What’s Jewish About Impact Investing?
For many generations, Jews have pursued social impact investments, knowing that one way to pursue justice in the world was to allocate money to uses that had broader social benefit as well as an economic return. The most obvious, and perhaps the oldest of these investments, are the gemachim, the free loan societies which go back to biblical times and provided no-interest loans to needy members of the community, starting thousands of years ago. The modern version of these are our Hebrew Free Loan Associations, which provide zero-interest loans to Jewish members of our community. Ask them about the returns they see on their investments, and you’ll hear success stories that go beyond default rates or return of capital.
And consider Israel Bonds – did you receive any at your bar or bat mitzvah, or invest in them yourselves? It could be argued that the Israel Bond is one of the original social impact bonds, with over 40 billion dollars issued since 19511; again confirming that Jewish impact investing has deep roots.
Jewish impact investing rides on the concept of heshbon, or accountability.
Hesbhon is not only the accounting that includes the kind of analysis and acumen that guides investment, but also includes accountability of an ethical kind. Are resources being deployed justly? Is harm coming from their deployment? Are workers being paid fairly and are their basic needs being taken into account? The spiritual realm of heshbon also matters, as the person deploying resources asks: am I spending my time on this wisely? Am I making just decisions?
As we reflect on the history of Jewish impact investing, we see how it intersects with a more modern phenomenon, what historian Lila Corwin Berman calls the financialization of American philanthropy. We all know that tax policy has long provided a significant break to those who irrevocably donate assets into a community foundation, but this has been broadly democratized in the past decades with the popularization of donor advised funds and supporting foundations – at many asset levels. While umbrella giving in the form of Jewish Federations and the United Way were once the predominant way to go – money in, money out propositions, year to year – we are now living in the age of philanthropic capital. There is a LOT of money siloed away irrevocably to philanthropy, and for more and more donors it is being put into “storage” for later use.
Because of this phenomenon, many of us have become too concerned about assets under management, or growing a corpus of capital, when really we should be focused on getting as much of that money as possible out into the community. So instead of measuring assets under management, or AUM, we should be measuring Assets in Community, or AIC.
At Federation Philanthropy Partners, we take care of the clients who have donor advised funds and supporting foundations as a key part of our work at the Jewish Community Federation and Endowment Fund. We are retooling our approach in order to get assets invested in the community by exploring new impact investing solutions such as bridge loans for local agencies at below – market rates, zero-interest loans for low – income members of the community, and a Jewish values public equity screen.
Jewish values also drive investment and change for a better world outside the Jewish community. Our clients choose us for many reasons: family, community a desire to pass a way of giving on to the next generation, and the recognition of being identifiably Jewish to the organization that receives the check. We also aim to provide a compelling point of view on Jewish philanthropy for our clients while they approach their broad philanthropic goals, both in the Jewish community and in the broader community. We know they like being inspired, informed and educated, guided, and sometimes challenged by us, and by this point of view.
In short, our approach to giving stems from a Jewish perspective involving the following four values: Building community, making the world a better place, taking care of the needy, and pursuing justice. In other words –kehillah, tikkun olam, tzedakah, and tzedek.
Jewish tradition and culture are full of wrestling with ideas, questioning one another, and respecting the debate. In fact, the origin of the word “Israel” means ‘wrestling with God,’ so we expect disagreement. That’s a key part of the process on how we advance the conversation.
We look forward to partnering – and wrestling – with all of you.
Learn more about Federation Philanthropy Partners.
