Races: Impact Investment in Latin America and Latino Communities in the U.S.

Jennifer Pryce, president and CEO of the Calvert Foundation, opened her plenary remarks at SOCAP 2015 in San Francisco (Oct. 6-9) by inviting the audience to close their eyes and picture an impact investor. (I invite you to do that now.)

What does that person look like? Do you picture millennials? Women? Latinos? The future of social capital investing lies with these people, said Pryce, as she announced Calvert’s newest initiative on its Vested.org platform. The new initiative, called “Races” (Spanish for “Roots”), targets Latin American and predominantly Latino communities in the U.S. with $25 million in social impact investments by retail investors.

Impact investing has been largely the purview of those with lots of capital, and options for impact investing at the retail level are still relatively rare. I sat down with Margot Kane, vice president of strategy at the Calvert Foundation, in order to find out more about the thinking behind the Vested.org platform in general and Races in particular.

Races and Vested.org

“Races is for people who have not traditionally thought of themselves as investors,” Kane told me, “but would like to try investing in people and communities that matter to them.” The Races platform gives people an easy way to experiment, and hopefully do more as they shift their perception of what investing can mean.

The Vested.org website, of which Races is a part, is a portal that gives individuals the ability to invest in the Calvert Foundation’s Community Investment Note, which has attracted more than 15,000 investors since 1995 and seen more than $1 billion invested. To date, every investor has been repaid.

Races is one of more than a dozen investment areas on Vested.org, including affordable housing, small business, fair trade, education, women’s empowerment, older adults and more. Anyone with a U.S. tax I.D., a bank account and an address can invest in a Note with as little as $20. When you invest on the Vested.org site, your money is pooled with the thousands of investors in the Note, and the Calvert Foundation uses the number of people investing in each area as an indicator for its fund deployment strategy.

Well-designed interface

After all the discussion, I had to log in and try it for myself. The first thing I noticed is the brilliant design of the website that puts a very human face on the reason I am here – to invest in people and communities that I care about. The faces are of real people, doing real work. I like it.

The simple, clean interface tells me to select my term of investment. The longer I keep my money in, the greater the interest paid, from a 0.50 percent return for a one-year investment to a 3 percent return for a 10-year investment.

Next, I enter my investment amount. I can enter any amount between $20 and $10,000. I hit the big “invest” button, which takes me to another very simple form that ask for my social security number, date of birth, address and phone number. The final screen asks me to enter my bank routing number and account number. And that is it. I am off to the Races! (Sorry, I couldn’t resist.). The account service used is Goldstar Trust Co., a branch of – and I’m not making this up – Happy State Bank (FDIC insured).

The changing face of the financial services sector

“The financial services sector is changing fast,” Kane told me, “and demographics are changing fast. We need to anticipate the audiences of the future.”

To that end, Calvert partnered with Think Now Research in order to understand the profile of the likely Races investor. The Vested.org site as whole provides an important feedback loop that helps Calvert understand people’s impact investing behavior.

“We are throwing a lot of things in the water to see what floats,” Kane said. For now, the platform is exclusively for individual investors, but institutional investment options may follow down the road, as millennials and others grow impatient with traditional investment options and exert pressure on institutions for ethical portfolio choices.

Additional thoughts

As I see it, the trend in disintermediation of financial services will grow in the years to come. Another platform, STASH, launching in a few weeks, will let you invest as little as $5 at a time. Its taglines include, “Investing is better when you do it together” and “Easy investing for everyone. Why let the old guys have all the fun?” Another platform aimed at millennial investors is Dough, “an investing platform for do-it-yourselfers,” which aims to demystify and simplify investing for those who are serious about learning how the stock market works.

On the other end of the spectrum, the SOCAP plenary session also included representatives from both Bain Capital ($75 billion in assets under management) and BlackRock ($4.72 trillion in assets under management) to discuss their new social impact initiatives. It is a hopeful sign that these powerhouses are finding it strategically important to discuss plans for social impact investing, even if it is still unclear what it will mean in practice at these firms. What is clear is that we may have reached an important tipping point in a national dialog of what our money is for and how we should be using it to effect the change we want to see.

Follow Julie Noblitt on Twitter @noblittje

Image credit: Photo courtesy of Opportunity Fund, a portfolio partner of Calvert Foundation.