April 17, 2011 | Read Time: 2 minutes
Interest in for-profit social enterprise—through which donors and investors use the principles of business and investment to promote social change—is growing. But it’s still a new area for many in the philanthropy world.
Some donors are using their charitable dollars—as well as their professional skills and volunteer energy—to build new networks and other systems to help spread the idea.
Through his family foundation, Ron Cordes, a philanthropist who supports microfinance programs, is working with Giving Assets, a nonprofit organization, to compile an index of the 50 top fund managers who specialize in social investments.
Mr. Cordes says that during his 30 years running a wealth-management company, he and his colleagues were always on the lookout for new types of assets in which to invest.
“The starting point is to gather the universe of leaders and managers in that field and begin to do diligence on those firms,” he says.
What he learned, he says, “is there was no database or index or any one place you could go to even figure out who the impact-investment managers were.”
Matching Funds to Causes
Giving Assets is currently analyzing several hundred submissions and scouring the portfolios of social investors for additional fund managers. After the ImpactAssets Global 50 index is compiled, the organization plans to take what it’s learned to develop investment products that combine multiple funds that provide money to companies working in education, microfinance, and renewable energy.
Financial advisers want investment products they can recommend to their clients that match up with the causes the clients care about, says Mr. Cordes.
A study conducted last year by Hope Consulting found that 48 percent of people with annual incomes of $80,000 or more were either interested or very interested in learning more about investments that seek both financial and social or environmental returns.
Mr. Cordes says he often cites that statistic when he speaks to gatherings of financial professionals.
“What I’ve said to wealth managers is, ‘Whether or not you even recognize it, many of your clients are interested in having this conversation, and I think you want them to have it with you as opposed to having it with somebody else,’” he says. “That’s a pitch that resonates.”
