GuidetoSocialResponsibleInvestment(SRI)&CommunityInvesting(CI)
Drew Tulchin Social Enterprise Associates
Whitman College Walla Walla, WA
Oct., 2008
AboutYou
Intros.Let’shearfromyou:• Name• FavoriteClass• FavoriteHalloweenCostume,ever• Interestthatbroughtyouheretoday
AboutUs
SocialEnterpriseAssociates
TripleBottomLinecompany.Anetworkofprofessionalsmakingcommunitiesbetterbyapplying
businessskills&sustainablepractices.INTERNSHIPSAVAILABLEwww.socialenterprise.net
DrewTulchin:• 15yearsprof.experience&MBA;8inSRI• Written50+business&strategicplans;effortshaveraised$12million+• ForPrismaMicrofinance,bizplanwinnerGlobalSocialVentureComp;
raised$1.2millioninprivateequity
Environmental Sustainability
Social Impact
Financial Performance
Outline
• Background&definitions• SociallyResponsibleInvestment(SRI)orSociallyMotivatedInvestment(SMI)• CommunityInvesting(CI)• GettingaJobinSRIfield• Discussion
Questionsatanytime
Background&Definitions
DefinitionsTerminology SocialResponsibleInvestmentorSociallyResponsiveInvesting(SRI) IpreferSociallyMotivatedInvestment
CommunityInvestingorCommunityInvestment(CI)
TripleBottomLine:Financial,Social,Environmental The3Ps:Profits,People,Planet DoubleBottomLine:Financial&ChooseOne
CDFICommunityDevelopmentFinancialInstitution MFIMicrofinanceInstitution
Note:ProfitisNOTadirtyword
SRIDefinedWhatissocialresponsibleinvesting(SRI)?Theactofdirectingonesinvestmentstowardsparticularfinancialinstrumentsand/orentitiesthatencompassperson/groupssocialandmoralvalues.
Whatdoessocialresponsibleinvestingachieve?Enactbehaviorchangeorencourageacertainbehaviorwithinanorganization/institution.Derivefinancialgainsthatalsogeneratemeasureablesocialimpact,communitygood,and/orenvironmentalsustainability.
Language&Jargon
Investor Language
SRI Investor Language
Maximize Profit Optimize the ‘3 P’s’: Profits, People & Planet
Bottom Line Results Triple Bottom Line Results
Profitability Performance
Language of returns Language of returns, impact & sustainability
History
History(SEEFAITHBASEDINVETSTINGHAND-OUT)
Okay,ModernHistoryatleast:WWI Anti-WarInvesting:Quakers,Memmonites1960’s Anti-VietnamWarInvesting,CivilRightsProtests,ConsumerProtection&Riots
1970’s Int’lDevel,CDCs(US),InnerCity,RalphNader1980’s DivestmentfromSouthAfrica, ‘RegularProducts’1990’s GreenProductExplosion
SomeTheory
ResearchIs(Mostly)ProResearchonSRI,CorporateSocialRespons.(CSR)&EnvironmentalSocialGovernance(ESG)issuesarepositiveforshareholders:
Indicesnowexistonit:• DowJones’SustainabilityIndex• FTSESustainabilityIndex
17studiesofSRI:(DowJones,Moody’s,Univ.)• 7documentedSRI>avg.marketreturns• 7showednolessthanavg.marketretuns• 3claimed<avg.marketreturns
IntersectionofReturns
Theintersectionbetweensocial&financialreturn
MorinoInstitute
Donation Investment
YieldCurve:Risk&ReturnTypically,investmenttheoryisthatgreaterriskshould=greaterreward.
Greaterrisk,buttakesomeoftherewardassocialreturnornon-to-youmonetaryvalue.
Lowrisk,butsmall,diversedeals=hightransactcosts
Return
Risk
IntersectionofReturns
Theintersectionbetweensocial&financialreturn
MorinoInstitute
Donation Investment
RISKWhatistheoptimalmatchingofrisk&subsidy?
PhilanthropySUBSIDY TheMarket
MostPRIsToday
GeorgePenick,RandCorporation
ContinuumofInvestmentRiskDonationsInvestment
SRI3LeggedStool• ScreenedMutualFunds• ShareholderAdvocacy• CommunityInvesting
ScreenedMutualFunds
ScreenedFunds
SEEHANDOUT
ScreenedFundwww.socialinvest.org/resources/mfpc/screening.cfm
FaithBasedInvestments
FaithBasedFunds
Tzedec Fund
ShareholderActivism
ShareholderAdvocacy
www.socialinvest.org/projects/advocacy/resolutions.cfm
CommunityInvesting
CommunityInvestingCommunityinvestingisfinancingthatcreatesresourcesandopportunitiesforeconomicallydisadvantagedpeopleintheUSandoverseaswhoareunderservedbytraditionalfinancialinstitutions.
