Trust in Investing

If you are feeling cynical about the world of finance and investment you should talk with Patrick Davis.  He’s a 25-year-old senior associate with the Calvert Foundation, a Washington-based non-profit that aims to maximize the flow of capital to disadvantaged communities. The organization enables investors – large and small – to earn a financial return while lifting families out of poverty.

Patrick’s enthusiasm is infectious. He believes we need to fundamentally rethink our relationship to money and to simultaneously build a new economy on the principles of sustainability and social equity.  And he thinks the time is ripe for such a revolution. He says investors are seeing the writing on the wall: “Unless we address environmental degradation, unemployment, and the education gap, even the most powerful corporations will have no customers.”

Long before the Bernie Madoff scandal and other Ponzi schemes made headlines there has been a structural disconnect in our economy that reinforces a disproportionate distribution of wealth. Patrick believes that the focus on short-term returns in the corporate and financial sectors has “produced a broken economy built on perpetual distrust and resentment.” 

Over a sandwich at Potbelly near his Bethesda, Maryland office, he told me, “We need to talk about the larger ecosystem, get away from quarter-to-quarter earnings and think about sustainability.” With degrees in Economics, Government & Politics, and a minor in Latin American Studies, Patrick was looking for a middle ground between wealth management and non-profits. The Calvert Foundation, which offers an alternative to traditional philanthropy or strictly market-based investing, was the perfect fit. 

According to its website, Calvert investors have put nearly $200 million to work in 250 community organizations in all 50 states and over 100 countries. These investors are supporting a diversified mix of high-impact organizations involved in affordable housing, microfinance, Fair Trade coffee, small business development, as well as charter schools, daycare centers and rehabilitation clinics.  Investors and supporters have helped build or rehabilitate over 17,000 homes, create 430,000 jobs in the U.S. and in developing countries, and finance over 25,000 cooperatives, social enterprises, and community facilities.

Last year, Patrick spent two weeks helping with the rebuilding efforts in Haiti. It was, he says, a life-changing experience.

Now he’s planning a workshop in October, as part of The Trust Factor 2011 program in Washington, to spread the word about “impact investing” to a lay audience. This approach produces “blended value – financial, social, and environmental returns.”  Patrick wants to demonstrate the role of “trustbuilding amongst financial advisors and clients, trustbuilding in local communities, and broadly a restoration of trust in the economy for the public.”

My guess is that there are thousands of talented people of Patrick’s generation who share his passion for a new vision in the financial sector where returns are “built on real assets that are visible in the community, rather than inflated bookkeeping and complicated financial arrangements.”  

And that makes me feel a whole lot more hopeful about the future.