FT Wealth

Left to right: Kevin Phillips and Elizabeth Phillips, Jason Ingle, Ian Simmons and Liesel Pritzker Simmons and Justin Rockefeller, shot exclusively for FT Wealth at Kykuit, the Rockefeller’s estate in New York © Pascal Perich

October 20, 2016

by: Stephen Foley

There is a capital P in The ImPact. The P is what happened when some of the youngest members of some of the richest families in America got together and decided that the philanthropy of their parents and grandparents fell far short of the good they could be doing in the world. What about the rest of their family fortunes, they thought. Charity is all very well, but shouldn’t the money they invest in stocks, bonds and private companies also be put to work to fix social and environmental problems?

The P is what brought together Rockefellers and Fords and Pritzkers and the scions of other historic dynasties from the US and abroad last month at Kykuit, John D Rockefeller’s country pile 34 miles from New York, which is now used to convene non-governmental organisations. There they debated how to bring “impact investing” to life and sealed a pact: “I commit to explore the impact of all of my investments and invest to create measurable social benefit.”

The pact is the brainchild of Justin Rockefeller, great-great-grandson of the oil baron turned philanthropist, and Josh Cohen of City Light Capital and is modelled on the “Giving Pledge” created by Warren Buffett and Bill Gates. Giving Pledge signatories promise to devote at least half their fortunes to philanthropy. Founding members of The ImPact met at Kykuit to discuss how they, and their family offices, can fulfil their promise to do good in other ways.

Justin Rockefeller
© Pascal Perich

“I am part of this amazing family, with a rich history in both capitalism and philanthropy,” says Justin Rockefeller, a lanky 37-year-old with a hipster beard and a beaming smile. “There are obvious success stories from business — not just JDR Senior but Laurance was an early venture capitalist and David was the chief executive of Chase — and then, of course, philanthropy as well. I want to build on the family legacy and the best way I know how to do that sits at the intersection of philanthropy and capitalism. Impact investing continues both family traditions, but with a new spin on it.”

When we meet, in the offices of Addepar, a New York software company where he is global director of family offices and foundations, Rockefeller is still delighting in the announcement that Rockefeller Brothers Fund, a philanthropic slice of the family fortune on whose board of trustees he sits, has finally been able to divest itself of fossil fuels. In doing so it can dedicate a portion of its investment portfolio to impact investing.

Impact investment is meant to offer a measurable social or environmental return as well as a financial one. It could comprise everything from microfinance loans to African businesswomen and venture capital for clean energy start-ups to more traditional bond or equity investing in companies whose products do good.

It is no coincidence that is being driven by young scions; there is a distinct millennial philosophy to the movement.

“There is something in it for the G1, the grandparents,” says Rockefeller. “The common gripe among them is, ‘I can’t get my grandkids to sit down and learn how to read a balance sheet’.

“And the reverse gripe among millennials is, ‘I want to invest in companies that I think are making the world a better place and I can’t get my grandparents to abandon this traditional view of investing.’ Impact investing has provided a bridge for inter-generational dialogue.”

Justin’s impact investment: Modern Meadow Uses living cells to create natural materials, including real biological leather grown in the lab from a process entirely free of animals. http://www.modernmeadow.com

Liesel Pritzker Simmons and Ian Simmons
© Pascal Perich

What marks Liesel Pritzker Simmons out from many wealthy pioneers of impact investing is her insistence that it is possible to dedicate 100 per cent of one’s portfolio to the practice.

Having carved out her piece of the Chicago Pritzker dynasty’s fortune in a high-profile court battle 12 years ago, she has put all her wealth, and that of her husband, into a family office called the Blue Haven Initiative, which the couple are using to evangelise impact investing.

“We are … taking a total portfolio approach,” she says. “We think about this investing very rigorously and pay a lot of attention to our risk-adjusted returns because this is not our play money … this is everything.”

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Ian is the son of Adele Simmons who, as president of Hampshire College in 1977 was the first college president in the US to divest her endowment of stocks from apartheid South Africa. “There were predictions that the sky would fall and that if you pay attention to the social impact of your investments you lose all this money, but the endowment did just fine and in some cases did better,” he says. Measuring financial returns is the easy part.

Measuring and comparing social or environmental returns is a much more complex and potentially subjective business. The ImPact hopes to use software from Addepar, Justin Rockefeller’s company, to aggregate all the different kinds of returns data for members.

Liesel and Ian’s impact investment: M-Kopa — has provided affordable solar-powered generators to more than 400,000 homes in Kenya, Tanzania and Uganda. http://www.m-kopa.com

Jason Ingle
© Pascal Perich

While the Ford family history is forged in the car factories of Detroit, Jason Ingle’s outlook on life was formed elsewhere. This great-great grandson of Henry Ford was raised on a farm in the beautiful countryside near New York’s Finger Lakes. “My parents were hippies and 90 per cent of everything we ate we grew on the farm. Before the word organic existed we called it homegrown.”

Ingle’s act of youthful rebellion was to go into finance, but raising a family of his own has brought him back to the path of doing good with his funds and back to thinking about how we produce food.

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He has founded Closed Loop Capital, a fund that invests in food system innovation and agricultural technology, expecting a market-rate financial return from those investments.

And he is not alone in the family in pushing impact investing. Bill Ford, the current patriarch, has a fund of his own called Fontinalis, dedicated to the future of urban mobility.

“Philanthropy alone is not going to be able to address the significant macro challenges we face, such as feeding 10bn people by 2050, scarcity of resources or inequality,” believes Ingle.

Jason’s impact investment: Beyond Meat — vegan alternatives to meat, including the “burger that bleeds”, which looks, cooks and tastes like ground beef. http://www.beyondmeat.com

Kevin and Elizabeth Phillips
© Pascal Perich

When Kevin and Elizabeth Phillips swung by the Financial Times’s offices in New York on their way to Kykuit, they were excited about impact investing and the new ideas they were hoping to learn as founding members of The ImPact. Sometimes they finish each other’s sentences. “Kevizabeth”, Kevin jokingly suggests they should be called. “We are impact investing babies,” Elizabeth adds.

Kevin was 24 when he took control of the family property business, based in the old textile town of Greensboro, North Carolina, after his grandfather died. He has been pushing the company to help house the community’s homeless. Elizabeth, meanwhile, agreed to take the helm of a new family foundation on the condition that, as well as giving 5 per cent in annual grants to tackle Greensboro’s social problems, it direct the rest of the endowment to doing good, too.

“I didn’t even know impact investment was a term. I just had a gut feeling that we could be doing more with the 95 per cent,” she says. “While we were doing so much good with the 5 per cent, what if some of the other 95 per cent was invested in a company that was creating homelessness?”

Kevin and Elizabeth’s impact investment: Akola — sells luxury jewellery produced by women in Uganda and Dallas. akolaproject.org

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