Impact Investing and Social Entrepreneurship: A Way Forward
Recently, I interviewed Ron D. Cordes, Co-founder of the Cordes Foundation, which he and his wife Marty created in 2006. The primary focus of the Foundation is to utilize social entrepreneurship and impact investing as tools for global poverty alleviation. Ron has enjoyed a 25+ year career in the investment industry, having co-founded and then sold AssetMark Investment Services to Genworth Financial (NYSE:GNW) in 2006. He is currently Co-Chairman of Genworth Financial Wealth Management, which is responsible for over $22 billion of assets under management.
Rahim Kanani: Describe a little bit about the founding and motivation behind ImpactAssets.
Ron Cordes: My motivation behind the founding of ImpactAssets came out of my personal experiences as an impact investor in our family foundation portfolio. Over the past four years we’ve been active impact investors, and while we’ve now assembled a portfolio of over a dozen investments, it’s been a difficult process to locate investment managers and funds focused on impact and evaluate them with respect to their ability to actually deliver that impact. What became clear to me is that if we’re really going to catalyze meaningful capital, we have to create tools, vehicles and products to better connect investors with impact investment opportunities – – in addition to engaging the wealth management community who act as the “gatekeepers” for much of this capital. We were fortunate to find a great partner who shared this vision in the Calvert Foundation, and receive great early support from the Rockefeller Foundation and others to get the initiative off the ground.
Rahim Kanani: As co-chairman of Genworth Financial Wealth Management, how did you become interested in impact investing?
Ron Cordes: When I sold my business to Genworth in 2006, my wife and I created our family foundation – and began to focus on how we could use our investment portfolio, via this newly emerging field of impact investing, to leverage the impact of our grants portfolio in addressing issues around global poverty. As I built our impact portfolio, I began to fully appreciate the ability to create “double bottom line” returns – particularly in 2008 when several of our microfinance investments were among the top performers in our portfolio. I also had the opportunity to speak with dozens of the wealth managers we work with at Genworth, and found that they had an emerging interest within their client bases to do the same thing we were doing – but lacked any tools or infrastructure to actually build and implement impact portfolios.
Rahim Kanani: Carve out the landscape a little more. What is the current state of impact investing, and where is it heading?
Ron Cordes: The impact investing space is still in its infancy – but several studies from JP Morgan and others have projected that it will grow over the next 5-10 years into a sizable market – which is consistent with all of the conversations I’m having today with leading players in the field. Like any new investment category – it will take time for investors and the advisors who serve them to embrace this new opportunity – but I’m quite confident that a strong groundswell of interests exists from individuals and family foundations who are becoming increasingly aware of how they can connect their “passions with their portfolios”.
Rahim Kanani: What kinds of investments is ImpactAssets currently involved in?
Ron Cordes: Today we administer $60 million of assets in our ImpactAssets Giving Fund, a Donor Advised Fund (DAF) spun out of the Calvert Foundation that is the only DAF specifically designed to embrace impact investing. Within this portfolio we’ve made investments on behalf of our donor advisors across about a dozen different vehicles, including microfinance, Fair Trade, sustainable timber, and renewable energy in the developing world. We intend not only to grow our DAF assets substantially, but also to introduce a series of multi-manager impact investment funds which will be available to investors for their traditional (personal, IRA, family trust) portfolios – with the goal of $1 billion in total assets on our platform by 2016.
Rahim Kanani: If the work of ImpactAssets rests upon one core philosophy about the way in which the world works, what is that philosophy?
Ron Cordes: Our philosophy is that to solve the world’s toughest problems we need exponentially more resources than can be provided through just traditional philanthropy. Impact investing offers an opportunity to tap a giant new capital source to create sustainable, scalable solutions that can have potential game-changing results.
Original post in Forbes