Sunday, August 21, 2011

Fortune Favors the Bold

By Lisa Hall, Calvert Foundation's President & CEO

Last month I was honored to participate in the inaugural Rockefeller Foundation Innovation Forum in the Chelsea Arts District of Manhattan along with one hundred other leaders in the social and private sector. It was a thought provoking event in a unique setting – Center 548 – an industrial warehouse space transformed into a conference center. The main entrance features a massive freight elevator that transported attendees to the second floor, where a large video screen showed an African women making her journey to bring water from a distant source to her home. It was a striking juxtaposition to the short distance we travelled from the elevator to a table overflowing with bottled water. 

The Forum focused on water security, food security, and economic security in American cities, and encouraged revolutionary thinking on solutions to these problems. The forum began with an extraordinary panel moderated by Dr. Judith Rodin, the President of Rockefeller Foundation, who previously made history at my alma mater, the University of Pennsylvania, as the first permanent female president of an Ivy League university. Distinguished panelists included Dr. Paul Farmer of Harvard University and founder of the world renowned international development organization, Partners in Health (PIH), and Nobel Prize winner Muhammad Yunus, who was an early advocate for – and some would say the inventor of – microfinance and founder of Grameen Bank.

Their legendary accomplishments inspired me to think about the next chapter for Calvert Foundation and what innovation means in impact investment. We are currently engaged in a major strategic planning effort with the assistance of Monitor Institute to envision and plan for the future and ensure success in our next 15 years. As I think about new ideas for Calvert Foundation, I wonder what would be possible if we could build out options to popularize the use of self-directed IRAs for impact investments. Or if we could create an investment product that allowed non-profits with earned revenue models to raise money from individuals, something similar to equity that would provide these non-profits with sorely needed growth capital. Another possibility? What about syndicating Low Income Housing Tax Credits or New Markets Tax Credits for individual investors?

With enough grant support, these could become more than just ideas. I’ve heard from many sources that workers are investing less in their 401k accounts – not only because they are they getting lower returns than they did historically, but also because they have no connection to their investments. Products like Calvert Foundation’s Community Investment Note and RSF’s Social Investment Fund allow investors to be connected to communities through programs like the California FreshWorks Fund, which is financing distribution of fresh, healthy food to “food deserts” in low-income neighborhoods. Calvert Foundation has also helped other non-profits – such as affordable housing group Enterprise Community Partners and international microfinance organization Oikocredit – offer investment notes to their respective stakeholders. We are proud of our past innovations at Calvert Social Investment Foundation and we are poised to do more and take bigger risks in collaboration with others. 

One of my favorite lines originates from the ancient Roman play Aneid by Virgil. It is often quoted and was recently referenced by Cheryl Sandberg, COO of Facebook, in her commencement address to the 2011 class of Barnard. In her speech Sandberg challenged the graduating women to take more chances personally and professionally – to do those things they would do “if they were not afraid.” After reading the transcript of Sandberg’s speech a few weeks ago, I haven’t been able to get the words out of my head: “Fortune favors the bold.” This quote resonated with me as I sat last month in the audience at the Innovation Forum and listened throughout the day.

I think funders should be putting larger, longer-term dollars toward mountain-moving efforts, not just the new start-up idea. In other words, I think they should be making bigger bets. “Bet” might seem like a bad word in the philanthropic/nonprofit sector since “betting” implies risk. But that is exactly why I’m using it. You might lose, sure. But you also might win big and watch a grant leveraged over and over to help thousands of people. For example, the $50 million in net assets that the Ford Foundation gave to Self-Help in the late 90's has been truly transformative.

This is not to say that smaller, shorter-term grants don’t have their place. They certainly do – Calvert Foundation could never have gotten off the ground if the great staff at the MacArthur Foundation didn’t bet on us years ago. But as government retracts and underserved communities are more in need than ever, there is a real opportunity to broaden impact. This is about more than the money – it’s about leadership and sending a signal to the larger philanthropic world about the importance of investing in big ideas and influential players.

Aiming high, taking risk and being innovative is also about more than the money – it’s about leadership and encouraging the larger philanthropic and impact investing community, to invest in big ideas and influential leaders. When thinking about risk, I believe we should be asking ourselves, “What is the risk of NOT taking risk?”

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