Gino Borges:
This is Gino Borges with The Journey to Impact. Thank you for joining us today. I have Morgan Simon with us whose two decades of making finance a tool for social justice have influenced over $150 billion in that time. She is the author of Real Impact, The New Economics of Social Change, featured by Harvard Business School and The United Nations. Morgan is a sought-after expert in the impact investing space, a regular voice in the media, and an active investor as Founding Partner of Candide Group. Welcome, Morgan. My interviews of late have tried to honor where we’re at in terms of the unique coronavirus pandemic and its effects on social and public health and finance. Where are you at, not just logistically, but professionally and personally with the current crisis?

Morgan Simon:
I’m mostly angry that the systemic racism that has always perpetuated our economic system is being emphasized through the responses that we’re seeing. I’ve been hearkening back to when Trump first got elected, and there was a lot of outrage, specifically from white women and the women’s march concept. There was this feeling that we didn’t know that things could get this bad: our rights, our wellbeing, and even just our existence could be so existentially threatened. The response from many women of color was, “Well, welcome to the party. We’ve felt this way for a hundred years.” What’s fascinating to me about COVID is that it’s peeling back the layers on everything that has failed in the economy in the ways that it’s created massive health disparities for people of color in the way that the gig economy, largely stewarded by people of color, is failing people in this moment. When we think about essential workers and the frontline health workers, we need to be paying more attention to our farmworkers. At least in California where I live, over 70% are undocumented and don’t qualify at all for this bill, but they are the ones that are keeping us healthy. When we then look at what does this means for me as an investor, I’ve been spending my time helping to push through a number of the PPP loans, the main element of the stimulus bill to get loans out supposedly to small businesses, but $10 million went out to companies like Shake Shack, or $4.6 million to the Lakers. I’m from LA; I’m definitely a fan, but if they had $40 million to pay LeBron James last year, they probably could afford to pay any of their workers at $15 an hour. This is massive wealth extraction in having so much of those relief funds go to publicly owned and large companies as opposed to the small businesses, largely Black and Brown-led that drive the economy. A lot of my work in the past week has been making sure that as many social enterprises as possible get their hands on that money. At Candide Group, we work with families, foundations, athletes, and other cultural influencers who want their money to work for social justice. Over half of our portfolio is led by women and people of color. When I talk about making sure that our portfolio companies get access to the stimulus money, women and people of color are our predominant focus amongst social enterprises. It’s this combination of how do we translate outrage into action. Candide Group is marrying investing and advocacy. We deploy about $40 million a year of capital for our families, foundations, and influencers. But, we recognize compared to the $196 trillion that circulates in the global economy every day, that’s enough capital to pat ourselves on the back, but it’s not enough to necessarily make the type of systemic change that we want. That’s part of why I’m a Forbes contributor and that our team has been making sure to be pushing on Congress, using media to get them to think more about how to incorporate small businesses led by people of color and women into the stimulus bill. It’s why we’ve been pushing so hard to make sure that people who are in jail can stay safe during the COVID crisis. We are thinking about how we leverage not just our capital but our broader platform because at the end of the day, what we say at Candide Group is, we really only have one client and that client is social justice. If you want to serve that client, we’ll work with your money. We’re always organizing our activities around what is the most critical social justice need on the plate. Right now, it’s really how do we clean up after all these historic disparities that our economy has created? The hope is to build from the ashes, if the system isn’t working and we’ve knocked it all down. Since we expect a significant portion of businesses not to recover, what could we build instead? I’m hopeful that our memories aren’t too short. We have a really bad habit, even going back to the 2008 financial crisis of saying, “Thank God we got through that, let’s go back to the same strategies and see if they get to a different outcome.” It’s the expression “Fool me once, shame on you. Fool me twice, shame on me.” I’m hoping to prevent that in this case and leverage our power as investors and activists to shift the future of the economy.

Gino Borges:
What would be the ideal vision or the steps that we would need to take to not just go back to our same approach?

