By Dave Kirkpatrick, Managing Director at SJF Ventures
Last week, I visited Dan Shugar, CEO of NEXTracker, a global leader in tracking systems for solar power plants. NEXTracker, which operates the 70MW Javiera Solar project in Chile, is one of the emerging leaders in the cleantech energy revolution now under way.
Dan and his team grew the company faster than any I’ve seen over the past 15 years. Then he consummated this success with a $330 million sale to Flex last month. Dan will be leading NEXTracker within Flex to continue to drive down the cost of solar globally. Dan and NEXTracker investors are donating to a 100% clean energy initiative at the Sierra Club to continue to support the rapid transition away from fossil fuels. This isn’t the first time Dan has been so generous and thoughtful. Earlier, he helped kickstart the Beyond Coal initiative after selling Powerlight to Sunpower.
An Aspirational Goal
In thinking about Dan, it occurred to me that just as ‘zero waste’ was an aspirational goal mobilizing many companies over the last two decades, so too, will this new goal of 100% clean energy in the next two decades.
The world will be a much better place if we achieve that goal. We’ll benefit from great jobs, community revitalization, energy independence, and carbon reduction driven by this next wave of cleantech companies. It will be nice to again prove the naysayers wrong about the promise of sustainability.
Back in the mid-1990s, several recycling advocates, including myself, began promoting the goal of zero waste. We were frustrated by the incremental efforts at 10% or 20% recycling and wanted to focus individuals, cities, and companies on a more aspirational and ultimately attainable goal. We drew attention to broad source reduction, reuse, composting and advanced recycling.
At the time, the concept was derided by many in the waste management industry as unrealistic. Yet over time, it gained acceptance and now many cities and corporations have set zero waste as their goal. Cities that now have zero waste goals include Seattle, San Francisco, Los Angeles, San Diego, Dallas, Minneapolis and New York.
Many corporations have also set their sights on zero waste as a paradigm shift for their business culture. The reason is simple. A goal of zero waste drives innovation, reduces expenses, builds more efficient operations and inspires employees and customers. Several operations or factories have effectively achieved ‘landfill free’ zero waste, including Proctor & Gamble, Subaru, Ford, Sunpower, Cargill, Unilever, Miller Coors, and Eaton.
These companies and a handful of others are helping their customers profitably reuse and recycle returned or damaged retail goods, mobile phones, utility equipment, organic material, biotech equipment, vehicles, municipal discards, e-waste, scrap lumber, and plastics. We continue to look for the next wave of great entrepreneurs who can find wasteful sectors of our economy where they can capture value and transform material and product flows.
100% Clean Energy
We should apply the same spirit that led to the zero waste goal in recycling, reuse and asset recovery in creating a goal of 100% clean energy in corporate America.
We’re optimistic we can achieve this thanks to a whole new set of energy entrepreneurs. NEXTracker, groSolar and Community Energy are all driving rapid adoption of low cost solar energy. EnTouch Controls, Ayla Networks, FieldView Solutions, RealWinWin, and B.B. Hobbs are enabling greater energy and water efficiency at restaurant and retail chains, appliance manufacturers, data centers, large commercial buildings, and farms.
The costs of solar and wind power, as well as energy efficiency, are declining rapidly. New energy sources to the grid are often from 100% renewable sources. They often displace retiring coal plants.
Energy storage costs are also declining rapidly. Tesla’s new Gigafactory is making news with its Powerwall solution, and many other companies are also driving lower costs. As business and utility models innovate to capture more of the diverse values of energy storage on the grid, this sector is likely to scale and benefit from the same low-cost, wide-adoption as wind and solar.
A New Day
The advent of low-cost storage, along with electric vehicles, creates the potential for individuals, companies and eventually communities and countries to move to 100% clean energy. Indeed, the RE100 is a global coalition of companies committed to going to 100% renewable energy including IKEA, Swiss Re, Goldman Sachs, SAP, Starbucks, Johnson & Johnson, UBS and Walmart.
