Where Should I Invest? Creating a Portfolio that Generates Social Capital
Before I get into today's blog, I just wanted to let you know that a podcast of an interview I conducted with Collin Glassco will be posted in the coming weeks. Collin is the founder and CEO of the Glassco Foundation. I interviewed him for a book I am currently researching on Strategic Philanthropy. This is my first foray into podcasting so learning as I go...
But onto a topic that has come up in recent conversations. What would a diversified portfolio look like if one of its objectives is to generate social capital?
Of course there would have to be charitable investments. Ideally ones that not only resonate with the individual, but also have greater impact on society. How do other businesses play into this portfolio?
Here are my thoughts - a social capital generating portfolio would include general revenue generating funds/shares/stocks. Some people feel that change can happen from the inside, so by holding a piece of an oil company's assets you are providing them with the means to make change. Fair enough. Others feel that social capital can only truly be generated by investing in companies that have society's interests at heart (i.e. green energy). That's fine too. Whatever the motivation, there should be some source of revenue generation in the portfolio.
The second piece would be investing in a social enterprise. I see social enterprises as companies that have social interests at the core of their business model. They are for-profit enterprises and can be in any industry.
I was recently speaking with a woman who is looking at opening up a restaurant that is sourcing its food from local farmers. Her approach to seeking investors has been the traditional business model (except that she is only asking those who align with her personal values). Of course, as many of us know, investing in the restaurant business is high risk and therefore difficult to attract investors. We talked about her changing her message from restaurant investment to a community enterprise investment. By buying a share of her company you will not only be bringing a new eatery to her city, but you will be supporting other local businesses. Most specifically, your investment will provide a foundation for local farmers to continue to strengthen their own farms in the shadow of the major agri-businesses that are cropping up around North America.
Of course, this positioning only works with those who already have a social bend. But if you are reading this blog my guess is you have already given some thought to the idea.
The final piece of the social generating portfolio is charity (as mentioned above). Charitable investments do not have to be to a specific sector or organization to have meaningful impact. The most important thing about your charitable investments (aside from the fact that they align with your values) is that you know where your money is going and how you can best get it there.