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Invest for Impact

Interview with Malaika Maphalala: Advising Impact Investors

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Natural Investments' Malaika Maphalala on Advising Impact InvestorsMalaika Maphalala is a financial advisor with Natural Investments, a national SEC registered Investment Advisory firm that has specialized in exclusively socially responsible and ethical investing for over 25 years.   A lifelong advocate for social change, Malaika is driven by a passion for finding innovative approaches to bringing people and resources together to address social and environmental complexities.

Prior to her work with Natural Investments, Malaika spent 10 years in the non-profit sector as an independent consultant providing administrative, development  and program management services for numerous socially driven organizations in Hawaii and Oregon.  She was also a co-founder of Dragon’s Eye Learning Center, a 501(c)3 non-profit organization that has provided ongoing programming in the arts, alternative education, and sustainable agriculture from its rural, 40+ acre farm-based site since 2001.  After transitioning to the field of finance, Malaika worked as the Business Manager for a private investment firm specializing in foreign currency trading where she worked directly with high net-worth investors and developed and managed fiscal tracking systems.  An important aspect of her work included helping the firm develop its goals to commit a portion of profits for social good.   

Q: How do you define impact investment and what does it mean to you?

A: Impact investing is looking at critical issues we face as a planet, like poverty, environmental degradation, and health care for the world’s poorest people, and using the business model and investment dollars to address them directly. These are issues that have been typically addressed by governments and non-profits, both of which have barriers and limitations to addressing the scale of the problem.

Impact investing is about more and more people realizing that enterprise and market driven dollars coupled with social/environmental mission can offer the needed scale, power and speed to create deep and lasting social change. I think the tremendous success of Microfinance as developed by the Grameen Bank, really opened people’s eyes to the possibility and power of using investment dollars as opposed to charity to drive social innovation and positive change.

Impact investing has a very wide spectrum, and can be small scale to large, local to global. I believe it is critical for communities to invest in their own development, moving more resources into local ownership. On a more global scale we can invest in things like clean energy, microfinance, and sustainable agriculture.

Q: How did your career lead you to focusing on impact investing?

A: I have always been interested in social and environmental issues, particularly sustainable agriculture and economic justice. These issues have defined my life. I was raised with a heightened awareness of my impact on the environment. Throughout my life, I continually worked to bring people and resources together to address social and environmental challenges.

An important part of my journey was spending 20 years living in a rural environment in east Hawaii, where lack of sustainable systems around food production and energy has a much more visible impact on an island ecosystem.  I became very involved in community development, sustainable agriculture, and alternative energy as ways to help communities of people adopt more sustainable lifestyles.

I also focused on drawing attention to issues of economic injustice. I spent 10 years working in the non-profit sector focused on  at-risk youth and found  I became frustrated with the capital and resource constraints that I faced in using the non-profit model. This led me to search for more efficient ways to mobilize resources and move capital toward supporting the things that matter to me the most Social Finance, and the community of people involved in the work really impressed me and drew me in.  I really see myself as a social activist working in the investing realm, enabling the spread of direct high-impact action to improve our world that comes with an economic incentive and benefit for all involved.

Q: What is unique about Natural Investments’ approach?

A: Natural Investments is unique because we have been exclusively focused on socially responsible and ethical investing for 25 years. We work with institutional and individual investors around the U.S. and help them incorporate their values into their portfolios. Sustainability is part of the core business model and is not just a sideline project. As a result, the firm has achieved significant refinement and deep thinking in our field. Every one of our advisors really has deep commitment to sustainability within our personal lives and our work in our communities.

We’re a small firm – just 9 of us working as independent advisors in small offices in 8 states – and we take a very client focused, personalized approach to advising our clients. Though we’re scattered around the country, we work as a team, with a kind of virtual office, and share the work of refining of our model portfolios, doing social research, and consulting with each other on issues related to the field, our clients and the firm.