Morgan Simon:
Part of our connection is that I was one of five co-founders of Toniic. We piloted the 100% network – investors who were willing to put a stake in the ground and say 100% of their assets all the time can be invested for social and environmental impact. That’s largely what we’ve done with the families and foundations that we work with, seeing the ability to transition portfolios comprehensively and to think more profoundly about the word “legacy” that we talk a lot about at Candide Group – this idea that when you sit down with your grandchildren, it’s not just saying, “look at this beautiful wealth that I created for you and the ability to go to college and realize your dreams, but also “I didn’t hurt someone else’s family in the process.” I didn’t invest in, for instance, in the private prison companies that have been detaining families at the US border. I didn’t lock up someone else’s family to ensure that my family could thrive. When we think about legacy from that perspective, it’s this holistic recognition of value that is both economic value but also the ability to hold your head high in the community. That’s where we have the opportunity to repurpose this concept of value and legacy as wealth owners and to revisit the ways we are complicit in our uses of capital in times of crisis. We can build that future. Something that we can’t forget when we talk about community autonomy (particularly in parts of the world that have had resource extraction over hundreds of years, whether that’s natural resources, whether it’s the actual stealing of people and enslavement of people) we can’t expect that shift to happen without replacing and replenishing some of those historically stolen resources which is why we work with investors from various ethnic backgrounds and our team internally at Candide Group is a majority of women of color. We’re certainly doing more to diversify across different levels of the company. Everyone’s historical narrative is different. It’s important to us and comes from the framework of thinking about the real purpose of capital and what we’re trying to achieve collectively.

I want to be clear within that, that there are great and legitimate reasons for people to need to make and preserve wealth. It’s not necessarily about giving all your money away, but that we always start by working with families, foundations, other groups examining how much is enough for their particular situation. In some cases, that means we’re building portfolios that are beating the Cambridge benchmarks where that absolutely is a legitimate goal. Then, we have others where the intention might be, “What if we tried to lose half thoughtfully?” If philanthropy is -100, if I could achieve plus 50 compared to that, that’s a phenomenal return for the impact that you’re getting. It’s rethinking for everyone, it’s an opportunity to reset on our starting place and where we need to go, and if we want to maximize value. It’s different than saying we’re going to maximize financial return, yet value a mixture of all these different types of return into our legacy. What does that look like for any person? We don’t judge that, but we think it’s important to consider it on the individual level.

Gino Borges:
What was your personal “Aha” moment leading to this intersection of social injustice and money? Where did this journey begin for you?

Morgan Simon:
This goes back to when I was a teenager running tutoring programs in the Valley and downtown Los Angeles with large Latino immigrant communities. I come from a very middle-class, white Jewish background. I do think that there’s a lot of social justice in the Jewish water in terms of history and tradition. It’s not an accident, that in the South, the water fountains used to say “No Blacks or Jews.” The Jewish experience in America has been a bit distinct. Sometimes, I call us the other white meat. There are certainly cultural values that were passed on there. You can’t live in most of the world with your eyes open and not be aware of where we’re at and how it affects you. But, there’s an important line between charity and solidarity. Charity is often seeing people as less than or other than you and therefore need your support. I was grateful to learn this at a young age in spending a lot of time with these largely Mexican immigrant families who were incredibly gracious in opening up their homes to me where technically I was the tutor or the mentor to these young kids, but they were really just my friends. They were like siblings to me who I would go back to volunteer with every week because I liked hanging out with them. I felt that warmth and connection. It started to help me understand the idea of solidarity is treating everyone like they’re your family. When you think of your partner or your child, if you were to walk down the street one day and saw them living on the street without food, maybe even tweaked out on drugs, whatever it might be, what sympathetic response would you have? What outraged response would you have, and how would that potentially change how you would respond in that situation? If you can hold the idea of everyone being your family, then it’s hard to not feel a tremendous amount of pain when walking through the world. That has been a big motivator for me.

I’m also an artist and very active in music and dance. My father is a musician. It’s always been a big part of our lens in seeing the world through creativity and cultural expression. The world is a beautiful, beautiful place; the world is also a terrible, terrible place, and that makes it very hard to plan the day. That’s a tension that I feel constantly. If we walk around eyes wide open, that means you have to see the beautiful and the terrible and to fight for both.

Gino Borges:
Is there any point of contradiction between social justice and money?

Morgan Simon:
As a teenager, I was observing these families of five or more kids with two parents in a one-bedroom apartment in Downtown LA. They can’t get more space nor more ease for the children to be able to study because the mom is undocumented, working in one of the sewing factories in LA putting up with sexual harassment and different types of abuse. Sometimes, paychecks were not granted when they should’ve been. Kids didn’t have access to healthy food making the focus difficult in terms of studying. I was seeing the constant intertwining of economic issues that you couldn’t fix housing without fixing education, without fixing food access, without fixing immigration, or without fixing quality jobs.

