the back of a packed room. There, I heard panelists from large and prominent foundations debating the merits of devoting 2% of their endowments toward investing in alignment with their foundation missions. This was the first I had heard of the potential for foundation endowment dollars to serve as tools for addressing philanthropic goals. While the debate heated up about whether 2% was achievable, the light bulb went on for me and I was sold. For me, it had to be 100%. I left that session, drove home from the conference and started making phone calls about how to move our endowment dollars into awesome, impactful, mission-driven investments. I started by moving cash to community banks. I have never looked back.
For several years, I oversaw the investment process at the family foundation, ensuring it was 100% invested toward our mission and goals. I went on to found Nia Community Foundation, an impact investing organization based in Oakland, California. At Nia Community our goal is to engage in field building, to nurture and help grow the impact investing movement. Then, seeking to expand this movement beyond the foundation world, making it more widespread and inclusive, I created Nia Global Solutions, bringing impact investing to the public markets. Nia invests in 6 solutions themes and incorporates a gender lens throughout the portfolio. I have since joined Green Alpha Advisors, where together we build portfolios of entirely solutions-focused companies for the Next Economy, making impact investing accessible in the public markets.
TPI: Why are women critical to impact investing? What roles might they play to accelerate the evolution of impact investing?
KH: Having more women enter the investment arena will be catalytic for our efforts to create a sustainable economy. With the much anticipated wealth transfer taking way, women will be inheriting a majority of the private wealth in this country. This is good news for the impact investing movement as women show more interest in investing for social and/or environmental outcomes. Additionally, women have historically been in charge of consumer activity in the US and abroad, and they take on that task consciously, weighing price and health benefits for their families. To have women bring those same lenses and practices to the arena of investing is essential to increasing demand for investment products that benefit our society.
A key role for women, and all investors, is to speak up for their values. Being willing and able to talk to advisors about their desires for their communities and the world, and to ensure those values are reflected in their investment portfolios will be revolutionary. Asking financial managers to invest in businesses with women in leadership, for example, or in companies whose products or service provide a solution to some of our most challenging issues will transform the way our economy is fueled.
TPI: What do you know about women’s interest, participation and leadership in impact investing today?
KH: Women are interested in investing in real people and change-making businesses. They welcome the concept of leveraging their money for good and with that in mind, I see many women stepping up to learn about creating positive impact with their assets. Women with whom I have spoken appreciate local investments in their community and enjoy the transparency in these transactions. Whereas hedge funds, indexes and other financial products can be quite opaque, with layers of fees built into abstract instruments, leaving the investor with many questions as far as where their money actually is, women show more interest in direct, straightforward portfolios and practices, ones where they can know specifically what their money is doing in the world.
Women are currently in charge of the majority of philanthropic dollars worldwide, so to the extent we can make impact investing more accessible to everyone, women are poised to direct these investments with a multiple bottom line approach. And having more women involved, leading this type of finance, serves to invite others in. We all benefit from role models that look like us—so as women begin to we see themselves reflected in this movement, I believe more will join in and activate their portfolios as well.
With the goal of helping to expand the field, I personally have dedicated my own resources to growing this movement. I serve on the faculty of PlayBig, a convening working with high net worth individuals on how to leverage their assets toward creating a world they want to see. At PlayBig we see many women eager to learn about this space and to take action. I am also building out an educational website where women can learn more about impact investing.
TPI: How have women influenced the field to date? Who stands out as leaders?
KH: Women are clear leaders of this movement. From the original pioneers in SRI (such as Joan Bavaria and Leslie Christian), to ground breaking full portfolio investors like Carol Newell of Renewal Funds and cutting edge impact investors such as Christie George at New Media Ventures and Kesha Cash at Impact America to those organizing the best educational convenings in the space, ie: Marian Moore of PlayBig, Dana Lanza of Confluence Philanthropy, Stephanie Gripne of Colorado Impact Days and Georgette Wong of Take Action). Many other women, such as Clara Miller and Dana Pancrazi at Heron Foundation, Debra Schwartz at the MacArthur Foundation and Morgan Simon of Pi and Transform Finance, are leading large family offices and foundations toward impact and values alignment. Fran Seegull at Impact Assets is spearheading impact for donor advised funds. Jenny Kassan is leading the Direct Public Offering (DPO) space, both expanding and democratizing access to impact funding. Jenny also coaches female entrepreneurs, guiding their early stage businesses along the path to being investment ready. There are many others leading their organizations, family offices, initiating product development and leading clients toward impactful portfolios.
Women are speaking up for their values and working with intermediaries to have their financial portfolios be as impactful and in some cases, as transformational as possible. Still other women are leveraging their own interests to influence product creation. The Women’s Foundation of California worked with their wealth managers at US Trust to help create the Women and Girls Equality Portfolio which is now available to others as well. Similarly, we at the Hull Family Foundation seeded the initial funding for the Women’s Initiative at Root Capital providing mid level loans to women farmers and business owners. We at Impact Hub Oakland also worked with RSF Social Finance to provide loan guarantees when leasing our building. These are just a few prominent examples of women leading the way by influencing product creation.
TPI: What are your expectations for women’s participation and leadership in the future?
Kristin: Female interest and leadership is growing! And as we introduce more onramps and ways for women to get involved, their participation will increase. One essential piece is the creation of impact investment products that are friendly to women: transparent, straightforward, beneficial to both planet and people. By expanding possible options, we will make it much easier for women to get involved.
TPI: What types (positive/negative screens, ESG, SRI, direct investments, local/global, gender lens, etc.) of impact investing are most appealing to women? Why?
KH: All types of values-based investments are appealing to women who want to know that across asset classes, their dollars are making a difference. Women get that their money is an expression of and an extension of themselves; as such they are less likely to separate out or compartmentalize their investments from their daily practices.
While SRI, or a negative screen is often where people start this process, women are more likely to want to start from a list of their values and what they actually want to see companies doing, as opposed to screening out negative players. ESG is that much more appealing because we can then use the Environmental, Social and Governance practices as lenses to look at company attributes.
In the case of Nia Global Solutions, we take a venture-like approach to investing in public markets by identifying six solution themes needed to address our world’s most intractable problems. We then look for the most innovative companies that are focused on solutions in these six areas, ie: renewable and efficient energy products, organic foods, affordable and environmentally-friendly housing, innovations and access in healthcare, education and financial inclusion. We add an additional layer in that we invest only in companies that include women in leadership. This combination of a solutions focus and inclusion has been particularly appealing to women as they get the idea that a portfolio can do all of this.
I also find that many of the women I talk to enjoy engaging with their community and with their investments, meaning, that I believe women impact investors want to be more active in their approach rather than passive investors. The more local, transparent and direct an investment is, the more appealing, for that part of a portfolio.
Part 2 of this interview, covering entry points and barriers to this movement and new innovations in impact, is forthcoming.