ten years ago, I was invited to join twenty-one other
women and start the Washington Women's Investment Club.
The group has been meeting regularly ever since.
At the beginning, none
of us had much experience investing, but we were eager
to learn about money and accumulating more wealth. We
were like-minded young professional black women. None
of us felt that we could reach our financial goals on
the strengths of just our salaries. By joining together,
we thought we could teach ourselves the ins and outs of
investing, share the risks, and buy into some investment
opportunities that few of us could afford on our own.
We also hoped to have fun and make new friends.
Unlike most investment
clubs, we haven't just stuck to stocks and bonds, but
have also invested within our local community. Our first
venture capital investment of this sort was a start-up
sports/entertainment management business with a good business
plan and solid funding. The lawyers, bankers, and accountants
in our group all recommended that we invest, so we unanimously
agreed--excited to finally be investing in our community.
The business folded, however,
and we lost all the money we had in it. At first, there
was some angry finger-pointing. Some members had felt
pressured to join the investment recommendation; now those
who had suggested it felt unfairly attacked.
We had to hold a retreat
and have a long, uninterrupted talk about our goals as
a group, our risk tolerance, and how we could better communicate
with each other.
Talking about money is
an intimate activity, but pooling resources and choosing
investments together requires even more trust. Ultimately,
we came out of the retreat stronger than ever.
This growing trust ultimately
changed how we worked as a group. Instead of making every
investment decision as a group, we delegated this responsibility
to two committees--an equities investment committee and
an entrepreneurial/ventures committee. This allowed us
to respond more rapidly to changes in the market, and
to decrease the work load for most members. Most of us
are married now and have families and demanding jobs.
The whole group still offers
guidance though. We decided as a group, for example, not
to invest in tobacco or liquor companies, nor to invest
our portfolio in companies doing business in South Africa
during the economic embargo.
By freeing up more members'
time, our group has found other creative ways to support
our local community. For several years, we organized an
annual art sale to highlight the investment value of art
and the work of emerging African-American artists. We've
always donated a portion of the proceeds--one year to
a homeless women's shelter for a mural project, another
year to a local public performing arts high school. We've
also promoted the idea of investment clubs in the black
community by speaking to groups, getting national television
and press coverage, and by publishing a manual on how
to start an investment club.
This excites me. I've received
a lot of opportunities in my life, and I want to give
back and help provide others the chance to prosper.
- anonymous author
Neither my husband nor
I really have time to evaluate our investments, so we
leave these day-to-day decisions in the hands of our financial
manager. For us, trust in our manager is key. We selected
our investment firm because it uses a broad range of social
screens to evaluate investments. Once our money was placed
there we knew our investments would be supporting the
kind of corporate responsibility we were looking for.
Now our money is supporting companies like Whole Foods
Market and ICC Technologies and we've experienced no significant
loss in our return since starting to screen our stock.
Our financial manager called
a while back and proposed a slightly more radical idea--putting
some of our money into higher risk, slightly lower than
market return investments in low-income housing. That
made sense to us. We felt that if we could still make
some money while offering opportunities to communities
that needed of capital, then so much the better. As a
result, we've invested in a number of projects, including
the Boston Community Loan Fund, the Mercy Loan Fund, Accion
International, Shared Interest, and the Institute for
Community Economics. In addition, we have purchased CDs
from two community economic development initiatives--the
Self-Help Credit Union in Durham, North Carolina and Elk
Horn Bank in Arkadelphia, Arkansas.
It's true that if we earned
the highest possible rate of return, we would be able
to make slightly bigger contributions to various community
organizations. But, if our investments directly produce
housing and jobs for people, isn't that as effective as
giving away a little more grant money?
- anonymous author
God, Not Mammon
My investment philosophy
is based on deep confidence that, ultimately, there is
no real risk. God loves us all, rich and poor, saint and
sinner. While it is a great blessing to have assets, money
comes and goes. I have many other assets: health, education,
energy, and self-confidence.
I always ask, "Does this
investment of my time, money, knowledge, or love serve
God's purpose?" For years I've had social screens on my
investments, and this does a lot of good. But I've decided
to do more to act out my faith in my economic life. Now
I put most of my money into community loan funds and emerging
businesses I believe in, even though the former offer
below market returns and the latter are high risk. For
me, these investments offer a chance to answer God's call
and be where I think He wants me to be.
Here's a success story:
a food bank in Western Massachusetts was given some land.
After a few years of growing vegetables on it to give
to the hungry, they wanted to develop a large-scale farm
that would sell food to the community--by individuals
becoming "subscribers"--as well as provide produce for
the food bank. They found prime farm land, but it cost
$900,000. That's when the farmer, who knew me from a different
project, approached me about helping them out.