Anything that I would have tried to have done on any of those verticals would have fallen flat. The only kind of consistent thread through that to me is the economy. Poverty is about a lack of autonomy. Do you get to live your life the way that you want to be it culturally, socially, politically? What enables those different forms of autonomy is economic. Autonomy is the root of that. Do you get to make choices for yourself? I started to look into what are the levers of the economy. I was privileged to go to a college that had a billion-dollar endowment and thought to myself, who knows what’s going to happen, but let’s presume this is the only time in my life I’m going to be connected to a billion dollars, so let me see what I can do with that. I started filing shareholder resolutions with my schools; that’s why I can say with a straight face that I’ve been doing impact investing for close to 20 years. I filed my first resolution when I was 19 years old. The important component of that story is that we got Lockheed Martin, a major military manufacturer to start giving domestic partner benefits and to put sexual orientation in their non-discrimination clause. We then wrote to other companies saying we noticed you don’t have this either. We’re investors; would you like to change your policy? They all wrote back within a month saying, yes, we’ll do it, don’t file a resolution.

By that point, I was the ripe old age of 20 and saw that these strategies worked. Being an economic activist was a lever for me to be able to address all these other social issues. Fast forward to now where I’m a co-founder of a registered investment advisory, we’ve done about 75 investments in companies and funds from utility-scale solar to the Navajo nation to worker co-ops to beyond fair-trade cacao, and many more, seeing the ways that the economy continues to be a lever to address all these different social issues that I care about.

Gino Borges:
How do cultural influencers fit into your mission?

Morgan Simon:
Part of our mission is to change the culture of money. That’s the root of it all. When we talk about things like how is your money determining your legacy, that can be levered through many forms of cultural influencers. Sometimes cultural influencers can simply be high-net-worth families. We’ve worked extensively with members of the Pritzker family; their leadership in impact investment has been hugely influential within the cultural segment of what does it mean to be ultra-high net worth in American society. What are the levels of responsibility or opportunity that comes with that? Another element of that is if I have a huge platform, how am I using that to shift the economic narrative? This is similar to what I mentioned before, deploying $40 million a year, but there’s $196 trillion in the global economy.

Another example of cultural influence that’s important: when we get to work with someone like Amy Schumer who has something like 3 million Twitter followers, she tweets out something like “Hey, you care about this family detention issue, right? Have you looked at your bank? Are they financing those detention centers where these people are getting locked up? If you knew where your money spends the night, you might not be very happy about it.” We think about the people that we work within various functions and what’s their ways of influencing culture. That can be with their dollars, with our platform, or with both. We launched a partner nonprofit to Candide Group called Real Money Moves where we organized over 30 influencers, largely from the NFL and cast members of Oranges is the New Black, to publicly commit to keeping their money out of private prisons and then to collectively commit $10 million to social investing. It says, “We’re willing to put our money where our mouth is for our values and we want our fans to be thinking about this, too.” Even if you have $5 in the bank, you can make a difference. Fast forward a year later, as part of the Families Belong Together Coalition, we were able to get nine of the major banks, Bank of America, Wells Fargo, Chase, being our boss, to commit to stop funding the private prisons that were largely profiting from family detention and proud of that. It’s these pieces where we can see the combination of the need to build a new economy but also act as activists in the old economy as it currently stands.

Gino Borges:
How do you live with the reality that as you get one step forward, there’s a lot of money out there that’s one-dimensional, still funding dark intentions? You’re trying to change the culture of money. What’s the next level of evolution to get the whole global economy cutting off darker money? Also, how have you personally stayed centered around this vision after taking an occasional hit?

Morgan Simon:
It starts not just with activism; it’s about strategic activism. We’re not just throwing darts at the wall. That’s critical. For instance, the work that we did around banks, private prisons, and private real estate investment trusts means that they have to distribute the vast majority of their profit every year, meaning they have to rely extra hard on bank financing compared to other types of companies. When the major bank said, we won’t lend you anymore, two major companies downgraded one of their credit ratings from average to negative. That seriously impacts their ability and pricing around the ability to raise additional financing. We’ve seen that for both companies. Again, it’s not just throwing darts at a wall but knowing what strategies make sense. Additionally, we didn’t do it alone. Families Belong Together, as a coalition of over 200 activists across the country, represents about 10 million people. We had 500,000 petitions that went into the banks. We had over 50 in-person actions at the banks. From that perspective, we have to be careful sometimes as activists or as financial antagonists to not just forge ahead with whatever we think is important but to really connect socially with humans. That’s a principle, not just in our advocacy work, but in all of our investing work. We talk a lot about accountability to affected communities. Impact investors can often be guilty of saying something is social change or something is impact because “I say it is” as opposed to “I want to be in deep relationship with affected communities for them to tell me what they need because I don’t have that lived experience.” I’ve never lived on $2 a day for more than a month at a time in terms of some of the global work I’ve done. For most of us, we do not have that lived experience. It then becomes about how do we build those connections authentically. When the movement comes to us and says, “Hey, we’re trying to understand this connection between bank financing and private prisons,” then it’s a great opportunity as financial activists for us to jump in and be supportive of the movement. Not acting alone and making sure that you’re being strategic about when and how you engage, you can be sure it’s not just symbolic, but it actually is impacting the work and the policies around it.

