Many financial firms have spotted their clients’ demand for impact investments. Fewer have satisfied that demand.
Rather than try to woo clients away from those financial firms, CapShift has aimed to help family offices, financial advisors and donor-advised funds offer impact investment opportunities to their existing clients.
The five-year-old firm announced last month that it had mobilized $1 billion through its platform, doubling its cumulative total in just the past year. Its dozens of partners include Fidelity Charitable, Vanguard Charitable, Silicon Valley Community Foundation and the Chicago Community Trust.
“When it comes to managing money, especially among high net worth investors, it takes years to build that trust. Whether it’s a wealth advisor or a donor-advised fund provider, many people have been with these firms for years or decades,” CapShift’s Adam Rein explains in ImpactAlpha’s latest Agents of Impact podcast.
“As opposed to setting up a new impact investing firm to try to convince people to leave their trusted relationships, our vision for CapShift has always been, ‘Can we be a business-to-business solution that helps private wealth and charitable firms insource impact investing solutions to the clients they already work with, or use those solutions to win new clients and and grow their practice?’”
Survey’s suggest that as many as half of all high-net worth clients say they are interested in impact investing. The majority have never had a conversation about impact with their wealth advisors, Rein says.
ImpactAlpha and CapShift have partnered to produce Advisors’ Corner, a package of “Getting Started” articles, deep dives and other resources to help advisors become familiar with impact investing practices and pitfalls.
“Wealth advisors are not going to talk to their clients about impact investing unless they really feel confident that they understand it, particularly if they’re not a practitioner to date,” Rein says on the podcast. Advisors’ Corner aims to help financial advisors get comfortable with the market and “translate that into their practice of setting goals and building and managing portfolios. Ultimately, the goal of CapShift and many in the space is to mobilize more capital for impact.”
Investment solutions
Rein, then with MissionPoint Partners, co-founded CapShift in 2018 with the Heron Foundation and Jacques Perold, the former head of Fidelity Research & Management. Its first partner, Fidelity Charitable, is the largest provider of donor-advised funds. Such accounts, which were initially intended to help donors manage their charitable giving, can also be used to make impact investments. Altogether, DAFs hold about $250 billion in assets. CapShift now partners with 10 of the 15 biggest DAF providers in the country.
“Most donor advised funds pride themselves on making it really easy to grant to any nonprofit of your choice,” says Rein. “But some of the investment solutions at these organizations were more rudimentary.”
For clients, he says, “It’s pretty common to think, ‘Hey, if I’m granting to nonprofits around an issue I care about, whether it’s regenerative agriculture or community development or affordable housing, should my investments just be in standard public market mutual funds? Or wouldn’t it be great to have investment options for the dollars that are waiting to be granted out to also be creating positive change on the issues I care about?’”
To expand its offerings to provide advisory services to foundations and family offices, CapShift in 2021 formed CapShift Advisors, an SEC-registered investment advisor.
Through its technology platform, CapShift monitors more than 1,400 impact investment opportunities, primarily in venture capital, private credit and real assets; its clients have made allocations to more than 150 entities. Fund managers can apply, at no charge, to get on CapShift’s platform.
“We have a heat map that tracks what are all the funds raising capital and where is there demand among all of our clients,” Rein says. Climate, not surprisingly, commands the most attention. Interest is also high for investments in underserved communities, particularly through community development funds, or CDFIs. The new Advisors’ Corner includes a “deep dive” on CDFI investments.
Another major focus is sustainable food and regenerative agriculture.
“Some may be thinking globally and that what we really need is scalable technologies to solve the problem, whereas another person may only care about the city they live in and helping farmers there with more nature-based solutions,” Rein says.
“Our goal is to truly understand the goals and philosophy of each underlying client and make sure that the things they’re investing in really reflect those values.”
Advisors’ Corner is a content partnership between ImpactAlpha and CapShift. CapShift’s impact investing platform empowers financial and philanthropic institutions — and their clients — to invest in their vision for a better tomorrow. All content is solely for informational purposes and should not be used as the basis for investment decisions.
