Rockefeller Funds Startup to Build Nonprofit ETFs

(3BL Media/Justmeans) – The estimated annual funding gap needed to achieve the UN Sustainable Development Goals (SDGs) in developing countries alone is about $2.5 trillion. Global philanthropic funds and other aid agencies must pursue innovative finance solutions to attract more private capital for projects to create a more resilient and inclusive world.

The Rockefeller Foundation is employing innovative financing mechanisms to mobilize private sector capital in new and more efficient ways to meet the goals of global sustainability. The foundation has announced a grant of $300,000 toward the cost of developing a series of cause-based Exchange Traded Funds (ETFs) in partnership with leading nonprofits in an effort to create better socially responsible investment solutions.

The startup, Impact Shares Corp, is a Dallas-area organization that aims to offer charities the ability to create ETFs that will be sold to the public. ETFs give investors the ability to buy a basket of stocks or other assets with a single trade. The profits from the ETFs will be directed back to the nonprofit’s causes.

Charities working with Impact Shares would include in their ETF whichever companies perform well on the environmental, social or governance (ESG) criteria that matter most to them. For instance, a veterans’ organization might support companies with policies to hire people who have left the military.

According to Impact Shares founder Ethan Powell, the organization’s goal is to create a fund that will perform roughly in line with the broader market. Powell says that a meaningful difference can be made if corporate America is organized around specific causes. The end goal is that every social issue gets represented by a major nonprofit.

Wall Street is increasingly championing ESG-driven investments. According to FactSet Research, US fund managers have launched 22 socially responsible ETFs over the last 12 months, up from 13 a year ago and just five the year before that.

Powell wants Impact Shares to become the first nonprofit to sponsor an ETF. Rockefeller managing director Saadia Madsbjerg said that the foundation's innovative finance team is aiming to create new ways to mobilize private capital for public good.

Source: CNBC

Image Credit: Rockefeller Foundation