Advocacy groups such as the Solutions Project have developed research on how states can cost effectively achieve 100% renewable energy. And the Sierra Club is advancing its successful Beyond Coal initiative to a 100% Clean Energy Project. Most 100% plans include not only solar and wind, but also efficiency, storage and intelligent grids, along with hydro, geothermal and tidal power.
Like “zero waste”, families and companies are effectively going 100% clean energy through onsite solar, green power purchases, efficiency and energy storage. Cities are adopting the goal as well, including Vancouver, Ithaca, Aspen, and Greensburg, KS. Costa Rica has a target to be 100% carbon neutral by 2020. Interestingly, 83% of Americans say they support an ambitious 100% clean energy goal in a national online poll recently conducted by Global Strategy Group on behalf of the Sierra Club and HereNow.
Not surprisingly, the fossil fuel industry is fighting renewables and a 100% clean energy vision, just like the waste management industry did the recycling movement. However, more and more investors and institutions are seeking to distance themselves from fossil fuels and their risks of stranded assets through strategic divestment.
The Bottom Line
We will continue to hear from skeptics that say we need an all-of-the-above solution for energy, just like we still ‘need’ landfills for waste. That’s like saying we need some toxins in our diet and we shouldn’t strive to be 100% healthy because it is just too hard, costly or troublesome. However, as the cost of renewables and storage continues to drop and efficiency increases, we no longer have to be distracted by that false dichotomy.
As I rolled out my recycling and trash carts this week, the recycling one was filled to the brim, my compost pile is full, and my garbage cart had one small bag in it. With the 6 KW solar PV array on my roof, we are generating all the power we need in our house on a net basis. I bike to work most days and my firm buys carbon offsets for all of our air travel. It is a lot more fun for us all to work on getting to 100% clean energy and 0% waste in our lives, companies and communities.
Dave Kirkpatrick is Managing Director at SJF Ventures.
By Anders Ferguson and Laura Callanan
Creativity. We hack it. We map it. We study it. We rate it. We take it places. We build industries around it. We invest in it. We recognize we need it, even when it hurts. We know our future depends on it.
This is the first in a series of blog posts which will explore the radical premise that creativity is a key driver of sustainability.
We will look at the role creativity plays in strengthening communities and driving change. We will appreciate entrepreneurs using the arts, design, and making to tackle topics like healthy food, climate change, the criminal justice system, and immigration. We will remind ourselves how much research science, technology, and social entrepreneurship have in common.
We will imagine creativity as an investment theme and propose how it may be integrated into impact and mission-related investment portfolios. We will review creativity standards for companies and investment funds seeking to have a positive social and financial impact. We will start the conversation about how to measure creativity’s contribution toward our sustainable future.
What Do We Mean By Creativity?
Creativity is the spark. When the spark catches, it catalyzes an expression, an experiment, a “creation.” If the spark turns into an invention, an entrepreneur can build an enterprise around it.
If the invention works and the company is profitable and grows, there can be a wide-spread change – that’s innovation. Innovation makes markets.
Business uses the word creativity, too. In fact, the Conference Board reports that creativity ranks among the top five skills that U.S. employers believe to be of increasing importance.
But the aesthetic, playful, social aspects of creativity are usually ignored by business. Business ignores creativity unless it’s easily measurable and quantifiable. Business ignores creativity unless it contributes to the financial bottom line.
If innovation drives the practical, monetizable, single bottom line, then creativity drives the social, impactful, sustainable bottom line. And just like the other drivers of social impact, since creativity is hard to measure, the value of creativity can easily be overlooked.
The Creativity Revolution
In the ongoing conversation about money and meaning, creativity is key to our next chapter. In the quest for a more sustainable capitalism, we must engage the potential for creativity to fuel change. It’s time we talk with the techies, the research scientists, and the artists.
Not because we are seeking a painting or symphony about climate change (though the Gates Foundation has recently engaged artists to help get the word out about the importance of vaccines). We need to talk to the “creative disruptors” because they have the power to transform systems, markets, and companies. They divine new solutions that most of us just can’t see.