The people that seek us out as an advisory firm generally already have an interest in doing good and are passionate about certain issues, we just help them align their personal interests and values with their portfolio. We facilitate corporate investing in socially screened mutual funds, community investing, and what we call “regenerative” investing. Regenerative investing is the term we developed to describe direct, high-impact investment in solution-based approaches before the term impact investing really came to the fore.  It offers our clients who are able to take more risk the chance to invest in truly innovative companies and projects that aim to be economically viable models of sustainable society.  We have also developed the Heart Rating, the only social rating system that monitors the social performance of SRI mutual funds in the United States.

Q: What do you consider the largest milestones in the firm’s development?

A: Natural Investments began with our founder Jack Brill working with his son, Hal. The two of them and their early partners, Michael Kramer and Christopher Peck, were the heart of Natural Investments for a number of years and helped to define our current organization. The firm has published two books on the subject of Socially Responsible Investing: Investing From the Heart in 1992, and Investing with Your Values in 2000.

In the last three years the firm has grown quickly, and I joined to become the first woman on the team. In just the last 6 months three new advisors have joined us and we now have $200 million in assets under management. This has been a critical growth period for us, and we are currently looking at expanding our work in shareholder advocacy, continuing to develop the heart rating system, and furthering our work in regenerative or impact investing. There’s even talk of writing a third book.

Q: Where do you envision the impact investing space will be in the next 5 years?

A: I see impact investing moving along a similar trajectory as community investing. I anticipate that in five years it will have taken root, grown rapidly and moved more into the mainstream. You know big things are happening when we see groups that represent the leading edge in the space, such as Calvert, RSF, and B lab, teaming up with the Rockefeller Foundation and JP Morgan. I’m confident that the implementation of the GIIRS rating will really help to create a common language for us and will be a very significant step in strengthening the field.

Q: Which sectors do you feel present the most promising double and triple bottom line investment opportunities among the social and environmental markets?

A: I encourage my clients and investors in general to use their personal interests as a guide in making their investment choices. I hesitate to say that certain sectors are more promising; I think that it is more important to join our passion with our investment, regardless of the sector. All of the sectors listed on Mission Markets, from community investment to clean-tech, present promising and exciting opportunities with a range of financial returns for investors. It is a matter of individual investors assessing their financial needs and goals, and determining how they want to have an impact.

Q: Which types of investors do you think will play the largest role in the growth of these markets?

A: Large institutional investors are whom we really need to be participating on a grand scale in terms of really moving the money. However, all players within the investing spectrum—both accredited and non-accredited—have an important role to play. I don’t think that impact investing can be a fully recognized asset class unless it can include all investor types.

I believe that the push for local and sustainable food systems is going to be huge—the whole conversation around the Slow Money movement is very interesting and exciting to me and will impact a lot of people. I think that will have a ripple effect. I think that between the work of RSF, Renewal2, Calvert, and several other key players, there is something very exciting happening. I believe that the development of new partnerships between the various leaders in the space is essential to its growth, and it is exciting to see them beginning to develop.

Q: How do you see your own current and future role in contributing to the growth of impact investing?

A: I see myself as both an advocate and as an activist within the finance community and on the community level to develop and expand impact investing on all levels – small scale to large. It’s an important role for me and my peers in the field to play into the future. I see my firm as an advocate working to create a market for new vehicles and pooled investment products that reduce individual risk while increasing social and ecological rewards. We are working to widen the playing field to enable more people to participate. It is very important to develop vehicles that enable average investors.

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Author: Mission Markets

Mission Markets operates a financial marketplace for the impact and sustainability community. On the Mission Marketplace members can raise capital, discover investment opportunities, buy and sell environmental credits, access comprehensive data and information, promote valuable products and services and connect with a community of like minded stakeholders. Our goal is to increase the flow of information and capital within the impact and sustainability sector and expand the stakeholder community as a whole.

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