Executive Summary

Download a PDF version of Women Entrepreneurs.

Women Entrepreneurs: Foundational to Economic Recovery

By now it’s well understood that entrepreneurship is beneficial to economic growth and development. It has been at the core of every economic recovery in history. The creation of small businesses boosts economic growth by introducing new products, services, and technologies into the economy.  Most importantly, it provides new job opportunities, challenges existing firms, and boosts competition and productivity.

In this note we consider the role of entrepreneurship in fueling economic growth. In particular, we focus on the need for investors to deploy capital to support women-owned businesses as we emerge from the Covid-19 recession, given that women-owned businesses in a post-recession environment have been shown to create more jobs. The gap between supply and demand for capital available to women entrepreneurs must be closed.

The backdrop: statistics on women entrepreneurs

Over the past several decades, women have been a fast-growing segment of small business owners, with entrepreneurial women of color representing the fastest-growing cohort of all entrepreneurs. Women-owned businesses were particularly big job creators and stabilizers of the economy following the 2008-09 Great Recession. Nationally, minority- and women-owned business enterprises (MWBEs) added 1.8 million jobs from 2007 to 2012, while firms owned by white males lost 800,000 jobs, and firms equally owned by white men and women lost another 1.6 million jobs.  Further, many women-owned businesses focus on sectors such as health care and education, qualifying for consideration as social enterprises, designed for both profit and positive social or environmental impact.

Business ownership demographics

Small businesses currently suffering

Many small businesses are being challenged or even decimated by the coronavirus crisis. A March 2020 survey by the National Federation of Independent Business (NFIB)  indicated that over 90% of small business owners had been negatively impacted by this crisis.[i]  About half of small businesses said they could survive two months at best, and about one-third believed they could hang on for three to six months.[ii] In a U.S. Chamber of Commerce Survey conducted April 21-27, 2020, roughly one in three small businesses reported temporarily shutting down in the prior two weeks, up 5% vs. a similar survey in March.[iii]

WEConnect International, a global network that connects women-owned businesses to global market opportunities, conducted a survey in April 2020 of nearly 600 women-owned businesses regarding the impact of Covid-19. More than 85% of those surveyed have been negatively impacted, with 90% experiencing a decrease in sales. Many are adjusting their products or services to changing economic climate and are trying to secure financing so that they can stay in business. On a positive note, women business owners are taking steps to adapt: 54% cut unnecessary expenses; 42% shifted to a digital model; and 37% are growing in response to local or global needs.[iv] [v]

There are reasons for optimism, especially in the medium to long term. According to the Census Bureau, 79% of small businesses that have laid off or furloughed employees anticipate bringing back most of their employees once the U.S. small business climate returns to normal.[vi] Further, more than 500,000 applications for an employer identification number have been submitted since mid-March, an indication of entrepreneurs’ intent to start new businesses soon.[vii]

Crisis fueling innovation

Crises often fuel economic and technological innovation. For example, the 2008-2009 financial crisis led to the development of new business models such as Uber, a ride-sharing platform, and Rent the Runway, an online clothing and accessory rental service. [viii]

Entrepreneurs are already rising to the challenges posed by the coronavirus crisis. For example, liquor distillers are pivoting to make hand sanitizer needed to deter the spread of the virus. Some small companies are seeing soaring demand for innovative products or services. One such example is Farmbox Direct,  a subscription service that delivers boxes of fresh produce directly to customers. Ashley Tyrner, Farmbox’s founder, saw a massive increase in orders as the nationwide lockdown took hold. New customers are coming from areas where grocery shelves sit empty, or are setting up deliveries for older relatives who don’t want to risk infection by shopping outside their homes.[ix]  Another example is MD Ally, which allows 911 dispatchers and other responders to route nonemergency 911 calls and patients to virtual doctors to help improve the efficiency of emergency response systems. Founded by Shanel Fields in March 2020 just as the US economy was shutting down from the coronavirus crisis, MD Ally is currently hiring while many companies have furloughed or laid off workers. [x]

Innovative new business models will probably lead to sales and employment growth as a route to rebound from the Covid-19 recession. While it may be too early to tell, business models that have gained traction during the era of social distancing, such as telemedicine and remote learning, may flourish longer term as demand for these services grows. The convenience of avoiding a doctor’s waiting room or being able to learn a skill from one’s home on demand may prove to be long-term winning business models.

A compelling analogy: small company performance during the Great Recession

Although businesses owned by women or people of color were more likely to shutter during the Great Recession of 2007-09, they helped stabilize the economy during the subsequent recovery, adding 1.8 million jobs in 2007-12. Meanwhile, firms owned by white males lost 800,000 jobs and firms owned equally by white men and women lost another 1.6 million jobs over this period.[xi]

Some of disparity of experience might be explained by the industries affected. Manufacturing and construction were hit particularly hard during this time — two sectors with a high concentration of white male owners. [xii] Meanwhile, the recovery was largely fueled by growth in industries such as health care and food services, which tend to have more minority and women ownership.[xiii]

The numbers are compelling:  Businesses owned by women or people of color were foundational to economic recovery.  

Women-owned businesses’ role in recovery

The growth trajectory of women-owned businesses, especially those owned by women of color,  suggests that investors who want to 1) support economic recovery overall; 2) support entrepreneurs; 3) support women and people of color; or 4) support social enterprises – or any combination of the above  – should consider investment in these businesses as they may offer the potential for both impact and solid investment returns.

