August 1, 2017; WHTC
NPQ rarely covers the “startups with an earth-changing idea” stories; they are too numerous, and often it is the last we hear of them. But we’ve taken an interest in this story, even if just to track the intentions of a large national foundation.
Writing for Reuters, Trevor Hunnicutt reported that the Rockefeller Foundation will announce later today its financing of Impact Shares Corp, an organization that plans to offer nonprofits the ability to develop exchange trade funds that can be publicly sold.
ETFs give investors the ability to buy a basket of stocks or other assets with a single trade. Many of the funds track a broad market index, rather than trying to outperform.
Charities working with Impact Shares would include in their ETF whichever companies perform well on the environmental, social or governance (ESG) criteria that matter most to them. For instance, a veterans organization might support companies with policies to hire people who have left the military.
The goal is to create a fund that will perform roughly in line with the broader market, according to Impact Shares founder Ethan Powell.
“If you really can organize corporate America around specific causes then you can make a meaningful difference,” said Powell. “The end goal is that every social issue is represented by a major nonprofit.”
It should be noted that the investment made by Rockefeller is relatively modest at $300,000 and, further, that the organization is still awaiting its own nonprofit ruling.
This experiment picks up on a strong social trend toward responsible (or at least not flagrantly irresponsible) investing. According to this article, “U.S. fund managers have launched 22 ‘socially responsible’ ETFs over the last 12 months, up from 13 a year ago and just five the year before that, according to FactSet Research Systems Inc.”
Founder Ethan Powell, a former chief product strategist for Highland Capital Management LP, said the reason it’s becoming a nonprofit itself is that it will ease the concerns of other nonprofits in their market.—Ruth McCambridge