By Don Shaffer
“How I can align what I care about with how I use money?”
Working for an organization that’s dedicated to revolutionizing how people relate to money, I hear that question a lot. But I’m hearing it now more than ever, and seeing it manifested in new approaches to business, investment and philanthropy.
I’ve met many people of means who are hungry to activate the majority of their assets, their talents, their time or all three for the lasting well being of society and the environment. They want their money and their work to correct the injustices that have built extraordinary privilege for the few and severely compromised the natural world. They want to chart a new path aimed at creating long-term resilience for all.
This is not an easy feat, given that the dominant investing, giving and growth models frequently work against the aim of promoting social good. The growing chorus of questions about these models, though, is widening the space for change, and more people are stepping into it.
Fellowship meets a growing demand for values-based investment advisors
We see this in the overwhelmingly positive response to our latest initiative, the RSF Integrated Capital Fellowship. This intensive nine-month program will give financial practitioners the tools and strategies they need to help values-driven clients deploy various forms of capital for lasting social and environmental benefit. The program will focus on systemic change and the individual and collective work needed to transform our outdated economy, moving it from extraction to regeneration.
Conventional wealth management is designed to drive money toward one goal: multiplying itself. Most values-based investors have had frustrating experiences with advisors who didn’t understand their investment goals, how to make them happen, or how to use philanthropic dollars for the most powerful effect. Our fellowship addresses those problems head-on. Fellows will learn to apply RSF’s integrated capital approach: the coordinated use of diverse financing tools (including loans, loan guarantees, investments and grants), network connections, and advisory services to support social enterprises.
When we announced the program earlier this year, we thought we would accept 15 or so fellows for the inaugural cohort. As it happened, the number of applications well exceeded our expectations, and most of them were very strong. As a result, we’re stretching capacity and planning to choose 24 fellows by the end of May.
Capital collaboratives deliver innovative financing where it’s needed most
Our initiatives to advance our own integrated capital practice are similarly taking off. We recently expanded our tool kit with a new series of capital collaboratives—themed philanthropic funds serving innovative social enterprises that address complex problems. Active funds include the Biodynamics, Fair Trade, Local Food, Soil Health, and Women’s Capital Collaboratives.
The Fair Trade Capital Collaborative tackles a critical capital gap that prevents farmers, weavers and other fair trade suppliers from achieving their potential. They often can’t obtain the relatively small, longer-term loans they need to finance capital projects at rates they can afford. The Fair Trade Collaborative helps by providing financing through fair trade product companies that we know and trust. It’s currently funding equipment for weavers in Peru who work with the clothing company Indigenous and efforts to recover from leaf rot for coffee growers in Chiapas, Mexico, who work with Equal Exchange. A third disbursement is in the works.
The Biodynamics Capital Collaborative just made its first loan, to Whitethorne, a sauerkraut company in the Hudson River Valley that is expanding its facilities to produce kraut from local biodynamic and organic small farms. The Soil Health Collaborative made a splash last year with its initial financing, to the Grass Roots Farmers’ Cooperative in rural Arkansas, which is creating a model for ethical animal husbandry and sustainable grazing methods that sequester carbon and rebuild soil health. The Local Food Capital Collaborative, our pilot vehicle, continues to support pioneers like Veritable Vegetable that are advancing healthy local food cultures and communities.
We’re also excited about the Women’s Capital Collaborative, which is on track to begin deploying capital to female social entrepreneurs—a seriously underserved group—later this year.
The fun is on the leading edge
Many finance organizations are discovering the value of supporting social entrepreneurs, and we hope that the increasing interest results in more competitive financing for enterprises that don’t meet the conventional market’s “grow big fast” criteria. Directing more resources toward social enterprise is good for the world.
From my perspective, financing for enterprises that are at the leading edge of transformation is also where the really fun action is. We’re always looking to the frontier of aligning money with values, and it’s a thrill to see these new initiatives grow.
Don Shaffer is president and CEO of RSF Social Finance, an innovative lending, giving and investing organization based in San Francisco. He is also a B Lab board member.