Where “Design Thinking” focuses on needs, “Creative Thinking” focuses on possibilities, aspirations, meaning. And that is one reason why “creativity scares us,” as Bruce Nussbaum puts it in his terrific book Creative Intelligence: Harnessing the Power to Create, Connect and Inspire.
Why Creativity Is Sustainable
The fundamentals of creativity read like a playbook for sustainability. Stewards taking a long-term view will find a lot to like.
Creativity is a team sport. Creativity both relies on and builds social cohesion. Looking at places and moments of great creative output – Renaissance Florence, New York’s Soho in the 1970s, Silicon Valley over and over again – we see communities intermingling, competing, and collaborating.
Creativity blends tradition and innovation. Whether creativity takes an aesthetic or scientific form, the next “new new thing” builds off what has come before. There is a sense of history, perspective, and context – even when making radical change. This anchor in what has “gone before” wards off short-term thinking.
Creativity is a bulwark against a volatile, uncertain, and complex world. We cannot anticipate the problems and challenges to come, so we must be able to improvise and respond. During times of stability and plenty, incremental improvements are fine. But to answer daunting challenges, we need a bold reply.
Creativity. It’s not just for art class anymore.
This blog post first appeared on PhilanTopic.
Laura Callanan has worked on Wall Street and on Broadway, managed the endowment for the Rockefeller Foundation, and overseen grantmaking for the National Endowment for the Arts. You can read more of her posts for PhilanTopic here.
Anders Ferguson is a founding partner of Veris Wealth Partners. He is passionate about drawing connections between the arts, creativity, and sustainability.
By Patricia Farrar-Rivas, CEO and Luisamaria Ruiz Carlile, Senior Wealth Manager
Interested in a new way to create impact in your portfolio?
Gender lens investing is emerging as one of the most exciting new ways of using capital to create positive social impact for women or girls.
Click here to download the Veris white paper, Women, Wealth & Impact: Investing with a Gender Lens 2.0.
An innovative way of allocating capital, gender lens investing is about accelerating diversity and inclusion in the workplace. It’s also about creating opportunities for women entrepreneurs and executives to obtain capital, secure leadership roles and have greater influence over decisions.
In the developing world, gender lens investing is helping to lift women and girls out of poverty and create opportunity where previously there was none. By facilitating the flow of capital to women-led enterprises and organizations that benefit women and girls, gender lens investing has the potential to meaningfully improve their quality of life.
A New Way Of Thinking
Traditional financial analysis has mostly ignored gender considerations in capital allocation decisions. By contrast, gender lens investing integrates questions and data about gender to inform and guide investment decisions. As an analytical tool, a gender lens helps investors identify investment risks and opportunities with greater effectiveness.
Specifically, a gender lens assesses opportunities to empower women by evaluating how an investment supports: 1) women’s leadership, 2) women’s access to capital, 3) products and services beneficial to women and girls, 4) workplace equity, and 5) related shareholder engagement and policy work. Investments that satisfy one or more of these criteria are presumed to deliver greater impact to women and girls.
A Growing Number Of Options
Just a few years ago, only a handful of investments were designed to achieve these objectives. Today, more than a dozen dedicated gender lens investment opportunities exist. Many other creative investment opportunities are in development. These options range from fixed-income to equity investments in private and public markets. Some investments are open to all investors, while others are proprietary or restricted to accredited or qualified investors.
Gender lens investing opportunities come in two broad categories: (1) Dedicated gender lens solutions that explicitly adopt one or more of the goals stated above; (2) Funds and managers that do not offer a specific gender lens mandated product, but who integrate significant gender criteria into their security selection and/or engage in shareholder advocacy and policy work to advance gender inclusiveness.
Each gender lens investment has its own gender criteria. Some products have women’s leadership as a singular focus and select securities based solely on the number of women on boards or in the C-suite. Still others channel capital to women – whether as coffee growers in Latin America, first-time home buyers in the U.S. or entrepreneurs seeking angel investors.
Another type of gender lens opportunity funds innovative products and services beneficial to women, such as banking services to older women in Japan, HIV prevention in South Africa, and medical devices tailored specifically to women’s needs. Lastly, a number of gender lens solutions promote diversity and gender inclusion through significant shareholder engagement and policy work. Most products apply more than one gender lens criteria.