Then to your question about getting knocked down: the deeper question is how to accept the fact that the way the world is structured is hugely problematic. How do you determine the right amount of engagement? For me, that’s mostly meant figuring out ways to not run myself into the ground. Amid COVID, I’ve been pushing hard on advocacy around getting these PPP loans to more communities of color with that being this great intersection of my financial knowledge, being a Forbes’ contributor, and being able to push some things. But, I’m also delivering about 200 meals a week to unhoused homeless members of my community and delivering roses and poems to friends on their doorsteps. There are so many different stages of social change from helping one individual to trying to shift liberty for millions. The challenge is for people with relative privilege. I’m not facing the day to day disruptions that others are. I can work from home. I’m very grateful for that. I can go running on the beach with my dog every day whereas there are people who actually are experiencing really serious personal trauma right now. It’s probably not a great time for them to be volunteering in homeless communities. The hardest part for me is figuring out what’s the limit because there’s so much need. But, I can’t get knocked down by the imperfection of humanity and my own imperfections within that. That would be unrealistic.

Gino Borges:
Systemic racial injustices have started taking all their clothes off amidst the COVID crisis with a large part of the population with under $1000 in their bank account at the start of this. Employment opportunities are restricted and people are going to bleed through their savings, if any, very quickly. My last question is how do we come out of this crisis without being drastically worse off than we were before? The government has thrown up a lot of money, but what happens when that runs dry?

Morgan Simon:
The Slow Money founder would often say that money when you spread it around, it’s like manure. It helps things grow, replenish, and renew, but if you just keep it piled up, it’s a pile of shit and it stinks. One way is thinking about philanthropy from an investment perspective for people and institutions that are used to sitting on money. There are opportunities to strategically deploy. For instance, two of the foundations that we support through impact investing, we’re very proud of (The Believe Foundation and Mary Reynolds Babcock Foundation) both of their philanthropic giving this year. At a time when many foundations might’ve been pulling back and concerned about the fall in the public equity markets of saying, these foundations recognize that our communities are hurting even more than we are and they want to do something about that. “By the way, last year we probably got 25% returns. This could be a great opportunity to send some of it.” Anand Giridharadas, author of Winners Take All, talks a lot about this idea of not just focusing on giving back but to stop taking. Are there opportunities within our business environments to make sure that we’re addressing inequality and the ways we cement the wealth gap? As impact investors, we’re guilty of adopting a “good enough for those people” type of response, whether it’s what should minimum wage be or what conditions are “appropriate” as opposed to thinking more from that solidarity approach. If my sister were to go work as an entry-level person at this place, would I feel great about how she was treated? Would I say it was fair, or would I be advising her with “What the hell? You don’t get health insurance? Go fight!” That’s a big part of why with Candide Group, we’ve often talked a lot about the difference between the “how” and the “what” in impact investing. We can get wrapped up, for instance, in a metric conversation around an enterprise that created 5,000 jobs. That’s the “what” of impact, but the “how” is left out, which is: is it a living wage job or is it a job that’s forcing you to get a job on the weekends? Is it a job that gets you access to quality healthcare? So often, we create low-paying jobs in low-income zip codes which is why people are poor. We need to think more deeply about how businesses operate separately from any consideration of sector geography. But, what is the criteria for real sustainability? One of the levers that we often use to measure that is the question of whether you are adding more value than you extract. A little bit of intervention is better than nothing, or is it fundamentally a fail? That’s based on the Transform Finance principles. In the book, I go through those in much more detail if people are interested in exploring that philosophy.

Gino Borges:
Morgan, thank you so much for eloquently connecting social activism and the culture of money. You have a very unique way of putting the mosaic together, a very thoughtful way of not only putting it together, but actually articulating it. Your voice is needed more than ever.

Morgan Simon:
Thank you so much for having me. I’m thrilled that we’re all building this work together. That’s the real opportunity that we have.