In Chicago, a worker-owned cooperative launched and largely staffed by formerly incarcerated women creates fresh, healthy meals for people in need using locally grown produce from black-owned farms.
In West Virginia, a benefit corporation seeks to renew Appalachian communities by implementing innovative approaches to solar energy, encompassing development, training, installation, and production.
In communities across the nation, a Latino-led CDFI intermediary provides access to financial opportunities that enable its 200+ member organizations to sustain and expand their work, building transformational wealth in Latino communities and creating a stronger economy for all.
Across the U.S., more than 160 companies and underlying funds like these, fueled by Candide Group, have built systemic opportunities for change thanks to an investment model founded in community development and climate justice. In its role as an investment advisor working with families and foundations who want their money to work for social justice, Candide Group has deployed or committed just under $300 million over the past 12 years into organizations focused on four impact verticals:
- Home and place: creating affordable housing and community ownership of spaces
- Employee ownership: building models from co-ops to perpetual purpose trusts
- Climate justice: bringing renewable energy and its economic benefits to low-income communities
- Diverse allocators: supporting diverse entrepreneurs serving underserved communities
In her 20-plus years working to make finance a tool for social justice, Candide Group Founding Partner Morgan Simon has influenced more than $150 billion in investments. Prior to Candide Group, Morgan was the founding CEO of Toniic, a global impact investment network, and co-founder of Transform Finance, a nonprofit organization building a bridge between finance and social justice. Morgan’s book, Real Impact: The New Economics of Social Change, has been featured everywhere from the Harvard Business School to the United Nations.
In this Q&A, Morgan shares her perspective on the mindset shifts necessary to transform finance from a tool of extraction to one of equitable wealth creation.
What structural changes to the typical investing model are required to create a system that truly creates value for and within communities?
Before founding Candide Group, I created the Transform Finance principles, which guide how we structure and make investments. One advantage of building custom portfolios is that we can work across asset classes and create interesting structures that align with these principles.
These principles are to:
- Engage communities in the design, governance, and ownership of enterprises. Too often, impact investors make decisions for communities without their engagement. We work to include communities in all phases, and often the projects we track come directly from affected communities.
- Ensure primary benefit to communities. This is about ensuring the benefit flows toward communities — not just investing in innovations that make it slightly less difficult to be poor, but shifting structural conditions that perpetuate inequity. We aim for reasonable returns, but not at the cost of extracting from communities. This can be measured numerically and defined clearly.
- Fairly allocate risk and return across stakeholders. This means understanding who is in a position to take on risk and making sure everyone has equitable access to returns.
What shifts in mindset are necessary to invest around these principles?
First is an awareness of what a community return is, or from a business lens, the concrete value being brought to everyone at different levels of the interaction. Whether it’s consumers, beneficiaries, employees, community stakeholders, or investors, everyone should be compensated through the interaction. Some of that comes down to creating a stakeholder map outlining what a fair distribution of both risk and return looks like for everyone in that process.
Second, investors need to consider what return they really need. That answer will be very different for, say, a family that’s the first generation to create wealth and needs to make sure their kids can go to college, versus someone at a foundation. Self-awareness is key — determining the rate of return you need may or may not be based on where the S&P is at any given moment.
Finally, it’s realizing that we can make choices about how we think about returns and what is acceptable to us in terms of ways to make money. Sometimes investing in the market as usual has an unmeasured psychological toll, for example, if it means investing in private prisons or weapons manufacturing. The idea is to recognize that different institutions have different capital needs and to create opportunities with varying risk and return to meet those needs, all while maintaining the community governance component that’s core to how we do this work.
Are the investors you work with purely motivated by the desire to do the right thing, or are there financial benefits to this kind of investing?
Though I personally am a bleeding heart trying to change the system, I don’t believe it’s required to “nice” our way into change because it’s the right thing to do. Traditional investor wisdom says we need to invest in products that are smart and sustainable in the long run. Companies that don’t have community buy-in or aren’t climate-resilient won’t be as effective long-term, so why would I invest in them?
I fundamentally believe that a more sustainable future builds a better economy. “Conventional” industries like fossil fuels have a lot of volatility that is often discounted by market opinion. From that perspective, investing in a sustainable future is traditional investing. These are long-term investments, and typically, families and foundations are long-term investors thinking about the health of the overall economy and what it will look like for their institution 30 years from now. It’s not just about the next quarter’s returns.
So are there trade-offs investors have to be willing to make?
Sometimes people say there are “no trade-offs” in impact investing, and I don’t think that’s true. For entrepreneurs who have faced the decision, for instance, of switching to sustainable packaging that increases production cost by 10 cents per unit, the trade-offs are very real.
It’s important to make these trade-offs visible and have open conversations with investors, asking, “What do we view as appropriate for the world we want to build, and what are we willing to contribute to that?” Otherwise, there’s too much expectation on entrepreneurs to make miracles. In the long run, it’s going to be better for consumer retention if a company’s commitment to sustainability is real, not just in statements but in actions. That may require upfront funding.
And sometimes the trade-off is not as big as we think. For instance, a number of states have cool programs incentivizing hiring incarcerated people and can pay for up to a year of their wages, so that makes a “do good” decision extremely efficient. We can be smart about it; it doesn’t necessarily imply a trade-off, but let’s be clear on what does and what doesn’t so we can plan around it.
How do you make the case for making those trade-offs and taking that longer view, for investing in a bigger vision for a sustainable future?
Investing is a vote for the world you want to see. This particular moment is one for people to think more broadly about the purpose of their investments. People are seeing this reality in real time: What is or isn’t going to happen in the world depends on what we fund.
Impact investors are in a very good position to fund everything Trump is defunding right now. I was on a call this morning with a fund manager in another country who just lost USAID funding, and now they’re looking for private investors to fill that gap. Or, given the challenges with the Greenhouse Gas Reduction Fund, there’s a real opportunity to step in and support investees on the climate side.
If you’re mad right now about everything Trump is defunding, this is a good opportunity to look in the mirror and ask: What do my investments say about my priorities? What am I willing to fight for?
Investments aren’t limited to those with significant wealth, right? Almost every person is investing in something, whether through their 401(k), college savings fund, bank accounts, even their insurance premiums. What do you say to individuals who are wondering about how their money is being used by others, and what kind of world those investments are creating?
Yes, this isn’t a conversation limited to big check writers. In one of the chapters of Real Impact, I discuss how, while most of us only go to the voting booth every two or four years, our money is a vote we cast every day. If anything, we are all too comfortable giving up our power. The minute we deposit money in the bank, we act like it’s not ours anymore. But we fund the banks with our money, and when we take collective action, there absolutely is power there.
This was a big part of the campaign we helped lead during the family separation crisis. Over 500,000 people across the country took action at bank branches like Chase and Wells Fargo. They were saying, “Hey, I don’t want my family’s money in the bank to be used to lock up someone else’s family.” It didn’t have to be major deposit holders; it was mostly moms showing up with their kids.
Candide Group supports families, foundations, and other institutions who want their money flowing to social justice companies and funds building a new economy. Learn more about their work.