Let’s Own Our Collective Future
As a society, we own and shape the social constructs and financial systems that govern our lives. We make the rules. We assign the value. Yet, we can feel removed from these processes and our power to bend the arc of our institutions. At its core, investing with a gender lens challenges the financial system and investors to better allocate capital with much more thought to gender imbalances.
Investing for all, and by all, has to be our ultimate goal.
Click here to download the Veris white paper, Women, Wealth & Impact: Investing with a Gender Lens 2.0.
By Anders Ferguson, Partner
Sustainability Is Something Much More: It’s A Worldview Based On Mindfulness And Interconnectedness
Sustainability is not climate change or local organic food.
Too often, those of us who care deeply about the sustainability movement tend to talk about it as a bright, shiny object – a new technology or the latest way to make the world a better place.
This focus on concrete outcomes is certainly good, but it commoditizes and limits the conversation and analysis about this critical issue.
The dilemma is easy to understand. We comprehend our world through sight and touch. Hence, the outcomes of our creative minds and hardworking hands are the easiest to see and experience as sustainable.
In fact, sustainability is a transformative worldview that is much more than new Teslas rolling off the assembly line, recycling or promoting impact investing. It is a mindset for seeing and changing our world.
What is Sustainability?
Sustainability is a deep understanding that everything is seamlessly and beautifully interconnected. It is rooted in a mindfulness recognizing that each of us, doing our own work in our own field, is connected to others and impacts others, even if we don’t see it or realize it. It understands that the process of creating new sustainable products and services is equally as important as the products themselves. A critical Yin and Yang for innovation.
Sustainability also accepts the responsibility to act and build a thriving world for our children and many generations to come. A big task. A lot of real wisdom is needed.
Specialization has produced unprecedented knowledge that has benefited us all. But we often lose sight of the whole. Typically, one group working diligently on one problem isn’t really concerned about the broader implications to the rest of the world – and the unintended side effects.
Fossil fuel is an illustrative example of our siloed thinking. Fossil fuels were intended to help society be more productive, but more than 200 years of their use has had unintended global consequences – climate change.
Even at Veris, in our daily work with clients, we also too easily speak of sustainable products and services and the global challenges we have to solve as sustainability itself. The reality is that they are actually the results of thinking and acting sustainability.
A Unified Worldview
Sustainability, then, is about looking at the world as an interconnected whole.
It’s about connecting the dots – uniting different branches of knowledge to produce solutions that transcend an atomized world, while refusing to be blind to the negative impact that one group or industry may have on others.
Put another way, the external world is a reflection of our inner selves: “How’s your Inner Climate changing?” If we are mindful and see the interconnectedness of all things, then the animating spirit of sustainability is present.
It’s not until we are one with ourselves – that we experience life holistically – that we can conceive of new ways of organizing ourselves and society that we unleash innovation.
A New Mindset: Moving from the Tangibility of a Prius to the Open Mind of Interconnectedness
By operating with the belief that all things are interconnected, we unleash creativity and enhance the performance of individuals. In essence, we dissolve the artificial barriers that divide one branch of knowledge from another, and begin to perceive the negative and positive results of our actions and decisions.
Interconnectedness also inspires individuals and companies to build new “mindfulness-based operating systems” that nurture and cultivate both the organization’s and our well-being. The common thread in these new systems is that they fully respect and appreciate human beings, nature and their potential.
Some of the world’s most sophisticated companies are already starting to operate with this mindset.
BlackRock, the largest financial firm in the world, and the CEO of AETNA, the health insurer, are embracing mindfulness and interconnectedness as a business strategy. They are encouraging their 70,000 combined employees to think about and practice, their own work and health with mindful intent. Toyota has done the same. The Japanese carmaker imagined the Prius years before it was prototyped or the market was ready. Unilever is transforming global consumer products by putting sustainability first throughout it interconnected global brands and operating companies on the ground in nearly every culture in the world.
