1981, Joshua Mailman convened a then-secret meeting in Colorado of a few dozen like-minded acquaintances to discuss how they could use their inherited wealth for social good.
More than 30 years later Mailman’s network has expanded to include a large international circle of people who do what is now called impact investing.
The list of the socially responsible businesses and investment firms that Mailman is associated with has more than 50 entries. Among them are the Threshold Foundation, a national network of philanthropists; The Social Venture Network U.S., Europe, and Asia, an international network of socially driven businesspeople; and Business for Social Responsibility, all of which he co-founded. He is also the instigator of Jalia Ventures, a fund focused on putting early-stage capital into the hands of black entrepreneurs running impact ventures.
Mailman’s introduction to impact investing began even before the Colorado gathering. “I have been involved since the dawn of time,” he joked. His late father, Joseph L. Mailman, was a successful businessman and philanthropist whose family foundation focused on education, medicine and the arts.
“It wasn’t what my father did in business that influenced me; it was how he lived as a human being,” Mailman told Fast Company in 2010. “So many people spend time trying to make a lot of money, but once they have it they don’t know what to do with it. I hope that, when I get to the end of my life, I can honestly say I did my part.”
As managing director of Serious Change Investments, an impact venture capital fund focused on growing visionary companies, Mailman has been investing in his major areas of interest: ventures in the developing world; green manufacturing and fair trade; mission-driven online platforms; sustainable finance; sustainable food and distribution; and alternatives to payday lending for low-income workers.
A member of the Global Philanthropists Circle since 2006, Mailman describes himself as a “donor activist.” As he put it, “I help to advance ideas that begin on the edge and move to the mainstream, particularly those that involve disempowered people.”
For example, Mailman was a founding investor in the company that created Grameenphone, which has become the largest provider of mobile phone service in Bangladesh. Grameenphone is associated with the Grameen Bank, which developed microfinance lending into an international phenomenon. Mailman’s investments also have helped companies such as Stoneyfield Farms, Seventh Generation, and General Compression get off the ground.
Mailman takes inspiration from those who have risked their lives to promote social change. He’s helped groups that mobilize resources for grassroots activists such as the Global Fund for Women, the Global Greengrants Fund, the Astraea International Fund for Sexual Minorities, and an organization he co-founded, the Fund for Global Human Rights.
“Supporting these leaders is especially important in places without well-developed local philanthropy, or when local philanthropy is mainly in the form of charity and not yet supportive of social change,” he said.
Having an impact
Impact investing is intentionally designed to deliver measurable social or environmental returns in addition to financial returns. Expected financial returns can be market- or below-market rate.
Describing impact investing at a 2012 meeting of the Global Philanthropists Circle, Synergos chair Peggy Dulany noted, “It’s about making positive changes in the lives of others, whether it’s through developing services that level the playing field for women and girls, developing products that bring water to more people, improving seeds so people can be fed, creating employment and more economic justice, or any of the many other ways that investing can impact poverty.”
Mailman defines the concept as “private investment in for-profit companies that have deep social and environmental missions connected to them.” This is distinct from simply screening portfolios (to avoid polluters, for example), and bigger than community-related investments, he said. The field has garnered increasing interest in the last decade, spurred by books such as C.K. Prahalad’s The Fortune at the Bottom of the Pyramid, the spread of technology in the developing world, and the greater global perspective of many people, including investors.
According to a recent report from the Rockefeller Foundation, impact investing – while still in its early “marketplace-building” stage – accounted for 2,200 investments worth $4.4 billion worldwide in 2011.
“What was formerly addressed with charitable contributions – healthcare, education, energy – is now addressed with for-profit ventures,” Mailman said. “The whole idea of ‘fortune at the bottom of the pyramid’ was proven by Muhammad Yunus and Grameen Bank. Poor people have money; they haven’t had things to spend it on that make any sense.”
Another driver, he said, is the trend in the United States toward organically grown, locally produced foods and related goods. “The whole area of food and biodiversity has added hundreds, if not thousands, of ventures into the mix,” he said.
Making the deal
Mailman advised those interested in impact investing to first decide whether they have “the appetite to do individual deals.” If not, he said, the alternative “is to invest with someone who is doing deals.”
He recommends funds such as responsAbility, Bamboo Finance and LGT Venture Philanthropy, all based in Switzerland; Renewal2 in Vancouver, British Columbia; and Toniic and RSF Social Finance, both in San Francisco.
Investing in these funds is a good way for philanthropists to be exposed to a range of ventures that all have been screened, Mailman said. “You don’t have to write a big check; you can write smaller checks for $50,000 or $100,000,” he added. All the funds he recommends are well-respected, and are run by people Mailman knows personally who are “deeply engaged in the field.”
All these investment opportunities demonstrate that the old dichotomy – one could seek to make money or to do good, but not both – has disappeared. For example, Mailman noted that the practice of corporate social responsibility has changed dramatically. Until recent years, companies typically screened public equities to ensure that their activities were not socially or environmentally harmful. Today, business leaders and investors increasingly are intentionally aligning business operations with social and environmental goals.
As proof, Mailman points to the San Francisco-based Net Impact, an organization of thousands of business students and executives committed to the notion that “it’s possible to make a net impact that benefits not just the bottom line, but people and the planet too.” “These are the kind of people graduating from business school now,” Mailman said. “Many are not seeing business as separate from a changing world; they want to use business to change the world. Business school students weren’t thinking of that 20 years ago.”
It’s this spirit that motivates the fair-trade movement, for example. That may seem paradoxical at a time when economic systems are larger than ever, Mailman said, but “we have more understanding now of how the current economic system has been failing a lot of people. There is more interest in economic solutions that can grow businesses that serve people’s needs and be profitable at the same time.”
“These were largely untested ideas when we started working together 25 years ago,” said Wayne Silby, the founding chairman of the Calvert Funds and Mailman’s co-founder at the Social Venture Network.
“It took a lot of courage for Josh to reach out and engage people,” Silby noted. “Through his passion and vision, he brought them into this new understanding about all our roles in the world.”
Creative Commons Attribution 4.0 license; reuse is encouraged with credit to Synergos.