By Milind Mehere
What do 29 unbanked borrowers, one small business owner, 22 investors, and an investment platform have in common? They are working to create a better world where their roles benefit not only themselves, but also one another.
Nearly 18 months ago, a company called Quest Livery Leasing asked my investment platform to back its business. Quest Livery wanted to lease its fleet of vehicles to drivers working with services such as Lyft and Uber. However, most of the drivers were unbanked and didn’t have credit histories, making it all but impossible for them to secure traditional financing.
Given our expertise in alternative investing, YieldStreet investors agreed to back the loans. The deal became a study in impact investment for us. Our investors were able to invest in a commercial loan to which they otherwise may not have had access; Quest Livery raised cheaper debt capital; and drivers were able to lease the cars and become entrepreneurs.
That’s the power of socially conscious investing. Contrary to traditional investment thinking, profit and positive impact aren’t mutually exclusive.
The power of social investments
Social justice investments help underserved communities by bringing new businesses and opportunities to their neighborhoods. Socially conscious initiatives also provide more sustainable, long-term strategies for making a difference than one-time donation campaigns can.
Litigation finance is another great example of this. Too often, the people who win lawsuits are those who can afford to stay in the fight the longest — not the people most entitled to compensation. Litigation finance enables plaintiffs to see their cases through by borrowing from third-party lenders.
A small British manufacturer used third-party funding to wage a lawsuit against Caterpillar Inc. In 2015, after five years of litigation, Miller UK Ltd. won $73.6 million in damages after a jury convicted Caterpillar of misappropriating trade secrets. Without litigation financing, Miller likely would have had to abandon the suit against the multibillion-dollar company.
Borrowers pay lenders only if they win their suits, so there’s no danger of going deeper into debt if they lose. Litigation financing promotes legal justice for people who were previously disadvantaged by the system, and it ensures that investors get paid if their borrowers do. Social investments make sense for everyone involved.
Make an impact without sacrificing profits
For-profit companies are judged primarily on their financial successes, but social responsibility is a key component in attracting consumers and recruiting talented workers. Here’s how you, as a leader, can marry financial success and social responsibility:
1. Connect the dots. Identify ways in which you can connect the business to social aspects. When Quest Livery pitched YieldStreet on investing in unbanked drivers, we saw a chance to make a real difference.
Ask yourself and your employees, when the going gets tough, what gets you going? Beyond doing your job, what does the company stand for? Who is using its products? What effects are you having on society or on consumers who use your products? How can you live those ideals more fully as an organization? What contributions are you already making, and how can you deepen that impact?
Connect your mission with every single person on your team to create a shared vision and purpose to define why you are coming to work every day. By inviting employees into this conversation, you build a socially conscious mentality that radiates from every level of the organization.
2. Empower employees. Passion is a key driver for success. How can you ensure your team is engaged and firing on all cylinders? That is how you create a competitive advantage for solving big problems.
Smaller companies may not have a corporate social responsibility (CSR) department, but you can still align your company’s social responsibility with employees’ everyday experiences. Solicit feedback, including criticism, about how you can improve possibilities for them to engage in efforts aimed at boosting employee social responsibility. Reward those who get involved in ESR campaigns and who help promote ethical, socially conscious behavior in the workplace.
Most importantly, hire people who are passionate about corporate social responsibility (CSR). Acumen, a nonprofit investment fund, recruits candidates who are aligned with the organization’s values and ideals by asking them for thoughts on CSR and how the company could do better. Applicants who come prepared with ideas are the ones you want on your team.
A toxic group of people can destroy morale, but an engaged group can build momentum around key company initiatives. If you empower employees to make decisions, solve problems, and work on projects that matter to them, they will build something amazing.
3. Engage in socially responsible team activities. Designate service days to take group action on an issue that someone on your team is passionate about. Clean-up projects stimulate environmental awareness and encourage teamwork and collaboration. Raising funds via marathons promotes health and wellness and helps people in need. Even simple things like energy saving or recycling programs at the office can get employees into the mindset.
In a U.K. study on volunteering, correlations were discovered between volunteering and overall better peer and family engagement, as well as greater confidence in social settings. Because a harmonious workforce is more productive, service projects make good business sense. They also offer great opportunities for natural leaders to emerge.
Use service days to showcase your team’s skills for a good cause. If you run a marketing agency, for example, you could offer to run a pro-bono campaign for a local nonprofit. Such efforts garner goodwill in the community and keep your services top of mind.
Social responsibility doesn’t have to happen at the expense of sound business decisions or smart investments. As a company leader, you should understand the how the work you do affects the areas around which your business is based. Business growth and social impact don’t need to be mutually exclusive.
Will you help create jobs? Positively affect the environment? Such outcomes aren’t just good for the community; they’re also good for business. So start thinking about how you can expand and fine-tune your operations to incorporate more meaningful initiatives.
Image credit: Pexels
Milind Mehere is a passionate serial entrepreneur currently at the helm of YieldStreet as CEO and founder. YieldStreet uses technology, data, and investment management to empower financial independence for all. Milind has been fortunate to work for industry-defining companies, and he has successfully built and scaled three businesses, one of which, Yodle, was acquired by Web.com for $342 million in 2016.