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Rating:The Rockefeller Foundation Backs an ETF Startup Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, August 01, 2017

The Rockefeller Foundation Backs an ETF Startup

Reported by Adena Baichan

The Rockefeller foundation is backing a charity-focused ETF startup.

Industry veteran, Ethan Powell, confirms that his Dallas-based nonprofit ETF startup, Impact Shares, has secured a grant from the foundation. Powell plans to partner with nonprofits in specific social issues to "create bespoke indexes and ETFs for organizations with specific ESG concerns." The collaborating nonprofits will receive all of the advisory fee.

Within the next three to four months, the firm hopes to have eight filings for new ETFs, Powell tells MFWire.

"The idea is that capital is creating social impact," Powell explains to MFWire. Rather than being held as a secondary or tertiary aspect, the firm makes social influence a first priority, so that investors can "achieve market returns while achieving specific social impact."

"It's equal parts passion for the cause and apathy toward our industry's ability to generate social alpha," he says. "We want to be able to get people to call to action and spur continued engagement."

Powell most recently served as chief product strategist at Highland Capital Management and is still chairman of Highland's mutual fund ETF board.

With Impact Shares, Powell aims to bring a balance between "social alpha and financial beta."

"There's sort of a natural tension between those two," Powell says.

The firms logo, which is the Celtic knot, symbolizes the interconnectivity of everything. In context of Impact Shares, Powell says the knot represents the interconnectivity of "capital and social outcomes" of not just investors, but also corporate America and nonprofits as well.

"Real impact comes within the ability to engage corporate America. That's really powerful."

Powell sees a distrust that young investors and nonprofit organizations have towards Wall Street. The media and entertainment spheres tend to vilify aspects of financial services. "It's more complicated than that," he explains, and Impact shares is meant to support a good reputation. "There are a number of firms interested in filling a need in a marketplace that isn't self-serving."

Powell also emphasizes the importance of reaching nonprofits and investors early in their investment lifecycle, which is useful in creating lifelong engagement, demonstrating commitment to a cause, and building a natural earmark toward the end of its life. Additionally, it gives another option to a charitable check.

In this, the traditional mutual fund shareholder updates become much more. "Organizations are able to say, 'these are the things we're doing, these are the changes we're making'," he explains.

The 40-act fund structure is custom-made to require engagement with the community. Impact Shares is utilizing the structure to benefit nonprofits and their goals. "You can stay on top of the issues, holding organizations accountable and getting them to be more proactive and demonstrate leadership in their cause."

Eventually, Powell aims to have every social issue and every nonprofit available within the platform. Powell says that the firm will remain issue agnostic, maintaining independence from social issues. In doing so, non-voting board seats will go to non-profits, and Impact Shares will hire from within those non-profits' affinity groups.

As a guidepost for the startup, Powell aims to follow the United Nation's 17 Sustained Development Goals, including essentially universal values such as clean water, resilient economics, and inclusivity. "We are bridging capital to cause," says Powell.

"At some point you have to look at yourself and ask, 'what can I do to maximize my impact?'," he says. "We hope to help lead the way on impact investing."

 

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