Published by Confluence Philanthropy. | May 5, 2020
I was born and raised in apartheid South Africa and lived there until I was ten. As I grew, the terrible inequity I witnessed taught me that I didn’t get where I am due to discipline and hard work alone, that the luck of my birth and parentage and immigration played a huge role. Had I been born with dark skin (like 90% of my country-people), I’d have had a very different life in front of me.
Having spent my first decade as a witness to such inequity, coupled with an upbringing by a psychotherapist mother and business enterprising father(s), when it came time to choose a path for my future – my existential dilemma was whether to pursue personal growth or wealth as the best way to make myself feel whole.
So I did what one naturally does when faced with large life decisions in their 20s. I took my mullet and my Guinean beads I’d bought at a drumming festival and headed off to India with books like Money and the Meaning of Life by Jacob Needleman in my backpack. During that trip I did a lot of yoga and wrote in my journal frequently. It was during that time that I realized it didn’t have to be an either / or decision. I chose both personal growth and wealth, which led me to create a company that integrates financial and behavioral advice, with the mission of expanding what’s possible with money.
I’ve been investing for social and environmental impact since 1993, first personally, and then beginning in 1996, professionally. I, along with my wife Britta, and our two sons, are particularly focused on climate change, animal welfare, women’s rights, financial empowerment, and poverty alleviation. We address these issues through my work at Abacus, as well as with our personal public equities and bonds, private equity, and strategic philanthropy. 96% of our investments are currently invested sustainably.
What does our family portfolio actually look like today?
I think it’s important to state at the outset that my wife and I make all financial and investment decisions together, and as our children have become young adults, we’ve involved them more and more.
Keep in mind that my day job is running a firm with about $3 billion of assets under management in alignment with my clients’ values and personal goals. Some of my clients are passionate about a particular issue – extreme weather from climate change, neighborhood gentrification, or regenerative agriculture – and our job is to build them a portfolio that achieves their social aims while also earning an appropriate financial return for their needs.
Our family portfolio is a bit atypical. Since I believe in walking my talk, the same investments that our clients own can also be found in my family’s accounts. But we’ve also invested in a number of businesses that I wouldn’t recommend to a typical client, either because they’re quite risky (and I’m aiming for an extraordinarily high impact or financial return), or because Abacus, the company I co-founded, gives me a ton of exposure to the ups and downs of sustainable, public stocks and bonds.
Our family’s largest asset, by far, is our equity stake in Abacus. I feel that Abacus makes a positive impact in the world (it’s a founding B-corporation, is carbon neutral, donates 1% of revenues to charity, helps a few thousand people worry less about money, and invests their combined $3 billion in companies doing good for society.) The tricky part is that Abacus is a small, privately held business, and its revenues are closely tied to the global economy. In the Great Financial Crisis twelve years ago, my share of profits fell to nearly zero and my share of the company’s value was cut in half.
Because of this somewhat traumatic experience, we now invest our non-Abacus money in companies and real estate that should hold their value better in the next crisis. I also do what I’d tell any client to do with a private company dominating so much of their balance sheet: I sell off a small portion of my stake each year to reduce exposure and help rising stars in the firm have more opportunity.
So where do we put the rest? I’ll start with some of our most risky (and hopefully impactful) direct private investments in for-profit companies:
- Warc provides regenerative agriculture services to subsistence farmers in Sierra Leone and Ghana. By training and providing the inputs for crop-rotation, no-till planting, and access to markets, Warc raises crop yields and incomes by 5-10x in the 6th poorest country on Earth while also improving soil health and reducing greenhouse gas emissions. 55% of trainees and employees are women, and the business model is highly scalable.
- Sanergy is a Kenyan sanitation company that provides social entrepreneurs with standalone toilets for placement in the worst Nairobi slums, where water-borne diseases are the largest killer of children. The waste is collected daily and turned into fertilizer, energy and food for black soldier flies, which become animal feed. Yup, not plant-based, but this investment saves human lives, so I’m all for it.
- Katerra is an innovative construction company aiming to reduce materials waste, time and costs by 30-40%, allowing housing to be built at a much faster pace and lower cost.
Venture Capital and Private Equity Funds
These are a little less risky thanks to diversification.
- North Sky Infrastructure Investment Fund invests in green stuff like waste management, water sanitation, and renewable energy (solar, wind, energy storage and energy efficiency retrofits of buildings) in lower-income neighborhoods.
- Stray Dog Capital II is a venture capital fund that seeks to invest in early stage plant-based and biotech start-ups that have a large impact on animals, people and the planet.
- Generation Sustainable Solutions, Sustainable Asset Fund, Energize Venture Fund, SJF Ventures II, III & IV, and Better Ventures II & III all invest in clean technology, renewable energy, and climate-related technology and infrastructure companies. Climate change feels super-urgent to us…can you tell?
- LeapFrog Emerging Consumer Fund makes growth investments in companies based in Africa, South and Southeast Asia that provide quality financial products and services to low income and financially excluded people.
- Unitus Equity Fund, Elevar Equity II, III, and IV. These venture capital funds, which began by taking equity positions in microfinance institutions in India and LatAm in the mid 2000’s, now invest in a cross-section of financial inclusion, education, and healthcare companies in the developing world. The four founding partners of this group get most of the credit for how involved I am in impact investing (shout-out to Chris, Maya, Johanna, & Sandeep).
- Turner Multifamily Impact Fund and Rose Affordable Housing Preservation Fund both aim to provide workforce housing at affordable rents to low-income families. Specifically by providing housing that costs less than 30% of people’s income, these investments give them a fighting chance.
- River House is a workforce and senior housing complex in Spokane, WA built with sustainability and energy-efficiency between 2011-2017; we own a minority stake in this property.
- Vert Global Sustainable Real Estate is a relatively new mutual fund of REIT’s (think publicly-traded real estate mutual funds) that have the best records on their environmental and social benefits. I wouldn’t have had a client invest in this because it’s too new, but I really want to help bring innovative vehicles to market, so we invested personally.
Publicly Traded Stocks
Our philosophy when it comes to stocks is to try to own a highly diversified, index-like basket, but to exclude ‘bad’ companies, own a lot more of ‘good’ companies, and make our voices heard by management when possible. Our portfolio has…
- No carbon/oil reserves, tobacco, factory farming, coal, guns, or private prisons
- Carbon emissions that are 30% – 75% lower than their industry peers
- Overweighted investments in companies with more revenues from renewable energy and climate solutions, better scores for employee treatment and diversity, community relations, and human rights
- We get involved in shareholder engagement. This includes pledging our shares to resolutions and hiring managers who meet with company management to obtain more disclosure and commitments to better treatment of the environment and minority employees, including women
- Managers include Aperio, TIAA-CREF, Calvert, Dimensional, Versus, and NuShares.
We own a combination of individual bonds and bond mutual funds (which lend to companies and government agencies) and which focus on their use of proceeds, preferring these sectors:
- Education (K-12, community and state colleges)
- Affordable housing
- Mass transit
- Water and sanitation
While this portfolio may not be perfect, and we’re consistently looking for ways to improve and deepen our impact in areas that matter to us, this is the portfolio that is right for our family and represents our shared values.
If you have any feedback or personal reactions, I’d love to hear them.
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