Impact investing is another expression of sustainability. Impact investing funnels capital to people, ideas, projects and companies whose work seeks to develop human potential and preserve the sanctity of the planet for its own sake and the sake of generations to come.
Sustainability Inspires Progress
Our world faces huge, some would say life threatening challenges. Arguably most have been created by humans. Now it is our responsibility to undo the damage and create a flourishing future. By creating systems empowering our “sustainable minds” we are giving intelligent people the freedom to create unique and world-changing outcomes.
“Sustainable minds” and systems create breakthrough innovation, holistic analysis and action. They reimagine supply chains, create products we really need and build companies creating real value for shareholders and stakeholders. They give people the freedom to act and dream big for the common good.
This is why the artist is as important to creating deep sustainability as the engineer, impact investor or the organic farmer. The multi-dimensional nature of sustainability demands everyone’s contributions.
It may be hard for us to truly believe it, but at its heart, sustainability may be as simple as changing our minds.
By Patricia Farrar-Rivas, CEO
As impact investors, Veris Wealth Partners directs capital to support the varied goals of our clients, while helping create a more just and sustainable world. The process of aligning values with wealth through impact investing continues to revolutionize the capital markets in the U.S. and abroad.
Impact investing also does something else that’s very important: It delivers both positive social change and financial performance. Very few wealth management strategies can achieve both of these goals.
With such a broad mandate and so much opportunity, the question is how do we determine where to concentrate our efforts and yours?
At Veris, we are focused on five key impact investing themes. These focus areas aren’t new for Veris; we have been working on them for many years. All of these themes are highly interconnected, though different in terms of suitability and risk.
Our team is excited about these investing themes for good reason: Each one seeks to mitigate specific risks and identify promising investment opportunities that can deliver significant environmental and social impact. In our blogs and white papers in 2015, you’ll hear more from us on these topics. Also expect that our point-of-view will evolve even further as new developments unfold.
1. Gender Lens Investing
Gender lens investing is one of the newest strategies for creating impact. Gender lens investing includes investments that make capital accessible to female entrepreneurs and businesses; promotes gender equality in the workplace by supporting companies that are gender policy leaders; and invests in products and services that benefit women and girls.
The data shows that better companies and communities are created when wealth and leadership flow to women, whether the goal is to lift women and girls out of poverty or bolster women’s leadership and entrepreneurial success.
Put simply, investing in women is good for all of us. By focusing on some of us we all win.
2. Sustainable Agriculture and Food Systems
Agriculture is the most dominant human endeavor on the planet. Agriculture as it is practiced today threatens wild plant and animal species, as well as the natural ecosystem upon which humans and wildlife depend. Today, over 70% of fresh water goes to crops, livestock grazing and forestry.
With the world population estimated to reach 9 billion by 2040, it is imperative that the management of agriculture systems be improved to increase productivity and preserve biodiversity. Investment in sustainable agriculture seeks to demonstrate that environmentally progressive farming practices are scalable and are more economically viable than today’s chemical-dependent commodity agriculture.
Further to advance this new agriculture consumers are demanding food and agriculture systems that return closer to their communities and regions. This too is a very positive trend, rebuilding a local food infrastructure which has been swallowed by Agribusiness and multinational food companies. Many of our clients are already very engaged.
3. Climate Change and the Environment
Climate change continues to be one of the most critical issues of our time. Global warming and the ongoing degradation of the environment pose growing risks to the planet and demand new solutions. As the effects of climate change accelerate, they are challenging corporate profitability and governments’ budgets on a global scale. The fallout from climate change is already beginning to create a ripple effect in equity markets.
As investors, we are constantly looking at the trade-off between risk and expected return. Incorporating climate change risk into portfolio management is vital to comprehensive risk analysis. One of the major financial risks we are following is the whole question of “Stranded Assets” being created as a world dominated by fossil fuels shifts to a renewable future. Trillions of dollars of existing energy assets are likely to see their value greatly depreciated in the transition. The good news is that across financial sectors and industries, there are a rapidly growing number of investments driving environmentally positive solutions.
