What Impact is Your Money Making?
By Tuti B. Scott
December 22, 2021
As we wrap up 2021 and all of its intense shifts, we have an opportunity to reflect on what kind of impact our money is making. No matter where your money sits — a bank, a mutual fund, a pension, etc. — it is making an impact on society and the planet. Now more than ever it is critical to ask: what type of impact are my assets making — positive or negative? With $80 trillion invested in the US fixed income and equity markets alone and with women expected to control 2/3 of the wealth in America by 2030, there is tremendous potential to influence the markets and economy to move with a social justice lens.
As Kristin Hull, the CEO of Nia Impact Capital and Money Doula, says, “You get the economy you invest in.” So, let’s build the economy we want! This will require us to address the unknown and biases and deeply engage in exploring and moving money in our investments in alignment with our values.
Industry leaders at How Women Invest have calculated that only 5% of the women who are accredited investors (people who have $1 million in assets without including one’s primary home or earn $200,000 annually as an individual or $300,000 in a household) versus 30% of the men who are accredited are investing in venture. These are the people who have the opportunity to invest in businesses being created in this disruptive economy…especially those being created by Black Indigenous Women of Color. Perhaps they haven’t realized or questioned that their current investments could be making incredibly destructive actions such as funding the prison to pipeline system, investing in fossil fuels or companies with toxic chemical issues that are heating up the planet, supporting companies that disavow women’s rights, equal pay and more.
We must accept that one can make a financial return AND a social return on investment holdings. Social justice investing, a term coined by Rachel Robascotti, the founder of Adasina, moves beyond ‘socially responsible’ investing and presents opportunities to put money in companies and places where racial, gender, and climate justice is a priority. Nia Impact Capital, an asset management company, has outperformed the market for 6 years with an intentional justice lens. C-note founder Cat Berman has built a fixed income product that directs Community Development Finance Institution (CDFI) funds to women led businesses. And Adasina’s ETF (electronically traded fund) JSTC is an example of investing in a portfolio of companies that are vetted with a social justice lens.
The first step towards making money moves that matter requires us to confront the biases and entrenched norms that exist. Recently, while I was designing a Gender Impact Investing Intensive for the Women Moving Millions community, I addressed biases in finance and the field of behavioral economics. Investing, saving, and giving money is an emotional experience with many layers of conditioning. At the same time, we are also influenced by societal pressures and norms including the ‘tradition’ of men handling the money and investments. These behaviors and practices are based on patterns that have been embedded in a financial system that has $70 trillion dollars invested with only 1.3% of this money being managed by women and people of color employed in the investment industry.
Confirmation bias and herd mentality bias ensure that someone won’t make an investment decision unless others do it and/or unless it has been ‘endorsed’ by others. We can clearly see that people in decision making roles in finance and investment are hindered by herd mentality bias as a large majority collectively ignore the decades-long data which proves that diversity in a boardroom or senior management team brings higher returns on investments, improved risk management and less fraud.
The same non-diverse leadership is responsible for the public health crisis of sexual violence, the redlining and racism in finance, and delivering frustrating results for Black women trying to get financing for their angel or venture projects. Recently, a BIWOC colleague shared that her conversion rate was much lower than a white woman as she was making 50 asks to get one investor versus 10 asks for white women. Four women of color led venture capital funds (The 22 Fund, WOCStar Fund, Supply Chain Capital, and 2045 Ventures) have joined together as Ally Capital Collab to raise funds in a campaign model and accelerate the glacial pace of funding they have experienced.
We need to mobilize our dollars to create transformative systems change and build the economy we want to see. And it begins on an individual basis where we examine our biases, look at our conditioning and take action.
Start having a conversation with your financial advisor or the person who manages the pension at your employment. If you share with them this report, Veris Wealth Partners’ Bending the Arc Towards Justice, they will see dozens of gender lens public equity products. There are eight pages of opportunities for mutual funds, separately managed accounts, ETFs for you to start moving your money today.
The other report you can share with wealth managers is Project Sage 4.0, recently released by Wharton Social Impact School and Suzanne Beigel of Gender Smart. Their fourth report on the private equity opportunities has more than 100 pages of hundreds of opportunities where you can mobilize your capital. You can engage in many angel investing communities and invest together. How Women Invest and True Wealth Ventures are specifically funding only women-led firms and are both starting their second funds.
So, for accredited investors, and yes, I am talking to the 95% of high net worth women who haven’t explored what positive impact your managed assets could be making, please take the smart risk and invest in your sisters today. Otherwise, the economic impact and the policies that shape our finance system will remain obsessed with profit at the expense of people and the planet. There is a massive opportunity to redefine our economy in 2022 and it is calling to you!
Note: This content of this article is directed towards high net worth individuals; particularly those who identify as women. A companion article about investments will be published in January 2022 that speaks to non accredited investor opportunities for impact.