To understand how this
opportunity hit me, you need to know that I spent my youth
thinking I'd be an organic farmer, and a fair portion
of my adulthood exploring ways that agriculture might
help other social-improvement endeavors. I supported the
farm purchase in three ways: I guaranteed the loan (which
didn't cost me a cent); I bought a below-market rate CD
for the loan amount from a socially-responsible bank,
so the bank could turn around and offer the farm a lower
mortgage rate; and I bought the farmhouse (over which
I retain ownership), so the farmer could live right on
the property. These were not gifts, they were investments.
My primary contribution was absorbing all the risk.
The food bank raised enough
to pay off the loan in just four years, partly because
the state bought the development rights which cut the
cost in half. The farm now has 400 paid subscribers and
provides 100,000 pounds of organic vegetables a year to
the hungry of Western Massachusetts. I often go out to
the farm, tickled that hardly anyone there knows the role
Even though my wife supports
this type of investment, she sometimes worries that we
won't always be able to afford this nice roof we have
over the heads of our two baseball-crazed sons. It's something
we've had to talk about, and I've reassured her that what
I'm playing with in venture capital is indeed play money,
not what we need for basic security.
Some people think that
having wealth is contrary to the Christian spirit, but
I don't think so if you wake up every morning thinking
about how to spread it around. If we don't ponder that,
we might be in deep trouble, because wealth raises the
stakes and makes it harder to get into heaven.
- anonymous author
How people invest their
money can not only change corporate practices, it can
help topple governments. I know this firsthand from my
years organizing with the anti-apartheid movement in the
United States. I've seen the effect of having individuals
and institutions divest from companies doing business
in South Africa.
The democratic movement
in South Africa didn't limit itself to moral appeals for
change. They reasoned that only if the South African government
felt the strain on its pocket book would it stop denying
equal participation to the black population. Thus they
called on the assistance of anti-apartheid organizations
around the world to create international pressure to isolate
and weaken South Africa's economy.
Over a period of years,
the divestment wing of the international movement convinced
employees, stockholders, and consumers that they had the
power to send a message. This pressure took different
forms. One strategy targeted portfolio managers, universities,
religious institutions, employee pension funds, and individual
stockholders, convincing them to divest themselves of
stock in companies doing business in South Africa. Another
identified banks which held loans to the South African
government, demanding that they not follow previous practices
of "rolling-over" loans when they came due, but rather
demand repayment and refuse new loans.
While just one facet of
the overall campaign to weaken the government, these strategies
were key to bringing it to the negotiating table. Apartheid
became too expensive and the government started looking
for alternatives. This movement ultimately led to Nelson
Mandela's election as President of South Africa.
While we should certainly
celebrate this stunning political victory, those of us
who care about South Africa must now find effective strategies
to reinvest and help rebuild its economy. On my trips
to the country, I've seen the hardships imposed by divestment.
Without an economic recovery that can provide basic necessities
for its citizens, South Africa's political victory remains
This next phase is in many
ways harder. Creating jobs and stimulating economic development
in disadvantaged communities is a challenge for any government.
If South Africa is to truly reach its potential, initiatives
which effectively make the economy a tool of empowerment
must be identified and supported by investors. Only through
creative reinvestment can the dream of a non-racist, non-sexist,
and democratic South Africa become a reality.
- anonymous author
After stints as an entrepreneur
and a technical writer on international food policy, I
was hired by a small venture firm in the early 1980s.
I had some success, some luck, a few good deals, and I
was in line for a partnership.
Yet I always felt a little
out of step with my colleagues. They had an unquestioned
faith that profitability was proof of social value and
that the rising tide of free markets would lift all boats.
As a technical writer, I had seen the effect of global
markets on local culture. Sometimes profitable businesses
are a great boon to a community; other times they can
have devastating impacts.
So, after about five years,
I set out on my own to start a $25 million venture fund
dedicated to socially and environmentally responsible
companies. This was in 1989, the nadir of the venture
industry. While I was not able to reach the necessary
capital threshold to launch the fund, the process put
me in touch with numerous individuals--foundation officers,
family investment advisors, high net worth individuals
and others--whose enthusiasm and concern convinced me
that the need for new approaches to venture capital investing
When faced with the decision
of going back to work for a traditional venture fund or
going "forward" into the unknown, I chose the latter.
We sold our house in Connecticut and down-scaled to a
much smaller home in Massachusetts. My plan was to give
myself a sabbatical year before jumping back into the
business. During that year, I was fortunate to be contacted
by a search firm that was looking for a new member of
the Finance Committee for the Jessie Smith Noyes Foundation.
