Our gap in perspective has been made more acute through the racial and resource schisms revealed by the global pandemic, schisms that shine a spotlight on the social and environmental consequences flowing from investment choices made over many years.
Most of us do not give much thought to where we put our money or who holds it, such as a bank or a pension fund. Even those with financial acumen might delegate investment responsibilities to someone else with varied results. We may not see it, but our decisions have undeniable outcomes.
With expertise in impact investment banking, Laurie Spengler argues that we should all question what our money does and how it is used by those acting on our behalf. Promoting the message of how we build an inclusive, sustainable, and resilient society, motivates her to spend many hours connecting with others around the world to influence our financial choices.
These days a lot of those connections come virtually through remote conferences and speaking engagements via Zoom calls across many time zones. But the message is consistent no matter the logistics, “I want to really empower us, myself included, to ask what is happening with our financial resources,” she tells Invest for Good. “My starting premise is that everything we do with our financial resources has an impact.”
Let me be clear: Laurie does not have a whole lot of spare time. Earlier this year she launched her own business, Courageous Capital Advisors, a firm that encourages its clients to use their financial capital to build a just, equitable, sustainable and resilient society. As CEO and founder, she wants people to be more courageous with their money, to put their convictions into action and get out of their comfort zone.
My starting premise is that everything we do with our financial resources has an impact.
It is Laurie’s view that impact investing - the belief that our money can contribute to a positive outcome while generating a financial return - will become the default in years to come. This will lead to a behavioural shift in society, with more and more of us seeking opportunities to put our money to work for good causes. Not just as philanthropists, but as individuals deploying private capital to solve systemic global problems affecting society. “I’m actually quite optimistic that we’re going to see pockets of accelerated activists,” Laurie says. These activists are likely to be young people and female asset owners who will benefit from a huge generational transfer of wealth.
While that future may still be some way off, the present requires immediate action. From income and racial inequality, climate change and marginalised communities, to persistent problems of hunger and access to clean water. All of these factors have made our world less resilient. Laurie explains that this means we are “less able to absorb shocks in a way that allows us to keep moving forward and not get completely thrown off course”. Nothing has demonstrated this as clearly as COVID-19.
It has laid bare not only social and economic inequity but racial and gender inequality. These issues existed before the pandemic, but the impact of COVID has disproportionately affected poor communities, people of colour, women and those without societal safety nets. So what does this mean for the impact investing community, the very people who want capital to tackle social injustices? How can they use this opportunity to build a more resilient society?
Building resilient communities
Laurie has spent much of her career thinking about what makes for resilient communities and how impact investors can contribute to their development. She talks about focusing on the what and the who. What are you trying to solve for with this capital and who will benefit from your product, service or venture? “I think we have to be more clear-eyed, more targeted and more determined on the who, and that ‘who’ being the more marginalised, disenfranchised, low-income, rural and more remote,” she argues. For instance, small businesses are currently constrained in recovering capital and women-led small businesses even more so. Making those a priority will be a positive step.
Additionally, the CEO advises that you demonstrate your relevance as an impact investor, to think about how you will solve the problem of people’s fundamental needs now, making the likes of access to capital, healthcare and education priorities. Laurie suggests not thinking about impact capital as a one-size-fits-all solution that can be applied broadly. Instead, be smart about segmentation. This could include thinking about what microfinance and community banking might look like in urban and rural settings.
Get close to the problem by supporting community development financial institutions (CDFI’s), she continues. It is an approach that has been championed by others in this blog, claiming that the financial system often does not reach those it intends to help. Some have called it a “plumbing problem” because it is about developing the pipework or the distribution channels to reach the people who have been marginalised and denied opportunities such as stable employment. Without stable livelihoods to maintain them, individuals and communities lose resiliency.
However, Laurie maintains that being resilient is much more than simply having money in the bank to deal with the unexpected. She contends that it is also defined by physical, emotional and spiritual health, as well as values of equity, integrity, inclusivity and respect. Another big one is longevity: “Whether it’s an enterprise or whether it’s your household, you have to have the stamina and perspective to understand what comes after this immediate crisis.”
As an entrepreneur, stamina is something with which Laurie is certainly familiar. Although she made the decision to launch Courageous Capital Advisors before the pandemic struck, she did not back away when the crisis engulfed the economy. It is not just her clients who she pushes to get out of their comfort zone, she also challenges herself to do the same. Hence the timing of the launch. She does have entrepreneurial experience to fall back on and, as she notes, “a track record much like my father, of starting and building firms”. Her most recent undertaking was building an impact investment bank called Enclude Capital. In 2018, after successfully growing the firm for just over a decade, it was sold to the Palladium Group. Once the transaction and integration process were complete, it was time for Laurie to build something new again. She founded Courageous Capital Advisors to deepen her impact and give further expression to her entrepreneurial drive.