4. Community Wealth Building and Social Justice
Community Wealth Building is a fast-growing economic development movement intended to strengthen local communities. It aims to redirect the flow of assets back from Wall Street to Main Street. Community wealth building promotes democratic ownership and local control of businesses and jobs. It seeks to develop local talents, capacities, facilities, and capital. Community wealth builders are developing and strengthening locally-owned – and often community-owned – businesses, universities, hospitals and non-profits that are anchors of their local economies for the long term.
The Community Wealth Building field is comprised of a broad range of models that have been growing over the past 30 years. These include cooperatives, employee-owned companies, social enterprises, trusts, municipal enterprises, community development financial institutions, community banks, and more. The profound issues of Inequality are now clear to all. Developing real strategies that work to rebuild communities for the “99% of Americans” are deemed essential by both the Right and the Left. The energy and ideas flowing from the community wealth movement will be exciting to watch in 2015.
5. Sustainability and Mindfulness
Sustainability is another emerging area of great opportunity and interest for both global and local companies who share a progressive sense of responsibility. At the most fundamental level, sustainability is a deep understanding that everything is seamlessly and beautifully interconnected.
Sustainability is about looking at the world holistically, and acting from this understanding. It’s also about connecting the dots – uniting different branches of knowledge to produce solutions that transcend an atomized world. Equally important, interconnectedness refuses to be blind to the negative impact that one group or industry working independently may have on the greater whole of society.
When we practice mindfulness, and are present with the choices we make every day, greater sustainability and greater innovation unfolds. Mindfulness recognizes that each of us, doing our own work in our own field, impacts others — even if we don’t see it or don’t realize it. At Veris, mindfulness is what we try to practice every day.
We hope you share our enthusiasm for these particular issues, and we welcome any ideas to help us have greater impact.
By Ted Howard, Co-founder and Executive Director of The Democracy Collaborative
More than a decade ago, my colleagues and I at The Democracy Collaborative began using a term for a new kind of economic development – Community Wealth Building. For years, the term was so uncommon that it almost invariably appeared within quotation marks when used.
Today, a Google search identifies 124,000 entries and is growing daily.
In Richmond, VA, the Mayor recently established the first City-government Office of Community Wealth Building. Community wealth initiatives have been launched in cities as different as Cleveland, OH, Washington, DC, Atlanta, GA and Amarillo, TX. Regional Federal Reserve Banks are hosting video webinars and meetings. Even the extractive fracking industry — yes, you read that right — is now working to co-opt the term to improve its image.
So let us pause for a moment to ask: What is community wealth building and why is it important?
My colleague Marjorie Kelly, author of Owning Our Future: The Emerging Ownership Revolution, writes that:
When families possess assets — valuable skills, social networks, a home, some savings, an ownership stake in a business — they enjoy greater resilience, and are better able to withstand occasional shocks like unemployment or illness. They can plan for their future, send a child to college, feel secure in retirement. A job may start or stop. It is assets, of various kinds, that yield greater stability and security. As this is true of families, it is also true of communities. Jobs may be drawn into a community, but then leave without warning. And if attracting jobs means degrading community assets — through pollution, low-wage jobs, or the loss of tax income through excessive tax breaks — a seeming gain can in fact represent a net loss.
If traditional economic development tends to be about attracting industry to a community, building wealth is instead about using under-utilized local assets to make a community more vibrant. It’s about developing assets in such a way that the wealth stays local. And the aim is helping families and communities control their own economic destiny.
This is community wealth building: a fast-growing economic development movement that strengthens our communities through broader democratic ownership and control of business and jobs. It builds on local talents, capacities and institutions, rebuilding capital to strengthen and create locally-owned family and community owned businesses that are anchored in place, that aren’t moving.
The community wealth building field includes a broad range of models and innovations that have been steadily growing power over the past 30 years or more: cooperatives, employee-owned companies, social enterprise, land trusts, family businesses, community development financial institutions and banks, and more. One powerful team of local partners are anchor institutions, like hospitals and universities. They are often the largest economic drivers in their communities. Increasingly they see the synergy between restoring local health and wealth with their success.