CommunityInvestingPro-Active
FastestgrowingSRIcomponentIncrease$5.4billion(1999)to$25billion(2007)
Goalof“1%orMoreinCommunityCampaign”SIFmemberstopushU.S.CIto$30billionby2010
Examples:InternationalMicrofinance,CDFIs,CommunityBanks,AffordableHousing&More
SEEHANDOUT
InternationalMicrofinance
InternationalMicrofinanceMarket
MarketConditions+/-150mill.clientsAvg.growth30%ayearlastdecade<10%oftotaldemandmet10,000MFIsworldwide;$10billiontotalcurrentportfolioInvestmentincreasing.$5billionnewmoneylast2yrs
GlobalMicrocreditDemand$300billion
GlobalMicrocreditSupply$10billion
InternationalMicrofinanceToday
+/-150millionclients(dependsonyourdefinition)80millionverypoor
<10%oftotaldemandmet$10billiontotalcurrentportfolioAvg.growth30%ayearlastdecade10,000MFIsworldwideInvestmentincreasing.$5billionnewmoneylast2yrs
Websites
StufftoLookatOnline
Prosper.comMicroPlaceFonkozeTheMixMarket
CommunityBanks
Shorebank’sEco-CD(WA)Carver(NY)Liberty(NewOrleans)Albina(OR)
JobStuff
JobsinSRI
Skills• Language,culture,int’ldev• Write,speak,present• Inter-personalskills• Figurestuffout• ProjectManagement• Specialize:getgoodat
whatotherscan’t
LikelyFirstJobs• PeaceCorps/VISTA• Admin.Support• ‘Backstopping’• Banking:retail,investment,corporate• Consulting• Marketing&PR• Fund-raising• Technology
PathtoSRIJobsPath• DirectGetajobw/anorgdirectly
• Mainstreamorgs.Geta‘regularjob’andthencrossover
• CommunityRouteWork‘inthetrenches’,foraCIborrowingorg,advocacygroup,etc.
Challenge• Fewjobs;highcompetition• Youareinexperienced
• Mightnotgoback• Incubationstrategy• Changefromw/in
• Don’talwaysgetrightskills• Becomemoreactivist
DiscussionQuestion
ForDiscussionAssumeyouhaveatriplebottomlineethicandinterest:Whichwillcreate‘moregood’:A) GoingtoworkforanorganizationdoingSRIfromthebeginning,andlikelytogetdecentpay
B) Working‘inthetrenches’everyday;donatingwhatlittleyoucanabovewhatislikelytobesmallincome
C) Goingtowork‘fortheman’,gainingseriousskillsthatyoucanthenbringbackto‘ourside’&earningthebigbuckstohavetheresourcestodonatelots
ForDiscussionAssumeIhavea‘regular’investmentthatprovidesadecentreturnofx%(let’ssay10%foreasymath),andanSRIinvestmentinthesamesectorwhichisknowntobe‘alittlelower’eitherduetomorevolatilityorslightlylowerreturns.Whichisbetter?:
A) GettheSRIoptionnomatterwhat,aslongasitpassesmyduediligenceandevaluation
B) Gettheregularinvestmentanddonatetocharitydoublethedifferencebetweenthetwoeveryyear
C) Buythe‘regular’investment,earnasmuchmoneyaspossiblefromit;thendonateittoaworthycause(alsoavoidingcap.gainstaxonit)
ThingsYouCanDoNOWSEEHANDOUT
Educate• Learnaboutthefield.1millionemployeesneededAdvocate• HelptomakethingsbetterinU.S.andworldwide.
MicroCreditSummit,AEO,CFED,NCRC• 1%forCommunityInitiativeInvest/Donate• Evensmallamountscount!• Placeyourassetsincommunitybanks• UsetheproductsavailableVolunteer/Intern• Soc.Ent.Assoc.year-roundoptionsavailable• U.S.domesticopportunities• MicrofinanceGateway,SIF,Idealist
PlacesToLearnMore
SocialInvestmentForumCommunityInvesting
ICCRSocialEnterpriseAssociates
Co-opAmericaGuidetoSRFunds
IndividualInstitutions:CenturyFunds,CalvertFoundation,CalvertGroup,etc.
Thanks Q & A
Discussion
Drew Tulchin Social Enterprise Associates
www.SocialEnterprise.NET [email protected]
202-256-2692