The fit between my concerns
and those of the Foundation were strong. A family foundation
with over $60 million in assets, the Noyes Foundation
was wrestling with its own moral dissonance--the irony
of supporting alternative agriculture with their grantmaking
while owning stock in pesticide companies like Monsanto.
I helped the foundation design a new investment strategy
with three key components: 1) social screens on at least
80 percent of the portfolio, 2) using our influence as
shareholders to improve corporate policies, and 3) putting
five percent of our assets into venture capital investments
related to our mission. This last part of our strategy
became my job. I soon started working as an investment
management consultant to the Foundation.
Our venture assets are
invested in four partnerships (which are essentially like
socially screened mutual funds for venture investments)
and ten businesses with whom we have direct relationships.
These businesses include a company that makes organic
yogurt, an energy conservation business, a company that
produces leak detection systems for underground storage
tanks, and a distributor of alternative energy products
for the home market.
All of these businesses
have established sales records and solid prospects for
growth, but none of them would ever be invested in by
traditional venture capitalists. The reason? Traditional
venture capitalists are looking for companies with the
potential to grow from start-up to $100 million in sales
within five years. This scale and speed precludes, by
definition, the universe of smaller, slower-growth companies
where we put our money. It precludes the notion that small
and slow can be beautiful (some might say organic).
I have come to see our
work at Noyes as part of a larger picture--the emergence
of a genuine movement toward stakeholder capitalism. We
are still at the beginning of this tremendously challenging
and exciting project. Can we recapture the power of financial
markets and reassert the primacy of people and place?
Can we reconnect investors to the ultimate consequences
of their investments? Can we free up even small amounts
of patient capital from our enormous financial institutions?
These are the questions
that keep me going. It is my hope that as our work progresses,
more foundations and individuals will join the fray, so
that we can increase the amount of patient capital available
and enhance the work of all of those who are seeking to
reshape our economy from the ground up.
A particularly rewarding
part of the job for me is providing moral support to CEO's.
I know how important it is for entrepreneurs to have at
least a few investors who share their values, who can
be patient, and who can remind them, over and over, that
they are not crazy for trying to create businesses that
contribute to a sustainable future.
- anonymous author
Higher Rate Of Flow
I am a "money flow artist."
If you've got more than you need (and I've learned I don't
have a lot of needs), it is fun to give away money or
invest it in ways that make the world a better place.
Some people worry about their security and think this
is a gamble, but I love to gamble.
Back in the 1970s, I won
a teaching award for my work at Boston University. With
a few thousand dollars from "my winnings," I set up an
interest-free, revolving loan fund for BU students. I'd
tell all the students in my classes that if they, or any
of their friends, needed emergency money they should see
me for a loan. I did not want these kids suffering for
lack of a little money in a pinch.
Hundreds of students have
borrowed from the fund over the years--to pay for rent
increases, therapy, telephone bills, abortions, travel
back home to visit a sick parent--you name it. I ask the
students to sign a simple promissory note and tell them,
"When you get rich, send me what you would have owed me
for the interest." In all these years, I've only had three
people not pay the money back. The fund has even grown
because many people have sent in their "interest payments"
years later. They all write the same thing: "That little
loan made such a big difference in my life at a very difficult
time. I want other students to have the same opportunity
Loans are one of my favorite
forms of investing. I frequently offer them to friends,
to organizations I support, and, occasionally, to complete
strangers who have a compelling need. Each year I loan
the War Resisters League money to print their annual peace
calendar; after the sales money rolls in, they pay me
back and keep the remainder of the income to fund their
work. I "lose" a little money in interest this way, but
I still count this as a good return. Some of my loans
are geared towards making money, however. I've lent to
Co-op America, which offers me eight percent interest,
and Common Courage Press, a progressive book publisher
which offers me seven percent interest and two free books
for every thousand dollars I lend. Soon, I'll be swimming
in great books.
- anonymous author
When I was young, I received
$750,000 in stock from an aunt who I only met once--for
about fifteen minutes. My investment strategy was just
to put the stock in a shoe box and go on with my life.
In a few years, the stock was worth 2.5 million dollars!
At this point, I started
investing money in my dreams and those of my friends,
not expecting any financial reward. For ten years, I managed
the Firehouse Theater Company in San Francisco and covered
any fundraising shortfalls. Later, when there weren't
any good high schools to send my eldest daughter to, I
bought a couple of Greyhound buses, gutted them, and put
in a kitchen, library, and bunk beds. We recruited teachers
and students, and created a school on wheels. We took
the kids to Mexico, the Florida Keys, and hundreds of
other places. Our young people grew worldly and wise.
I was satisfied with my rate of return.
Eventually, I made a dream
investment, hoping to yield a solid financial return.
