Quiet leadership isn't always obvious. But it can take the
qualities of a leader to follow "the road less traveled"
in one's own relationship with money-qualities like courage,
vision, perseverance, and the willingness to engage with
others. Here, Carol Atwood, a recognized leader in the business
world, describes the quiet journey she took to align her
private equity, social, and philanthropic investments with
her values as she received multiple bottom- line rewards.
roads diverged in a wood, and I-
I took the one less traveled by,
And that has made all the difference.
- Robert Frost 1
When I sold my business five years ago,
I decided that the time had come to align my private investing
with my social values. Expecting great advice from advisors
and money managers about how to accomplish this, I was shocked
by the reaction I actually got. "That's great; that's noble,"
they told me. "You can dedicate a portion of your assets
to society, but that's your 'other pot.' Asset allocation
is one thing. Social giving is another." The bottom line
for them was that a social filter would inhibit my returns.
While I wanted to maximize profit and mitigate
risk, I was determined to put my money to work based on
my personal values. After all, if I were to invest in a
for-profit company that was damaging the environment in
the course of doing business, wouldn't I undo the good I
hoped to do by giving a grant to an environmental nonprofit
organization? Rather than canceling my investments out,
I decided that my left hand should know what my right hand
was doing. So I struck out on my own.
Having little experience with managing money
for myself, I really didn't know how to start. I decided
that it made sense to use the skills I had developed in
the course of running my own business to tackle this challenge.
So, I began choosing private equity investments that aligned
with my social concerns, looking for both healthy financial
and social returns. I discovered that my approach mirrored
Jed Emerson's. [See sidebar, p. 27, and www.blendedvalue.org].
Emerson has referred to value as "what gets created when
investors invest and organizations act to pursue their mission."
As he notes, the conventional wisdom is that value is either
economic (i.e., created by for-profit companies) or social
(i.e., created by nonprofit or non-governmental organizations).
Espousing a Blended Value Proposition, Emerson states that
"all organizations, whether forprofit or not, create value
that consists of economic, social, and environmental value
components-and that investors (whether market-rate, charitable,
or some mix of the two) simultaneously generate all three
forms of value through providing capital to organizations."
As I proceeded on my own with Emerson's
words in mind, I happened upon Investors' Circle, a community
of socially responsible, private equity investors who changed
my whole experience. It felt good that I was no longer alone,
as most of IC's members also expected fair market as well
as social returns. The more involved I became with the various
instruments of finance, the more I realized that the entire
spectrum of my pocketbook could be aligned with my values.
Research conducted by the IC Foundation,
in collaboration with Harvard Business School and McKinsey
& Co., showed that, in fact, favorable market returns
could be generated by private investments in social companies.
This research examined the financial return realized by
the Investors' Circle network, whose 110 members had made
investments totaling $72 million. Their research found that,
treated as a hypothetical portfolio, IC's investments generated
an 8% return for a "buy-and-hold" strategy and a 14% return
when there was an additional round of investment and liquidation
after a lock-up.
Circle itself, the collective experience of its members-
investing approximately $80 million in 120 deals over a
period of more than 10 years-showed that, as a total portfolio,
returns were definitely in line with other venture capital
me, leadership is about understanding truth in a way
that the mainstream may not yet perceive. Those of
us who are engaged in the kind of investing that Carol
Atwood describes recognize the truth of what we're
trying to do, which is to create economic, social,
and environmental value by investing in alignment
with our values and mission. The mainstream hasn't
caught up with us yet. People like Carol are changing
the terms of the conversation around investing and
public discussion as a whole."
-Jed Emerson, lecturer in business at Stanford University's
Graduate School of Business and senior fellow with
the William and Flora Hewlett Foundation and the David
and Lucile Packard Foundation
philanthropic side, I had been writing checks into what felt
like a black hole, giving without knowing much about the organizations
or what actually happened to my money. I set out to learn
about nonprofits so I could make good decisions about what
organizations, projects, and people to support. Then I heard
Meryl Bralower, the chairman of Social Venture Partners/Boston
(SVP), speak about the engaged venture philanthropy model.
Using the same principles I had been using in my private equity
investing, she introduced me to a model that leverages each
investor's (called a "partner") giving with others who also
become engaged, not only as donors but also as advice-givers
or as hands-on providers of technical support. Staying involved
with SVP's grantees (called "investees") has enhanced their
chances of becoming sustainable over the long term and more
valuable to their constituencies. This model has been perfect
for me, as it has allowed me to financially support the community
while maximizing my contributions. I never knew what I was
missing until I began aligning my investments with my values.
Combining private equity investing, social investing, and
philanthropy has taught me that philanthropic pots and private
equity pots are not distinct. To the contrary, they are- and
should be-inextricably linked. For that reason, I am now as
inclined to take an equity position in a company being operated
by a business owner in a disenfranchised community as I am
in making a grant to a nonprofit organization serving that
same community. In addition, connecting with communities of
likeminded others has not only enriched my giving and financial
investments, but has also made me feel that I am making the
biggest impact I can with what I have.
From The Poetry of Robert Frost by Robert Frost, edited by
Edward Connery Lathem. Copyright 1970 by Leslie Frost Ballantine,
Owl Books, Second Revision, 2002
. Copyright 2003, Jed Emerson. All rights
3 Research results were published in "The
Hard Numbers on Social Investments" by Manda Salls, Harvard
, November 10, 2003.
Carol Atwood is president and CEO of
Spartacus Media Enterprises, a social mission media company.
Formerly, Ms. Atwood owned and operated TMG, an international
marketing company that focused on programs for Fortune 500
companies. She is the recipient of many awards, including
New York City's Entrepreneur of the Year award. In 1997,
TMG was named Company of the Year by the National Association
of Small Business Investment Companies and was ranked by
Working Woman magazine among the top 100 women-owned businesses,
placing Ms. Atwood between Martha Stewart and Oprah Winfrey.
Ms. Atwood is also a member of Investors' Circle (IC), a
social venture capital intermediary whose mission is to
support early-stage, private companies that drive the transition
to a sustainable economy. Founded in 1992, IC has become
one of the nation's oldest and largest investor networks-the
only one devoted specifically to sustainability.
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