These strategies reverse the focus on “chasing companies to relocate to my city.” All too often this includes greater tax breaks and lower wages for companies that may well relocate again for a better offer in another community. Community wealth, on the other hand, is tied to place. The people who own and control the businesses live there.
These structures and models are part of a growing system that aims at improving the ability of communities and individuals to:
- increase asset ownership;
- create anchor jobs locally by broadening ownership over capital;
- help achieve key environmental goals (including decreasing carbon emissions);
- expand the provision of public services by strengthening the municipal tax base; and
- ensure local economic stability.
Significantly strengthening and growing local capital is critical.
- building new, and strengthening existing, community-based financial institutions;
- preventing local financial resources from “leaking out” away;
- leveraging the use of procurement and investment from existing local anchor institutions such as hospitals, universities, foundations, cultural institutions, and city government; and
- finally, working aligned impact investors and financial institutions to grow affordable capital committed to building local wealth.
Veris and other advisors play a critical role in furthering community-based impact investing.
The overall economic impact of place-based, community wealth building strategies is evident. More than 10 million employees own all or part of 10,900 companies through employee stock ownership plans (ESOPS) — firms that employees finance and increasingly own through pension contributions. These ESOPs have generated equity benefits of $870 billion for their employee-owners. Cooperatives, according to a 2009 University of Wisconsin study, now operate 73,000 places of business throughout the United States, own $3 trillion in assets, employ 857,000 people, and generate over $500 billion in revenue for their member-owners. The new “go local/sustainable” business and food movement is exploding.
Political economist and historian Gar Alperovitz, a co-founder of The Democracy Collaborative, often asks audiences this question when he lectures: “If you don’t like state socialism and you don’t like corporate capitalism, what kind of system do you want?” Community wealth building begins to point to some of the essential elements of a more just, equitable and sustainable system.
To learn more about community wealth building innovations across the country, visit www.community-wealth.org
Ted Howard is the co-founder and Executive Director of The Democracy Collaborative.
By Patricia Farrar-Rivas, CEO
“The world has changed, and so must we.” – Clara Miller of The F.B. Heron Foundation
The time is now for community foundations to embrace a new vision that accelerates social progress and rebuilds local wealth.
The good news is that a new roadmap for community foundations is contained in a just-published report by The Democracy Collaborative, A New Anchor Mission for a New Century: Community Foundations Deploying All Resources to Build Community Wealth.
The report is recommended for anyone interested in making their community stronger, especially those encouraging social change through impact investing. Why? Impact investing is growing more rapidly among community foundations than other foundation sectors.
The 52-page report highlights how community foundations are innovating to build community wealth and profiles 30 innovative foundations across the country. The report describes how each of these forward-thinking organizations is rethinking its mission to have an even greater impact.
Ted Howard, Executive Director of The Democracy Collaborative, explains that community foundations are evolving to play a lead role among major local “anchor institutions” including major universities, hospitals and non-profits. These institutions represent more than $1 trillion annually in economic activity and are grounded in their region.
The report showcases community foundations that are adopting this new anchor mission by deploying all of their resources—financial, human, social, intellectual—to create shared prosperity. This mission uses their twin financial resources, grants and investments, to help develop a locally rooted economy that is inclusive and sustainable.
“America’s more than 760 place-based community foundations can be a tremendous force for community economic revitalization,” Howard said. “Combined, their endowments total $65 billion and their annual grantmaking roughly $5 billion.
Community foundations are today at a tipping point, said Ronn Richard, president of the Cleveland Foundation. “Our field’s next century will be radically different from the first.”
In particular, community foundations are facing growing competition from a growing group of national donor advised funds, many of which are affiliated with commercial institutions such as Fidelity, Schwab, Vanguard, Citibank, and Goldman Sachs. Donor advised fund (DAF) assets at those institutions now surpass the DAF assets at community foundations, the report found.
Clara Miller of The F.B Heron Foundation noted that local foundations can provide new leadership in their communities. Most philanthropic approaches were designed for a world in which a small segment of the population lived in poverty. Today, Miller says poverty is structural and the urgency and size of the problems require that we work differently. “Everything at our disposal is now a mission-critical resource.”
