You could never accuse Nia Impact Capital of being short of ambition. The impact fund based in Oakland is aiming to shift our entire economy to make it more equal, fair and just. That means thinking carefully about who controls the money.
Kristin Hull, founder and CEO of Nia, is clear about the importance of diversity when it comes to finance and investing. In fact, Nia Impact Capital only invests in companies that have women in positions of leadership, weaving a gender lens in its approach. Kristin talks of how almost every where in the world boards of directors are “male, pale and stale”. This creates inequality and a dearth of viewpoints.
A recent study commissioned by the Knight Foundation found how asset management firms are disproportionately run by white men, yet there is no statistical difference in how well they perform, compared to diverse-owned firms. The same 2019 study revealed that women and minorities manage just 1.3% of assets in an industry worth about $70tn. We agree that if we can shift those numbers, even if just a small amount, it will make a big difference.
The founder practices what she preaches, describing her team as small and mighty. Nia has a number of women in its ranks and actively looks to recruit more through its Change the Face of Finance internship programme. It trains young women and non-white people who would like to build a career in sustainable finance. Kristin wants to grow Nia and to get more voices involved in who is running the money in this world.
Nia - a Swahili word meaning intention and purpose – does not stop at supporting and investing in women. Its flagship portfolio, Nia Global Solutions, invests in 50 companies that are providing sustainable solutions to global problems. The investment thesis focuses on six themes, from education and affordable housing to healthcare.
Kristin believes we need to move money from so-called zombie portfolios. Her portfolios are actively managed and diversified with the aim to move people away from passive investing and indexing. Instead, the focus is on making sure that every investor intimately knows the companies they are putting money into and that they can be absolutely proud of each one. Depending on the platform, investments start at just $100 for high school and college students using an app created by NewDay, through to $100,000 for some of the bigger brokerage houses.
People and planet
It is Kristin’s conviction that there doesn’t need to be a trade-off between the positive impact these companies can have and the financial return to investors - and this has largely been borne out. Investing in solutions that are needed for people and the planet and then weaving that gender lens throughout is proving to have more alpha than the benchmarks at this time.
In 2019, Nia Global Solutions had a strong year, finishing up 32%, benchmarked against the MSCI All Country World Index. This year is a slightly different picture because of how Covid-19 has rattled the markets. Yet with all the turmoil and uncertainty, the portfolio is up. For investors in this portfolio, short, sharp and colourful impact reports highlight a different issue each financial quarter and the solutions that are being developed to tackle these. The CEO explains that it is about drawing people in to read these reports, so they are kept to one page, with the hope that people might be interested enough to ask questions later.
Teaching and learning
As a previous kindergarten teacher, Kristin has a wealth of experience to draw from when it comes to holding people’s attention. She admits that teaching is something she continues to do every single day, albeit through the lens of finance. Before switching to this industry full time, she helped to fundraise for building and starting a charter school. Successful in raising capital, many people asked where she learned so much about money and realised, she was sitting on a lot of financial skills. Kristin thought of how different the world would be if a more diverse range of people were empowered with the same skills she had.
Kristin developed her own financial prowess with one of the best teachers around in her young life - her father. He started a trading firm in the family’s garage and, from the age of 14, she was learning about derivatives, commodities, futures and algorithms. “Buy low and sell high” was the family’s mantra. It worked. Her father eventually sold the business to Goldman Sachs, a moment that enabled Kristin to think about how she could combine her passion for making a difference and the world of finance.
Kristin talks of how different the world is when you are with adults all day. Although she hasn’t looked back since, while reminiscing about cutting coloured paper with former students, you can tell she has moments when she would like to get back into the classroom.
The founder’s quest to change the current parameters of finance is unrelenting. She hopes to inspire others, especially women, to think more about how they can use their influence to shape the world. For many women, the world of finance is something that they are shut off from. Kristin adds, “once women feel empowered with their finances, it’s amazing the other things they can do.”
She encourages all her investors to move their money from large, polluting banks to a local, community bank, something which she calls a big win. She hopes that the impact of her company goes further than that. If more people experienced how Nia invests and does finance, then they would demand this approach of asset managers more often. That’s where change starts.
Another avenue in which Kristin tries to create positive change is through investing in social entrepreneurs. Nia Community Investments is a 100% mission-aligned fund focusing purely on social justice and environmental sustainability, two of Kristin’s personal passions. Begun in 2010, the private fund consists of almost every type of asset class and concentrates on being more of an angel investor at an early stage. One of its investments is Kubé Nice Cream, a coconut-based ice cream that is completely organic.
Founded by Kai Nortey, a young, black woman, the company has plans to hire formerly incarcerated women and disadvantaged youths from the Oakland community. It is also committed to creating a regenerative and inclusive economy, by donating its waste to organic, urban farms in low-income areas; and building trusted relationships with coconut farmers. The CEO says that all of these investments feel like her babies, companies that Nia has supported and championed because of their values and positive influence.
As impact investors and founders know all too well, measuring the impact a company or social enterprise in the longer term is a bit trickier. The chief executive feels that the responsible investing industry is yet to figure out how “impact” is measured. Accurate measurement is challenging with a range of metrics used by different companies and entrepreneurs. It makes any comparisons almost useless and can lead to the impact being watered down. Nevertheless, Kristin says, there will be some clear outcomes eventually. For instance, the greater diversity of boards and executive teams, as well as how many assets under management are going to women-led products. These are all easily measurable.
Close to home
As a native of Oakland, a city that has been blighted by social problems, Kristin is all too aware of inequality, injustice and inclusion. She grew up in the 1970s and has seen inequalities get even starker in recent years. The homeless population of Oakland for example has gone up 47% since 2017, with volunteers counting more than 4000 sleeping on the streets in 2019. Kristin explains that only a mile away from her home on a quiet, tree-lined street, is a homeless encampment with dozens of tents.
Covid-19 has only exacerbated the problem, with poorer people and minorities generally suffering disproportionately from crises such as these. Kristin sees the trend of United States government loans going to white, male businesses and corporations. Smaller businesses are not accessing the money, so we are likely to see our inequalities grow through this crisis, and out the other side. It is her hope that the pandemic will make us pause, take stock and start doing things a bit differently.
With a busy life leading Nia Impact Capital, Kristin knows it is important to take time to recharge. She does this through a mixture of meditation and taking hikes in woods near her home. Writing is one of her hobbies too, and she has contributed to a book on impact investing edited by Paul Herman. She keeps thinking one day she will write her own, focused on women and non-white people leading in impact investing. Until then, she writes a blog, the Money Doula blog, about investing in the world we want to see and tackling the business-as-usual mindset.
“Following the path that you know to be right can be hard because we have the status quo” Kristin admits, but she has no plans to veer off track.
Kristin Hull is the founder and CEO of Nia Impact Capital and is the co-founder of Impact Hub Oakland, a co-working space for entrepreneurs and social changemakers. She also serves on the board of the Mosaic Project and on the leadership committee for How Women Lead.