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Impact Investing for an Equitable Future

Author Charlotte Cipolletti, Director of Impact Investments at CapShift

November 3, 2021

At the onset of the pandemic, calls for unity and togetherness proliferated, guided by the notion that the public health crisis was a collective experience. And while the health, economic, environmental and social ramifications of the pandemic have been felt in every household, it is no question that historically marginalized groups have been hit the hardest. For example, Black (2.9x), Latinx (2.8x) and Indigenous (3.3x) COVID-19 patients are disproportionately more likely to be hospitalized relative to their white peers. Existing gaps in education and work are also widening along the lines of race — such as the much higher rates of unemployment among Black and Latinx workers.

These inequities have always existed, but now — over nineteen months into the pandemic — they stand in relief more than ever before. For those in a position to help, donor-advised funds (DAFs) can offer ways to promote inclusion, level the playing field and reduce existing disparities.

Taking Action

One way to close these systemic gaps is to advance equity and inclusion. We define equity as the fair and just treatment of all individuals in society, with the additional emphasis of understanding and meeting each individual’s needs. Equity is distinct from the concept of equality; as outlined by the Education Trust, while equality strives to “level the playing field,” equity understands that we must invest “more for those who need it.” Working in concert with the fundamentals of equity, inclusion ensures that all of society’s participants feel valued, empowered and able to participate.

Like-minded philanthropists can look to donor-advised funds to advance equity and inclusion through grantmaking, aligned public ESG investments and private impact investments. As a complement to NPT’s recently published anti-racism grantmaking guide, NPT also offers donors liquid, thematic investment portfolios and private impact investments that address equity and inclusion.

NPT Thematic Portfolios – Equity and Inclusion

Working parallel to NPT’s efforts to boost grantmaking towards racial justice, NPT’s Equity and Inclusion portfolio supports companies and municipalities that lead in fair wages, healthcare, affordable mortgages and other areas that benefit historically marginalized communities. This portfolio anticipates moderate growth of DAF assets and has the benefit of daily liquidity and low investment minimums.

One example of a portfolio investment is the CCM Community Impact Bond Fund. NPT directs the allocation of capital to explicitly support CCM’s Minority CARES initiative, which invests in market-rate bonds that have direct and measurable social impacts on historically marginalized individuals, families and communities. Its investments span affordable healthcare, affordable housing, economic inclusion, education, childcare, enterprise development, jobs, human empowerment, minority advancement and neighborhood revitalizations.

In addition to investments, the managers of funds held within NPT’s Equity and Inclusion portfolio advocate for equity and inclusion by engaging with underlying portfolio companies. For example, in 2020, Parnassus, the manager of the Parnassus Core Equity Fund, adopted a new proxy voting policy that requires at least one person of color on corporate boards. They have directly engaged with companies in their portfolios that do not meet this new requirement to push them to do better in the future.

Finally, the managers of funds within this pool have made efforts to advance equity and inclusion in their own organizations and throughout the industry. For example, Calvert President & CEO, John Streur, stated in 2015 that inequality presented a greater threat than climate change, as it was poorly understood, left unaddressed, and continually exacerbating. To better understand how to evaluate companies’ contribution to inequity, Calvert adjusted their models to measure company performance on issues such as health and access to education and the labor market. Calvert commits to push their own research on these issues to help drive more informed investment selection for their clients.

Investing with NPT’s Equity and Inclusion thematic portfolio provides a multi-faceted approach to mindful philanthropy. A moderate risk profile geared towards long-term capital growth provides stability for grantmaking, while a thoughtful investment selection allows donors to align their investments with their social impact goals.

Driving Impact Further: NPT Custom Impact Investing Portfolios

NPT recognizes that building a liquid and diversified investment pool with a moderate risk profile may limit the portfolio’s ability to target specific issue areas or influence change on a larger scale. For donors with a more targeted impact focus, NPT also offers opportunities to invest capital in high-impact, private investments that directly address specific drivers of racial justice and inequity.

As outlined in CapShift’s Racial Justice Framework, there are multiple investment themes and approaches to targeting racial justice. Donors can explore these themes and discover impact investment opportunities through the CapShift platform, as well as recommend custom impact investments for their donor-advised fund.

One example of an opportunity available through the CapShift platform is a prison-reform focused private equity fund. This fund invests in innovative companies that are working to reduce the suffering and injustices of mass incarceration. Specifically, the fund will target companies focused on reducing incarceration, reducing suffering for individuals and families in the system and promoting a successful transition out of the system.

Another example highlighted on the CapShift platform is a nonprofit-backed private equity fund that concentrates on workforce development. This fund seeks to improve economic mobility by expanding the availability of career-centered, high-quality job training programs to disadvantaged students.

These are just two examples from a selection of investments on CapShift’s platform that advance equity and inclusion through business lending, education, affordable housing — and more. With a focus on breadth in themes and depth in impact, CapShift’s menu offers donors the flexibility to find the opportunities that best align with their theory of change.

Getting Started

If you are interested in activating your donor-advised fund through philanthropy, public thematic portfolios, or private impact investments, please reach out to NPT’s Philanthropic Services team at philanthropicservices@nptrust.org or info@capshift.com to learn more.

Charlotte Cipolletti helps lead the investment research team and advisory practice at CapShift where she is responsible for the sourcing and due diligence of impact investment opportunities on the CapShift platform as well as portfolio construction for CapShift’s clients. Prior to joining the CapShift team, Charlotte worked as a Portfolio Manager at DWS Investments, an international asset management firm. She has experience managing index funds across domestic, international, and emerging market equities with a specialization in ESG, currency hedged, and smart beta methodologies. Charlotte graduated from Columbia University with a BA in Sustainable Development.

About CapShift

CapShift is an impact investing platform that empowers philanthropic and financial institutions, along with their clients, to mobilize capital for social and environmental change.

This publication does not provide individually tailored investment advice. It has been prepared without regard to the circumstances and objectives of those who receive it. This report contains general information only, does not take account of the specific circumstances of any recipient and should not be relied upon as authoritative or taken in substitution for the exercise of judgment by any recipient. Each recipient should consider the appropriateness of any investment decision having regard to his or her own circumstances, the full range of information available and appropriate professional advice. CapShift Advisors LLC recommends that recipients independently evaluate particular investments and strategies, and encourage them to seek a financial adviser’s advice. Under no circumstances should this publication be construed as a solicitation to buy or sell any security or to participate in any trading or investment strategy, nor should this publication or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. The value of and income from investments may vary because of changes in interest rates or foreign exchange rates, securities prices or market indexes, operational or financial conditions of companies, geopolitical or other factors. Past performance is not necessarily a guide to future performance. Estimates of future performance are based on assumptions that may not be realized. Every investment strategy has the potential for profit or loss. The information and opinions in this report constitute judgment as of the date of this report, have been compiled and arrived at from sources believed to be reliable and in good faith (but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness) and are subject to change without notice. Capshift and/or its employees, including the author, may have an interest in the companies or securities mentioned herein. Neither Capshift nor its employees, including the author, accepts any liability whatsoever for any loss or damage arising from any use of this report or its contents. All data and information and opinions expressed herein are subject to change without notice.

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