My fellow-military-vets-empowered-and-empowering and VC-backed for-profit startup HeroHomes.com practices “philanthrocapitalism,” which we define as “Mother Theresa and Genghis Khan have a business model baby, but where the philanthropy part isn’t the weakness, rather it is its competition crushing strength.”
It leverages 100% Loan to Value (LTV) Veterans Administration Loans to “disrupt” the $300-400B a year multifamily finance market (aka capitalism) to its very core, and that today requires $90-120B of very hard, slow, and expensive to get investor equity to get to standard 70% commercial LTVs to build housing.
And we’ve got a “By/for/with locals first to VETrify versus GENTrify the Great American Renewal” mission statement.
So no, Brad, the solution isn’t to accept lower returns for ESG investments; it is to find, promote, and fund better investments.
As I’ve long said, if you like nonprofits, invest in high-risk-for-high-reward startups, since all but a very few of them crash and burn, but the few that succeed do so very, very well.
As for microfinance, for which Mohammed Yunus won a Nobel Peace Prize, and for which Brad practiced and after a long while became unenamored with because (no duh?) it doesn’t materially and scalably work, I long watched with frustration when today’s forms of ESG finance crowd out all other efforts because of the fashionable and politically correct factors.
I suggest three solutions:
First, all socially responsible investments by foundations, governments, and nonprofits should be apples-to-apples compared using the MR SUCCESSS acronym, i.e. is the investment Material, Repeatable, Scalable, Unbeatably politically correct, Capital efficient, Cheap, Expeditiously accomplished, Self-sustainable, Self-financing, and Simultaneously accomplishable in as many of these attributes as possible?
This, I think, will eliminate the so many fashionable and politically correct things like microfinance.
Second, not just allow but require foundations, for 25% of their required minimum 5% of assets yearly distributions, to make Program Related Investments (PRIs) in for-profit startups, and then via independent evaluation apples-to-apples compare the outcomes between the foundations’ for- and nonprofit efforts.
This I think will eliminate and rationalize much of the circular logic, self-validating, insular against “true” innovation, risk avoiding, and “yes, the outcome wasn’t what we wanted, but we learned something” touting “foundation, government, and nonprofit industrial complex” efforts aimed at ESG.
Third, not only should PRIs in foundation identified nonprofits be tax exempt, but the same should be true of first in lead and sole investments by for-profit investors (such that there is neither risk sharing nor the hassle of finding co-investors) in the foundations identified for-profit PRIs, plus any returns of profit from them to these for-profit investors should be tax free also.
This will give incentives to many more shots on goal being taken at solving ESG challenges, plus keep the nonprofit PRIs and all the other foundations and nonprofits’ efforts honest and rationalized also.
My fellow-military-vets-empowered-and-empowering and VC-backed for-profit startup HeroHomes.com practices “philanthrocapitalism,” which we define as “Mother Theresa and Genghis Khan have a business model baby, but where the philanthropy part isn’t the weakness, rather it is its competition crushing strength.”
It leverages 100% Loan to Value (LTV) Veterans Administration Loans to “disrupt” the $300-400B a year multifamily finance market (aka capitalism) to its very core, and that today requires $90-120B of very hard, slow, and expensive to get investor equity to get to standard 70% commercial LTVs to build housing.
And we’ve got a “By/for/with locals first to VETrify versus GENTrify the Great American Renewal” mission statement.
So no, Brad, the solution isn’t to accept lower returns for ESG investments; it is to find, promote, and fund better investments.
As I’ve long said, if you like nonprofits, invest in high-risk-for-high-reward startups, since all but a very few of them crash and burn, but the few that succeed do so very, very well.
As for microfinance, for which Mohammed Yunus won a Nobel Peace Prize, and for which Brad practiced and after a long while became unenamored with because (no duh?) it doesn’t materially and scalably work, I long watched with frustration when today’s forms of ESG finance crowd out all other efforts because of the fashionable and politically correct factors.
I suggest three solutions:
First, all socially responsible investments by foundations, governments, and nonprofits should be apples-to-apples compared using the MR SUCCESSS acronym, i.e. is the investment Material, Repeatable, Scalable, Unbeatably politically correct, Capital efficient, Cheap, Expeditiously accomplished, Self-sustainable, Self-financing, and Simultaneously accomplishable in as many of these attributes as possible?
This, I think, will eliminate the so many fashionable and politically correct things like microfinance.
Second, not just allow but require foundations, for 25% of their required minimum 5% of assets yearly distributions, to make Program Related Investments (PRIs) in for-profit startups, and then via independent evaluation apples-to-apples compare the outcomes between the foundations’ for- and nonprofit efforts.
This I think will eliminate and rationalize much of the circular logic, self-validating, insular against “true” innovation, risk avoiding, and “yes, the outcome wasn’t what we wanted, but we learned something” touting “foundation, government, and nonprofit industrial complex” efforts aimed at ESG.
Third, not only should PRIs in foundation identified nonprofits be tax exempt, but the same should be true of first in lead and sole investments by for-profit investors (such that there is neither risk sharing nor the hassle of finding co-investors) in the foundations identified for-profit PRIs, plus any returns of profit from them to these for-profit investors should be tax free also.
This will give incentives to many more shots on goal being taken at solving ESG challenges, plus keep the nonprofit PRIs and all the other foundations and nonprofits’ efforts honest and rationalized also.
I welcome all critiques or discussion via reed@herohomes.com.