“If the head has been making investments and the heart giving it away, it’s time to unite the head and heart and make money more” – The Case Foundation
The following is a brief summary of the panel discussion entitled Families Embracing the Future at The Campden North American Family Office Conference, held in Boston last November. The moderator was Northland Wealth Management’s CEO, Arthur Salzer. Arthur’s panelists were Justin Rockefeller and Antonio Ermirio de Moraes Neto.
It is estimated that 60% of families lose their wealth by the second generation and 90% by the third. Many multi-generational families are exploring what they can do in order to improve these odds by uniting families around common values and positive legacies, and more closely involving family members in responsible long-term investing. Over the last few years, “Impact Investing” has gained awareness and popularity with families of significant wealth.
Impact Investing is when investments are made in companies, organizations, and funds which are generating a measurable social and/or environmental impact alongside a financial return. The key is that the impact gets measured along with the financial component, because, as the saying goes, “what gets measured gets done”.
Done prudently, Impact Investing can deliver the required financial return while at the same time having the potential to excite true passion and dedication in the next generation. By encouraging the participation of the next generation, Impact Investing attempts to create an environment conducive to fostering the commitment necessary for maintaining the wealth of the family. Mr. Moraes, is 27 years old, and a member of the Brazilian family who owns the industrial conglomerate Votorantim, and believes Impact Investing can be one of the crucial components in generating financial wealth for families.
Antonio shared his thoughts on why he was drawn to Impact Investing and how it led him to form his firm, Vox Capital.
“Being a 4th generation member of a large family business in Brazil, I was since young inspired by the example of great entrepreneurs and innovators. As my own path, it became absolutely clear, when I was 16 that my purpose in life is to reduce social inequalities in the world. And nothing better to do this, than an innovative and scalable business model, with a new mindset to serve society”.
Vox is targeting investment in companies that serve households in Brazil with a monthly income of less than $1,500 USD – this demographic represents nearly 160 million people or 85% of Brazil’s population. Vox is investing in companies that operate in the healthcare, education and housing sectors. So far, Vox has made 4 private equity investments and 5 convertible debt investments. While the track record of Vox is just under 4 years, it has been generating more than acceptable double digit returns since its founding.
Mr. Rockefeller, at 36, is a member of the Board of Trustees for the Rockefeller Brothers Fund – an international philanthropic organization. The fund was formed in 1940 in New York City by Mr. Rockerfeller’s grandfather and great uncles. The Rockefeller Brothers Fund drew some large media attention recently as it divested of its oil & gas investments this past fall – this was a monumental change as the Rockefeller wealth came largely from its ownership of Standard Oil. Standard Oil was the largest oil refiner and first multinational company in the world during the early 1900s. Before its divestiture, Standard Oil eventually gained control of nearly 90 percent of the United States’ oil production.
However, it is Justin’s new venture, The ImPact which he co-founded, to which Mr. Rockerfeller is dedicating much of his attention.
“The ImPact is a non-profit/NGO membership organization comprised of investors who pledge to make Impact Investments, track their social impact and financial performance, and share that data with others who have made The Pact. The mission of The ImPact is to increase the probability and pace of solving social problems by improving the flow of capital to businesses that have measurable social impact.”
Every family’s motivations, operational context and goals are unique, therefore impact investing may not be a good fit for every family. Rather than prescribing a single approach, there are many approaches available for consideration. Using groups such as The ImPact, or investing in private equity funds that specialize in this area may be a start.
Impact Investing will be an area that Northland Wealth will be exploring further and we will be sharing our findings on how it may benefit your family.