I bought a fifteen acre boys camp in West Marin County
for $600,000, and spent another $500,000 converting it
into a retreat center. We had small Japanese-style cabins
with fresh flowers and sitting cushions as well as a hot
tub and swimming pool. I was not earning much on my capital,
but the center was covering its costs, and the future
looked good. Every few months, I turned down offers to
buy the property for over a million dollars, figuring
I couldn't go wrong with the real estate, no matter what
happened to the conference center.
I was wrong: the Marin
real estate market crashed. When I needed to refinance
my loan, interest rates were 20 percent--up from the nine
percent of my first loan! And gas prices were so high
that many people couldn't afford to drive to our center
(an hour from San Francisco). We suddenly had no customers,
higher expenses, and no buyers to bail us out. By the
time I shut down operations it was costing me $10,000
a month just to own the property, and I was facing bankruptcy.
Worse, my sweat, blood, and tears had come to nothing.
I felt emotionally bankrupt.
The property was finally
bought by a drug rehab center for $600,000. It's where
Jerry Garcia breathed his last breath. I go back sometimes
and walk the grounds and turn it all over in my mind.
Investing two million dollars this way taught me that
I am more of a poet than a businessman. I now make about
$70,000 a year as a writer and "corporate culture" consultant.
You'll often find me in the wilderness taking engineers
and managers on vision quests and helping them build a
sense of teamwork and community.
I still invest in dream
projects, but now I make it a rule to team up with other
investors. By pooling resources, spreading the risk, and
bringing all our expertise to bear, we have a much better
chance of success. I've been an investment partner in
a publishing venture, a corporate training company, and
a movie production company. This way I am learning to
be a poet and a successful businessman.
- anonymous author
Some people think shareholder
activism got started in the late 1960s, but my brother
Louis and I have been doing this since the early 1930s.
We've been called the pioneers. Louis passed away in 1993,
but I'm still going to close to 50 shareholder meetings
a year--asking questions, saying my piece, and sponsoring
resolutions. I like to keep management on their toes.
After all, they are my employees!
I guess we got into this
work because of my mother. She bought us stock in Woolworth's
and a few other companies when we were kids. Louis and
I liked owning shares in different companies. We felt
part of what made this country great. As Louis liked to
say when he got older, "I am alternately a railroad man
and an operator of ocean liners. I am a manufacturer of
tobacco, steel, glass, typewriters, rubber, rifles, business
machines, automobiles, cosmetics, and airplanes. I am
a builder of bridges and tunnels."
In 1933, Louis became curious
about stockholder meetings. When Consolidated Gas had
a meeting in New York that year, Louis went. Shareholders
today wouldn't recognize that meeting. There were only
a few dozen people in attendance. There were no proxy
statements. No printed annual report. No comments from
the floor. No auditors present to answer questions. Everyone
was asleep. When the chairman was finished reading his
statement, people woke up and started to clap. Louis tried
to ask a question, but the chairman laughed at him and
adjourned the meeting. This got us mad. Our country was
in the middle of the Great Depression. Obviously management
wasn't doing so well on its own.
We had enough money from
our investments to live comfortably. This gave us the
freedom to become full-time corporate watchdogs. We bought
stock in over a thousand corporations, researched the
companies, attended hundreds of meetings a year, and started
pushing for reforms. We wanted to keep management salaries
in line, increase shareholder participation in annual
meetings, make boards more responsive, and have the auditors
present at meetings to answer questions. One thing just
led to another. Soon we were publishing an annual report
on our shareholder activities. We even started our own
nonprofit organization, Corporate Democracy, Inc., to
encourage other shareholders to get involved.
Between my brother, myself,
and a handful of people such as our associate Wilma Soss,
we turned the heat up on American management. The Securities
Exchange Commission even started seeing things our way,
and in 1942, they passed a rule requiring companies to
print and distribute shareholder resolutions at the company's
expense. The companies, of course, hated this, and we
had to go to court to make the regulation stick.
In 1945, the president
of TransAmerica refused to include our shareholder proposals
in the company's proxy statement. The SEC came to our
defense and sued Transamerica on our behalf. Most of the
shareholder resolution fights that people are familiar
with today wouldn't have been possible without this suit.
It forced companies to honor their responsibility to publish
and distribute shareholder resolutions. This makes launching
shareholder campaigns much easier.
My motto in all of this
is to hit management hard and then leave them laughing.
I've dressed up as Sherlock Holmes to protest a company's
lack of disclosure of important information, and I've
worn a red clown nose when speaking up for a resolution.
The Ringling Brothers Circus even made me an honorary
clown for my meeting antics.
- anonymous author
© 1990-2005, More Than Money, All rights reserved