On January 28th, we gathered a diverse group of impact investing enthusiasts through Meetup to talk about cutting edge approaches to invest in human capital. We heard from three leading professionals in the space and discussed the structures, targets, opportunities and challenges of investing in individuals.
- Oren Bass, cofounder of Pave, explained the company's role as a platform that connects individuals with investors. In Pave's model, the individual receiving the investment pays back to his/her investor a percentage of earned income over time.
- The Global Good Fund's Karin Fujii, senior director of fellowship and expansion, explained a less financially-focused approach: Karin and her team select a group of fellows each year who exhibit the traits of outstanding leaders of socially, environmentally, and economically sustainable business and nonprofits. Those fellows are then introduced to investors and coaches who contribute their time, experience, and connections to their fellows and serve as a resource for growth.
- Gene Gurkoff, a Global Good Fund fellow, was able to dramatically increase the scale and effectiveness of his organization, Charity Miles, thanks in large part to the knowledge and networks that his investors/coaches provided for him—and will continue to provide as Gene progresses.
We began our discussion with questions surrounding the three primary inputs that can be invested in individuals: • financial capital (monetary funding) • human capital (knowledge/skills/experience) • social capital (networks/contacts).
We then broke out into groups to discuss the target outputs when investing in individuals:
- Karin led a discussion about the difficult task of developing vetting criteria for potential fellows and identifying accurate metrics with which to evaluate the effectiveness of an investment.
- Gene's group talked about the primacy of human capital (skills) and social capital (connections, advisors, friends) as necessary prerequisites to attract financial capital (money!) effectively. And generously shared his tried and true ways to position yourself to pursue this ‘people-first’ strategy.
- Oren investigated the motivations driving investments in individuals, whether primarily for financial returns or human returns, and how best to align investors' and individuals' goals through the allocation of investment capital.
We challenged each breakout group with the task of distributing 100 hypothetical "points" from an investor across the various input categories (financial, human, and social) in accordance with each input’s relative importance. One group split the points in thirds and allocated each equally. Another decided that an individual’s vision for his/her future, alongside human and social capital, must come first, followed by the right amount of financial capital at the right time.
We hope that the discussion will radiate outward from the event—it's one worth continuing that will become an important part of impact investing discourse. Thank you to everyone who helped to make our conversation happen (our host Pave, and innovators Global Good Fund and Charity Miles) and those who joined in to make it so enriching!