The founder of SoCap and ImpactAssets shows how impact investing works, and how to start a private foundation with as little as $5,000.




Episode Summary

  • 2:15 What is ImpactAssets? Tim talks about how impact investing works, and what differentiates it from regular investing and venture capitalism.
  • 9:30 What Was Impact Investing Like Before? Although investors face the same problems in choosing companies to support, the biggest difference is in the mindset.
  • 12:15 The Coolest Social Impact Events in the Country Tim talks about the start of the social impact conference movement, and the ten years it’s taken to create social impact hubs all over the world.
  • 25:00 Donor Advise Funds: A Big Pile of Accounts and a Tax Break Time breaks down how to create your own miniature family foundation, and why it’s a good idea.
  • 38:30 Where Should I Invest? Interested in doing good with your investment dollars, but don’t know where to start? Here’s how to have advice and options brought to you.
  • 48:00 The Secret To Investing Like a Millionaire Tim talks about democritizing investing, and how much impact is possible when small funds and personal funds are aggregated on the ImpactAssets platform.

Full Post

Last year, the Social Capital Markets Conference brought 3,000 social entrepreneurs and impact investors to San Fransisco to collaborate. Now, the founder of SoCap shares how to democratize impact investing even further with the ImpactAssets platform. ImpactAssets is the leading facilitator of direct impact investing and donor advice.

What is ImpactAssets? 

ImpactAssets is an asset management platform built by impact investors for impact investors. The platform hosts thousands of investors of all contribution levels. That way, the assets can be allocated across many vetted projects.
Mission: Time shares that ImpactAssets was first built for “The apologetics of impact investing.” Or to bring the idea of impact investing to the mainstream and show that returns are good. But now, Tim says
“It is time to move toward much more dynamic user experience…where people are highly engaged and can express their passions in a collaborative way.”
Tim talks about impact investors interacting with more information inside their portfolios, and increasing face-to-face conversation with social entrepreneurs.
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Glorified Intern 

Tim shares about his journey in investing before impact investing was a thing.
“We were getting on planes to pull down $100k from a family foundation. Impact investing didn’t come online as a term till much later.” At the time, it was called “responsible investing.” Tim says, “things were a lot slower and much less mainstream at the time.” That was more than eight years ago. But in the timeline of cultural and social change, eight years is not long at all.
“You’ve got to be calibrated for the long haul. It’s a zeigeist shift, a total cultural shift we’re in… and you measure that in decades and generations, not quarters and years.”

PreHistoric Social Impact: What Was Impact Investing Like Before?

Tim says it was similar in some ways, in that it takes “wrestling” with wealth holders to allocate funding to vetted projects for social good. He says the same issues still abound, even with impact investing becoming more mainstream. “Stage and scale are complexities that are never going to go away in impact investing,” he says.
Tim talks about the question of market value when investing in social good companies.
“Can you do just as well or better by doing good? Or should you actually suspend some of the rules around the conventional rate of return and get stuff done that needs to be done in the world?”
He asserts that those questions will only be fully answered when we reframe capitalism entirely.
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The Coolest Social Impact Events in the Country

Tim talks about a common theme in the events he’s started. “I’m comfortable and see the value in middle-ware plumbing: What sits in the middle and knits people, ideas and capital together?” Be it a digital platform or an in-person event experience, he says
“I see it as a catalytic tool kit.”
In 2008 when the markets crashed, Tim saw the need for a gathering place for the tribe. Social entrepreneurs needed to keep steam in a depressing time. “The market was messy and fractured, and we needed to get everybody together to look at things in one place.” The idea of SoCap was to create a diverse, impact-driven Lollapalooza.

More recently Tim and his team have been working on more in-depth meetings and events. It’s important for all involved parties to “put their chips on the table,” and look at what there is to work with in one place. “We fell in love with this idea of having a persistent exchange of value of diverse parties on a regular basis. You talked about collaboration a year ago with your neighbors from another country, but it became out of sight and out of mind.” Tim casts a vision of ImpactHubs that are “embodying where change goes to work.”
Now, there are 103 of these hubs across 30 countries and 5 continents, and about one new location opens per month. “We’ve had as many as 600 members in San Francisco, from student groups to investors to consultants to nonprofits to for-profit companies. All these things can hang together.” The intention is to take care of social impact projects that have “middle-ware” or system-oriented needs.
“I’m trying to build a set of frontier activities that will pull the public toward more appropriate tools to get done what needs to get done in the world, considering the wicked problems we’re facing today.”

Democratizing Investing with Donor Advised Funds

Tim defines donor advised funds and shares that they “allow people or companies to bring a bunch of assets and get the tax break at day 0.” The opportunity in donor advised funds is that all of your donation and investing money can be “scrubbed of doing ill in the world” and designated in areas that align with your personal passions.
Also, Tim talks about the “menu” of projects and categories that ImpactAssets provides to people, so that they can take their 100k and support 10 different really cool curated projects. The investing options are customised and various, to make sure investors find the best place for their dollar to get specific things done in the world.
“The technology is not the issue, the will is not the issue, it’s the customer acquisition that is the issue,” Tim says. It costs something to connect investors and projects, even with great technology. Tim describes the business model, which is 1% of recurring annual assets.

Where Should I Invest?

Do you want to establish a personal charitable foundation? Then, you go to a donor advised fund, and THEN you invest in your favorite VC fund. That way you get the tax break. “It’s like having your own little Gates fund.” The fund is for putting aside funds you want to use for good, when you would still like advising and curated options.
How amazing that we can have donor advised funds for $5,000 and eventually $500 is a big deal – it’s a democratization of investing to make a difference. “It’s not just a playground for the rich and powerful,” Tim says. It calls to question “oligarchical philanthropy in the United States.”

Why is a Donor Advised Fund a Good Idea?

Unless you have tons of time and money, Tim says you’re going to find more options and more intentional returns with Donor Advised Funds. The funds do not have a return profile, because they are so specific to each donor.
“The answer depends on what you choose to munch on off of our platform,” Tim says. The returns are solid, but there is not a direct market value relationship with impact investing options.

The Secret To Investing Like a Millionaire

“They make it possible to become a major endowed philanthropic institution, in terms of your capabilities and access to impact investing, because you’re joining a group of many people that are aggregating to the scale that’s required.
If you have thousands of people with their little investing pools and put them together on a platform, you can allow them to access these incredibly arcane elite structures of private debt and equity etc. at effectively no minimums, because at an aggregate level we’re still making those institutional minimums. So that’s the secret, and what we’re making available.”
Tim talks about customizing the investing experience as a platform, by tracking opportunities, companies, and transactions. Before long it will be easy to find the options that relate to the Global Goal you’re most interested in solving.
“I think we will move a small number of billions of dollars over the next not too many years… I think our catalytic change this is is related to, how do we engage and innovate for a wide range of participants to get involved and integrate values into their day to day expression of passion with their wealth”
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  1. What it took in 2008: 10 years ago a small group of people stood up and created something that has now grown internationally.
  2. Impact Hubs make SoCap a yearly event: It’s so important to create an ecosystem of resources and support tribes to get something done in the world.
  3. Donor Advised Funds: These are an amazing way to structure your investment funds easily and efficiently to make a difference in areas you’re passionate about.

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