The world's richest 1% controls half the world's financial wealth, now standing at $280 trillion, according to Credit Suisse’s global wealth report published in November 2017. What does this tell us? There is plenty of pizza to go around, except the lazy Susan is broken - or we don't know how to spin her along. Do we go down the rabbit hole of the blame game or do we take responsibility for our choices?
Despite coming from the low-end spectrum of middle class America (around US$50,000 annual income), I still live with the uncomfortable fact that this falls into the top 3% of the global spectrum. What I am interested in is how we - as "almost everyone else"- can make small, consistent effort to tip the scale of wealth distribution. Money is energy. While our work through Terra Cura strives to facilitate diverse forms of capital that connect communities, money remains the catalyzing energy that could uplift the livelihood of people, especially in the developing world. How could we share our coffee money better? More importantly, how do we sustain self-motivated will to invest securely and consistently?
Rise of the Everyday Impact Investor
I have been toying with the idea of the Everyday Impact Investor. It integrates the core ideas behind the following :
- Impact Investing - Aligning personal values with profit making. Usually seeking positive environmental and social benefits. Largely a domain of wealthy individuals and corporations.
- Fixed deposit - You have a small pool of money in the bank that you don't need to use urgently. You let an entity invests your savings into something (not-sure-what). You don't know what it is, but at the end of the term you know there is a humble interest that appears. Secure and low-risk.
- Crowd-sourcing - Leveraging the inter-connectivity of social media for burst aggregation of money around an awesome idea. Connects choice with personal value.
- Mission based Charity - Establishing a direct connection with a target beneficiary (the 7 year old in India whom you've been sending $20/mth for school supplies). Might be a one-time donation or recurring.
Whatever you call it, and perhaps not founded on the ideas above, doors to impact investing are diversifying. Ethex, a Britain based online investment platform offers everyday users a menu of investment products. It has a simple interface where users can view return %, social and environment impact metrics, and minimum investment amount. What this means is that impact investing is now available to anyone with small amounts of cash to spare. It could be investments in community cinemas, affordable housing or low cost gyms - from as little as US $70.
I love the idea of small, low-risk investment with humble returns. Interest levied on those purchasing the product is used to pay investors their profit. Looks quite painless and it keeps the greed factor in check. While returns could be small, in aggregation, it could generate impact at population-level.
I love the idea that there is transparency, connecting beneficiaries directly to the investor. Above all, I love the potential of capacity building. And this is what sets an Everyday Impact Investor apart from the never-ending recurring donations to charities. Have you had the experience of looking through your credit card statement and realize you have been giving to XYZ organizations for years and you don't even remember these "negligible bills" have been racking up?
Energize Africa , a joint venture between Ethex and Lendahand, raise funds from individual investors that are then used by solar companies working locally to provide solar kits to rural families in Uganda, Kenya and Mozambique. Here's an excerpt from a family benefiting from this initiative:
"Father of five Hajji Ssenkere Umaru, 81, is a farmer living in Kyazanga District, a rural area of central Uganda. He grows tomatoes, cabbages and matoke, a type of banana, on his small farm, which is about the size of a soccer pitch. He used to spend 150,000 Ugandan shillings (US$40) a month - 15 per cent of his salary - to fuel a water pump which irrigated his fields. The pump also incurred frequent repair costs.
These expenses made it difficult for him to pay school fees of nearly US$200 a year in the months outside of the harvest. He purchased a solar kit and waterpump in October and will pay for it over two years. When it's paid for, he'll be saving $50 per month. He is also able to charge his neighbors to use the pump, which brings in an additional US$11 per week."
Quoted from DEVELOPMENT: EVERYONE'S A WINNER? HOW 'IMPACT INVESTING' CAN MAKE MONEY - AND DO GOOD by Lee Mannion.
Doing good does not mean keeping someone reliant on your generosity. Ultimately, it is about working our way out of this jump-start relationship, in a way that empowers others to further their journey towards increasing self-sufficiency. It is about investing into someone's fishing pole, not buying them fish for the rest of their lives. At the end of one investment, I can imagine one starting another, or having a few investments at the same time. Perhaps one would turn into a Serial Everyday Impact Investor.
Tying back to the idea of small-scale investment at large-scale aggregation. Based on the Statistic Portal, global crowdfunding volume is currently at US$16.2 Billion, with 385,335 projects launched on Kickstarter alone. Looks like we have quite a bit of pizza to go around even with a broken lazy susan. Go figure.