Progress On Many Fronts
The report profiles a wide range of foundations, but three examples show how foundations are evolving to become anchor institutions.
- The Cleveland Foundation catalyzed the creation of three employee-owned Evergreen Cooperatives, including Evergreen Energy Solutions, a solar installation and energy solutions company launched in large part with the support of large contracts from local anchor institutions. The three cooperatives employ workers drawn from Cleveland’s inner city neighborhoods, where unemployment exceeds 25 percent and median household income is under $18,500 a year. Inspired by this model, a number of other community foundations have begun adapting this approach for their own communities.
- Vermont Community Foundation, based in Middlebury, VT, for the last decade has had a policy of devoting five percent of all assets—including donor advised funds—for investments that benefit Vermont. And through its Food and Farm Initiative, the foundation has deployed many other resources to build community wealth in the food and agriculture sector. The foundation supported legislation that created the Farm to Plate Initiative and funded the Initiative’s ten-year plan to increase economic development. It also helped launch the Vermont Farm to School Network, which seeks to create local food-buying programs at all Vermont schools by 2020.
- Incourage Community Foundation of Wisconsin Rapids, WI, this year made a new commitment to invest 100% percent of its resources for mission. Everything the foundation does—grants, investments, vendor relations, and hiring—will be re-examined with a focus on creating a community that works for all. Incourage made a commitment to invest all its financial assets for mission, making it the first community foundation to take such a pledge.
The Democracy Collaborative is doing great work helping foundations shift their mindset from poverty reduction to wealth creation. This is the kind of inspired thinking that benefits all of us.
Patricia Farrar-Rivas is CEO of Veris Wealth Partners.
By Casey Verbeck, Director, Business Development
Living in lovely Boulder, Colorado with my wife and two kids is an amazing and wonderful experience, but I will never forget where I came from: the other side of the tracks outside of St. Louis.
Even amid this Rocky Mountain splendor, I’m reminded that not everyone is living the dream. We live in a time when 33 million people in the U.S. do not know how they will get their next meal.
Right here in Boulder we have too many people of all ethnic backgrounds living below the poverty line – 14% of the population. The equality gap is further dividing us from one another, dimming the hope of millions of people who long for change for their families and children and the opportunity to make the world a better place.
What Can We Do?
My modest upbringing motivated me to work hard, and it helped me succeed. But not everyone is as fortunate, and the institutions that are supposed to benefit all of us are fraying faster than we can repair them.
We have public school systems with limited resources and packed classrooms; teachers who are underpaid, in stressed communities and trying to do the job of three; healthy foods that are simply not affordable to many; and rationed healthcare because of the serious limitations of our system.
We need a new formula and a new set of principles that elevates the conversation about equality for all. Collectively, we should aspire to a standard of living that is more than simply getting by.
Systemic change comes with deep understanding, and it should start in our backyard. By visiting local neighborhoods we normally don’t go to, or participating in local nonprofits, we connect with our community and begin creating systemic change.
I’ve experienced this firsthand as an advisory board member of Accion and my work with like-minded Community Investment institutions. Community Development Financial Institutions (CDFIs) were just beginning to have significant presence ten years ago with $14 Billion in assets. Today, CDFIs have grown to $61.4 Billion in assets to meet growing U.S. demand. It’s not just about the loans made available to those who would never qualify for a loan. It’s also about the importance of understanding the culture and belief systems of those who benefit from these programs.
Nothing is more rewarding than helping people in our community build their knowledge and skills, so they can achieve financial security and begin accumulating wealth for themselves and future generations. Through impact investing Veris works closely with other leaders in the rapidly growing Community Wealth Building movement to support lasting change.
By working together in our own communities, we can provide those most in need with the guidance, support network and capital to help them succeed. The first step is to begin a dialogue with those who come from the other side of the tracks to see how we can do something great together.
Veris is committed to investing in our community investment partners throughout the nation to bring this vision into reality. It’s more about the “we” and less about the “I.”