Erika Karp, founder and CEO of Cornerstone Capital Group, was recently interviewed by Charities Aid Foundation (CAF) America to explore the intersection between market-based solutions and philanthropies, particularly as it relates to investment. We used the request by CAF America to conduct interviews internally with Cornerstone Capital staff and externally with thought leaders in the finance and foundation fields to gather opinions about the nexus of market-based solutions (i.e., traditional for-profit investment via the capital markets) and philanthropy. Topics included the following:

  • Areas of collaboration between philanthropy and capital markets,
  • Role of Donor Advised Funds (DAFs), and
  • Evolution of corporate philanthropy.

For Philanthropies: Aligning Program with Endowment
Interviewees cited collaboration between traditional investors and philanthropies as a key to solving the world’s most pressing issues. Philanthropies bring specific expertise and willingness experiment, while market-based solutions bring scalability and financial sustainability.

Our interviews identified three areas of collaboration:

  1. Partnerships between philanthropies and investors can bring scalability to projects. Market-based solutions provide financial returns that can be recycled for further impact while philanthropies typically have deep knowledge of specific social and environmental issues.
  2. Philanthropies can amplify the impact of their capital by allocating investment of their endowments to sustainable investments.
  3. Collaboration between philanthropies and investors can increase the attractiveness of certain investments, as philanthropies that focus on social impact can act as a guarantor for part of the investment and entice more capital to projects.

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Emma Currier is a Research Associate at Cornerstone Capital Group. Emma graduated with a Bachelors of Arts degree in Economics from Brown University in May 2016. While at school, she worked with the Socially Responsible Investing Fund and as a teaching assistant for the Public Health and Economics departments. She spent her sophomore summer researching differences between American and Indian educational styles in Arunachal Pradesh, India, and completed a summer investment bank analyst position with Citi in the Media & Telecom group in 2015. 

Sebastian Vanderzeil is a Global Thematic Research Analyst with Cornerstone Capital Group. He holds an MBA from New York University’s Stern School of Business. Previously, Sebastian was an economic consultant with global technical services group AECOM, where he advised on the development and finance of major infrastructure across Asia and Australia. Sebastian also worked with the Queensland State Government on water and climate issues prior to establishing Australia’s first government-owned carbon broker, Ecofund Queensland.