Stephanie Cordes didn’t plan on getting involved in impact investing. Her interest was fashion — and it was a passion she followed straight into a job at Condé Nast, publisher of Vogue, after college. “Growing up, it was my ideal career path,” she says.
Her focus changed a bit, though, after attending the 2013 Opportunity Collaboration gathering, an annual retreat bringing together investors, academics and nonprofit executives to focus on ways of alleviating global poverty.
Suddenly, Cordes says, the fashion industry lost some of its allure.
“It opened my eyes to the world of social entrepreneurship and aligning your capital with your values,” Cordes says of the conference. “I was incredibly inspired, and when I went back to [Self] magazine it didn’t seem quite as fulfilling.”
Cordes, however was well-positioned to make a move into something better: In 2006, her parents, Ron and Marty, set up a family foundation using the assets from the sale of an investment-management business her father had owned. And that foundation — the Cordes Foundation — was looking at impact investing as a means of both growing the endowment and doing additional good.
Impact Investing Meets a Drive Toward Ethical Fashion
So Cordes joined her family’s foundation in 2014 — she’s now vice chair — and combined her passion for fashion with her dedication to helping people. The entirety of the foundation’s $10 million endowment is now invested in social-impact businesses, with holdings in companies such as Soko, a jewelry company in Kenya that connects artisans via their smartphone to international department stores and online retailers, and Maiyet, a “modern, ethical and luxury fashion brand” that sources from global artisans.
“I’ve found ways to merge passion for fashion with a way to make a social impact,” she says.
The foundation’s move to impact investing was underway before Cordes joined. When the Great Recession hit in 2008, her father discovered that the foundation’s investments in microfinance were still bringing a return.
“Unsecured loans to small borrowers in countries I can’t name or find on the map paid off just fine, 100 percent plus accrued interest,” he told Entrepreneur in 2014. “That was the wake-up call for me to say, ‘Here’s a totally uncorrelated asset class that in the worst financial crisis in my lifetime was the only thing I had invested in that was immune to the crisis.’”
That led the foundation to grow its investments from 20 percent at the time to 40 percent, and eventually — in 2014 — to 100 percent. Today, the foundation’s investments are diversified: 5 percent in cash assets, 29 percent in fixed income, 39 percent in public equity and 27 percent in private equity.
How the Cordes Foundation Defines Impact Investing
The entire portfolio doesn’t meet any existing “impact investing” definition, Cordes acknowledges, but all investments must meet certain ethical guidelines as determined by the foundation.
And the impact investments, she says, are paying off. The foundation’s public-equity money is spread among 11 funds seeking to invest in companies that “address social challenges.” Foundation documents say those funds brought an overall return of 1.16 percent, with one fund bringing a 12.2 percent return. That means the remaining four funds underperformed; one fund actually declined by 6.9 percent. Eric Stephenson, the foundation’s portfolio director, says the strategy is to be patient. One of the lagging funds, he says, was a solar-energy investment that has since rebounded to beat its expected benchmark in 2016. The foundation relies on public-equity managers selected through First Impact, an impact investing firm based in Colorado; foundation leaders want to give each fund at least two years to perform.
“Markets are volatile, so we’ll see what happens,” Stephenson says. “We’re not day trading.”
With its private-equity investments in Bridge International Academies, MicroVest Holdings, Lumni, Maiyet, Soko, ThinkImpact and Unleesh the foundation is targeting an eventual return of 10 to 15 percent on its investments.
“Seven of our 11 public-equity strategies outperform their benchmarks,” she says. “We monitor our private-equity investments closely, and thus far all are performing according to plan.”
The Cordes Foundation offers more than cash to the startup companies it supports, though. With Soko, Cordes says, the foundation has put the company in charge with U.S. stores interested in selling its artisanal jewelry. The company pays its Kenyan workers up to four times what they would otherwise make.
“It’s more than financial commitment,” she says. “We find other ways to partner with them using human capital, social capital.”
That also helps the foundation achieve its goals. In addition to alleviating poverty, the Cordes Foundation wants its initiatives to “fundamentally advance women’s human rights,”
“We always look to see how many women are in leadership roles in the companies the foundation invests in,” Cordes says.
Indeed, she says, the goal is more than profit. The investments are a means to keep doing good into the future. “If we grow our investments,” she says, “we can give out more grants and continue the foundation in perpetuity.”
It’s still early, but Cordes says she believes that impact investing mixes the best of both worlds — doing good and doing well, following your interests while being of service to others.
“There are ways to align your passions with how you want to make a positive impact in the world,” she says. “It doesn’t have to be a trade-off.”
This article was made possible through the funding of the Case Foundation, which invests in bold changemakers and transformative ideas that harness the best impulses of social innovation. For more information, please go to casefoundation.org.
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