It’s not surprising that many investors in deep-blue Boston are unhappy with current federal policy directives and budget priorities. What may be more surprising is that they’re willing to back alternative approaches even when that means accepting concessionary returns.
Carrie Endries of Boston-based Reynders McVeigh is the rare advisor for whom such tradeoffs is not only understood, but accepted. Many of her clients have come into wealth through the stock markets or their own companies.
“We have many clients who have more abundant wealth than they need,” Endries says on the latest Agents of Impact podcast. “That means that they can set aside a portion of their portfolio that might have a return that is below market, if they choose.”
Such clients are among a growing cohort of asset owners who are shifting their focus to making a positive impact in their own backyards. Endries works with high net worth individuals, families and smaller foundations, many of whom are based in Boston and across New England, to design and implement impact‑first, place‑based investment strategies.
“We look for options where they can feel like they’re having a real, tangible effect on neighborhoods around them,” says Endries.
In Boston, high net worth families and small foundations are able to tap into one of the most mature place-based impact investing ecosystems in the country to find opportunities for local impact.
“Twelve years ago, I could make an impact investing map of Boston and have it be pretty complete,” says Endries. “Now that ecosystem is so complex that it is much, much harder to do.”
Doing the work
The desire for proximity and visibility is driving a shift toward local investments in renewable energy and energy efficiency, sustainable agriculture and food, and racial and economic justice. For example, many Reynders McVeigh clients are invested in Sunwealth, a Cambridge-based financier in community-based solar and storage projects.
“You can really see how your money is attached to something that you can feel proud of,” Endries explains. “You’re going by this multifamily housing complex, and it’s got solar panels on the roof from Sunwealth, and you invested in Sunwealth, and you know that’s in the fund that you invested in.”
Endries points to a handful of organizations she considers forerunners in translating that philosophy into investment structures that actually build neighborhood wealth.
Boston Impact Initiative (ImpactAlpha Edge), for example, pioneered a model that bakes wealth-building covenants directly into its loan agreements with portfolio companies (see, “Boston Impact Initiative raises $22 million to invest in New England’s small businesses”). That means tracking employee hiring, living wage compliance, supplier diversity and connections to underserved vendors.
“Boston Impact Initiative was really a forerunner in thinking about this, and pushing in all directions to think about how you do create wealth through small businesses, for sure, and the entrepreneurs that start those businesses — but also in every part of the ecosystem, with their suppliers, with their workers,” Endries says.
The fund also upended conventional wisdom about investor accreditation. Rather than offering the choicest terms to its wealthiest investors, it structured returns so that accredited investors accepted more risk and lower returns than unaccredited ones — and used loan guarantees and charitable capital to protect lower-income participants.
Boston Ujima Project (ImpactAlpha Edge), founded in 2016, has built a democratically governed, community-accountable model that Endries says goes well beyond lending.
“They have really created an ecosystem,” Endries says. “I give them so much credit for how much work they have done in having financial education classes, as well as developing businesses and really promoting some of the places that they’ve made loans to,” she says.
Impact first
Endries says the philosophical terrain of impact investing has shifted noticeably over her dozen years at the firm. The early argument — that you could have market-rate or even above-market-rate returns alongside impact — has given way to what she says is a more honest conversation about tradeoffs.
“Maybe we shouldn’t be expecting market rate out of all of the impact returns,” she says. “If you have impact first, then you might be thinking about how extractive are the returns for some of these lower income neighborhoods that we might be investing in.”
One of the more underappreciated pools of capital in this ecosystem, Endries argues, are donor advised funds, or DAFs.
The Boston Foundation is now rolling out a “Mission First Fund” with Boston Impact Initiative as an anchor investment. It is structured as an opt-out for DAF holders, meaning a percentage of its assets flow into local impact investments automatically unless the donor chooses otherwise.
“You have a captive group of people who have created a donor advised fund because they have charitable intentions, and many of them are passionate about their local area,” Endries explains. “It’s a perfect opportunity to bring impact into the investment portion that will align with the grant making that the DAF is doing.”
The need for such solutions is greater than ever. Federal policy shifts are creating real gaps that local capital is being asked to fill.
In the interview she describes a community development financial institution that recently approached Reynders McVeigh clients for impact dollars after a federal policy change blocked green-card holders from access to loans from the Small Business Administration. The move that blocked many immigrant-run child care facilities from their primary source of financing.
“When the national stage feels harder to affect, people are thinking a lot about their neighborhoods,” she explains.
