The other night I was at an event to celebrate the 10th anniversary of Veris Wealth Partners, and the retirement of my friend David Hills, a founding partner. Veris has been a leader of wealth management through the prism of sustainable and impact investing and they, along with others, have helped transform the way people think about their wealth and how it circulates in the world to do the most good. I’m always energized by people who fundamentally believe, as I do, that money can be a force for good, if only we demand it.
At the reception following the program, I was sharing with some acquaintances that I had recently been accepted into a fellowship program being launched by RSF Social Finance on “Integrated Capital.” Beginning in October, I will join a cohort of like-inspired people looking to demand more from money, an experience that will no doubt find its way into the heart of my consulting practice. I was explaining why the thought of breaking down barriers between philanthropy, impact investing, and social investing was so compelling to me. How we could deploy so much more capital by following this integrated approach to building the world we want. I was motoring right along, gesticulating wildly and taking as affirmation the nodding heads around me. When I finally took a breath, a young man I admire, a social entrepreneur who is tackling waste stream issues on college campuses said, “I don’t know… all of that went right over my head.” What I said to him was, “Let’s get together so we can talk about it because it’s something that could be helpful to your work.”
We haven’t gotten together yet, but I’ve been thinking about how to explain integrated capital. I have a feeling I’ll be thinking about it a lot and that as I learn more I’ll reframe how I describe it. For now RSF’s definition is a good place to start:
"Integrated capital is the coordinated use of different forms of financial capital and non-financial resources to support an enterprise that's working to solve complex social and environmental problems."
For me, thinking about a kind of virtuous capital which encompasses financial, human, and social connections being invested in sustainable enterprise by decent people intent on helping rather than harming, is so much more compelling than simply striving to achieve the highest rate of financial return. That narrow paradigm has surely built a lot of wealth, but at what cost and to whom?
Recently on Twitter I saw a quote by Jacqueline Novogratz, the founder and CEO of Acumen. She says, “My dream is to find individuals who take financial resources and convert them into changing the world in the most positive ways.” I’ve been hanging on her words for over a decade and if you haven’t seen her 2007 TED talk on "Patient Capitalism", I encourage you to watch it. With humor and humility she fleshes out the idea of integrated capital by talking about her earliest work in Africa, learning to be patient so she could better listen to people express their community vision. She explains how philanthropy and investment commingle with technical assistance to empower people to build what they need for themselves, not charity, but investment which honors the intelligence and capabilities of problem solvers.
In the ensuing decade since that talk, the examples of life-affirming work across a variety of sectors, both for-profit and nonprofit ,have only multiplied. Acumen alone claims a remarkable track record of investing over $100 million dollars in nearly 100 innovative companies on several continents that created 58,000 jobs addressing vital community needs. Acumen’s investment is seeded with the help of philanthropy but again, this is nothing like charity. It is not a one-way exchange but a regenerative cycle of investment, repayment, and reinvestment. Work of this kind is not just happening in far off places under the guise of “microfinance” but also in communities closer to home.
For too long we have bifurcated “giving” and “investing.” We have asked our philanthropy to build a better world by making grants to nonprofits. Conversely, we have asked our investment portfolios to make money by investing in companies so we can live a comfortable existence now and in the future. What if we just did both at once? We’re smart enough to do that aren’t we? What kind of world would it be if more of us, no matter our degree of wealth, simply said we demand both? This is just one somewhat simplistic example, but instead of making money by investing in the fossil fuel industry and then making grants to mitigate the worst effects of climate change, what if we just put our money into clean energy? Would we die penniless and full of regret? Doubtful. More likely we would accelerate the shift to a healthier and more humane energy system. Why humane? Because it is clear that those who will suffer the worst, possibly deadly effects of climate disruption will be the poorest and most vulnerable people on the planet. For me and many others, there is no quandary about where to invest our money.
While I have dedicated a fair bit of my life to understanding philanthropy and helping others to be strategic with their resources, I now believe we have asked too much from philanthropic capital. As Novogratz points out, philanthropy is a crucial element in the ecosystem of building healthy and resilient communities. Philanthropy can take early bets, provide the structures of support to test innovative ideas, and ensure that we have policy and advocacy efforts aimed at diminishing the barriers to success. It can also lower the cost of capital, making it accessible to social entrepreneurs. Alone philanthropy is insufficient for creating viable systems change on a broad scale, the kind we need to solve the most pressing challenges of our time. That’s why we need integrated capital; more of our money working in concert with our social systems to build the world we want.
In a future post I’ll explore why this type of thinking is not just for the wealthy, and share examples of how we all can join the movement to align our vision for the world with our money. In the meantime, I’ll keep working on my elevator pitch about integrated capital and gathering stories to share to better illustrate its power and impact. Let me know what you’re thinking about. Send your ideas and questions.