Total return on investment
With over 25 years in impact investing banking, she asks her clients to at least acknowledge that they are hunting for a total return on their investment, not just a financial return. In other words, as an impact investor you may need to reframe your return expectations. If you want to achieve high impact, you might need to take a more modest, or at least more uncertain, financial return - and the net value of those two components needs to be considered.
“I never deny the financial return analysis,” she adds, “but I try to combine it with additional analysis so that the investor is really embracing a more integrated proposition, a total return proposition.” Anyhow, she asks, what’s wrong with a reasonable rate of return? “I feel like somehow that’s seen as a failure, if we talk about reasonable rates of return in a purely financial way, people say: ‘Oh, you’ve left money on the table.’ Why is that?”
Laurie points to influential academics such as Harvard Business School’s George Serafeim, who has been analysing a range of company data that supports the idea of taking a more cohesive view of performance and putting less emphasis on prioritising short-term profits. In one essay for the Harvard Business Review, he says: “Valuing a company’s effects on people and the planet—and integrating that into traditional financial analysis—will offer a more comprehensive picture of actual corporate performance.”
Valuing a company’s effects on people and the planet—and integrating that into traditional financial analysis—will offer a more comprehensive picture of actual corporate performance.
The founder of Courageous Capital encourages her own clients to think about allocating some of their portfolio to addressing some of the issues raised already - to support marginalised communities, the disenfranchised and the low-income. Some people, she says, will reply that their portfolio is not designed for that purpose or that their investment criteria are more narrow. “My response is, take advantage of today. If you’re telling me you can’t shift all of your assets into this kind of focus, okay, but at least part of your assets can go there.”
While this might make it sound like it’s only those with money who can make a difference, that’s not the intention. In fact, Laurie uses her many speaking engagements, interviews and writing to reach new audiences and those without vast sums of money in the bank. “The reality is, you can do impact work wherever you sit today; whatever your job is, you can be asking some questions and making impact objectives more explicit,” she insists.
We’re all impact actors
Calling on all of us as impact actors, she advocates for more responsibility and curiosity. This includes supporting friends who have ideas with impact, thinking about where we bank and exercising more control over our pension. In the UK, there is already a movement in that direction with the launch this year of Make My Money Matter, a campaign to encourage everyone with a pension to be more aware of what their money is doing when it’s invested. Like she tells her clients, Laurie tells Invest for Good’s readers to challenge themselves: “Sometimes I feel like we look to others as examples and say, ‘I’ll be active in supporting that person in that organisation. I’ll support someone else in doing it.’ This notion of identity is important, of seeing yourself as an inner impact community activist.”
Laurie learned some of her values from her dad, a successful businessman before anyone had ever heard of stakeholder capitalism or social entrepreneurialism. She remembers him as a man who defined success by “we” not “me”. He’s the one who first taught her about the need for stamina, about being willing to do everything and anything it takes. “I loved that because of the humility that comes from that as well - whatever your success may or may not be and however many people may or may not depend on you if you have the stamina, empathy and humility, it really gives you the power to keep going.”
There is little sign that Laurie intends to slow down. She serves on myriad boards, including as a lead expert for the UK Impact Investing Institute. She’s an advisor to BRAC, a microfinance bank that has made capital more accessible for millions and has scaled impressively. It’s work that she calls a “privilege”, in part because she believes BRAC’s growth is for impact, not growth for the sake of a bigger balance sheet.
In the United States, she works with Southern Bancorp, a community bank operating in Mississippi and Arkansas. There’s no question that Laurie is generous in sharing her knowledge and expertise, serving on the board of several impact investing field-building organisations including the UK’s Impact Investing Institute. As she puts it, “I want to be sharing and collaborating as much as possible because we simply don’t have enough time or energy to address the multitude of opportunities and challenges, we need to address to build a more inclusive and sustainable world for all.” Her new firm’s tagline is “Actions speak louder than words” and as Laurie concludes our conversation, “the time for action is now”.
Laurie Spengler is the founder and CEO of Courageous Capital Advisors. She serves as a non-executive director of the Impact Investing Institute, the CDC Group, Global Partnerships and Bridges Insights; Laurie serves as Global Ambassador to the Global Steering Group on Impact Investing and is Senior Fellow and Advisory Council member at Casei3 at the Fuqua Business School at Duke University. She was formerly president and CEO of Enclude, an impact investment bank.