Half of women-owned businesses are concentrated in three industries: professional/ scientific/technical services (lawyers, scientific, architects, consultants); health care and social assistance (child day care and home healthcare services), and other services (such as hair/nail salons and pet care)[xiv] Some or all these industries will rebound once the crisis recedes. An opening up of the economy, an aging population and a return to work should revive demand for these types of services and the emerging companies could represent good investment opportunities. Clearly there will be pent up demand for personal services such as hair and nail care. As people go back to work away from home, the need for childcare and other services will rise. Elective surgeries and other non-essential health care services will be in demand again. Finally, as the economy returns to growth, the need for professional services such as legal or consultant expertise will increase.

Across the board, people are increasingly looking at social enterprises, i.e. businesses that are designed to have both a positive purpose and profit, as vehicles for providing solutions to the major social and economic challenges facing communities. By providing social benefits as well as well-paying jobs, social enterprises offer the potential for rebuilding communities that are stronger than they were before the recession. Social enterprises run by women and entrepreneurs of color, who are hardest hit by the economic downturn, understand their target markets especially well and are well positioned to build successful social enterprises while the economy recovers.

The challenge for women entrepreneurs

BCG, a management consulting firm, partnered with MassChallenge, a US-based global network of accelerators, to review five years of investment and revenue data through a gender focused lens. They found that companies started or cofounded by women received on average less than half the amount of investment capital as male founded companies. Typically, women founders receive only a small fraction of venture capital deals (4.4.%) and only about 2% of all capital invested according to pitchbook data in 2016 through early 2018. However, the women-founded and co-founded companies outperformed their peers, generating 10% more cumulative revenue over the five-year period.  According to the study, this might be attributable to women operating businesses that they have experience with, such as childcare or personal care (e.g. hair salons). [xv]

Michele Bongiovanni is an entrepreneur and CEO/Founder of HealRWorld LLC, a database platform that measures sustainability and creditworthiness of small  and mid-sized enterprises (SMEs) for investors and funders. When asked why she believes women entrepreneurs tend to perform better than men, she opined that women business owners tend to be more collaborative in their management approach and make better financial decisions. This combination, in her opinion, often leads to success for startups. [xvi]

There is some data to back up Ms. Bongiovanni’s statements regarding women as better business owners and managers. FitSmallBusiness.com compiled data from the U.S. Census Bureau, Dow Jones, the Harvard Business Review, and others to compare female entrepreneurs to their male counterparts. The analysis combined 10 private and public studies and determined from the statistics that women business owners outperformed their male counterparts, generating higher revenue, creating more jobs. They also tend to significantly improve startup company performance and have a larger appetite for growth.[xvii] [xviii]

Ms. Bongiovanni notes that funding for SMEs was sorely lacking during the Great Recession. This appears to be the case during the current crisis, as evidenced by the first round of the Paycheck Protection Program (PPP) administered by the Small Business Association (SBA) and facilitated by banks. According to a recent study from ColorofChangeUnidosUS, and Global Strategy Group, close to half of Black and Latinx-owned small businesses expect to close their doors within six months, and may not be able to reopen. A majority (51%) of Black and Latinx small business owners who sought PPP loans asked for under $20,000 in temporary funding from the federal government. Only about 12% received the requested loans. Nearly two-thirds said they either received no funding (41%) or are still waiting to hear whether they will receive  any federal help (21%).[xix] [xx] If these businesses can receive funding to get through the recession, they would help the economy pull out of the recession by providing needed jobs and services in local communities, particularly underserved communities.


As the coronavirus continues to wreak havoc on communities and the economy sputters back into gear, it is clear that small businesses, particularly those founded and run by women entrepreneurs, can help pull the economy out of a recession by providing needed products, services, and jobs. Such enterprises may also help communities emerge by filling in gaps in social services no longer provided as effectively by underfunded local governments. Investors can step up and provide needed capital and reap positive returns by supporting these women entrepreneurs.

[i] https://www.nfib.com/content/press-release/economy/covid-19-impact-on-small-business-part-3/

[ii] Ibid

[iii] https://www.uschamber.com/report/small-business-coronavirus-impact-poll?iesrc=ctr

[iv] https://www.weconnectinternational.org/en/media-news/ceo-blog/connecting-in-the-age-of-covid-19

[v] https://www.weconnectinternational.org/images/IndPDFs/COVIDInfographicRev2.pdf

[vi] https://www.uschamber.com/report/special-report-coronavirus-and-small-business

[vii] https://www.nytimes.com/2020/05/20/business/coronavirus-small-business-startup.html

[viii] https://www.entrepreneur.com/article/347669

[ix] https://www.marketplace.org/2020/03/25/some-small-businesses-are-flourishing-during-the-covid-19-pandemic/

[x] https://www.nytimes.com/2020/05/20/business/coronavirus-small-business-startup.html

[xi] http://www.growth-engine.org/news/brookings-businesses-owned-by-women-and-minorities-have-grown-will-covid-19-undo-that/

[xii] https://www.brookings.edu/blog/the-avenue/2020/03/25/what-the-great-recession-can-tell-us-about-the-covid-19-small-business-crisis/

[xiii] https://www.brookings.edu/research/businesses-owned-by-women-and-minorities-have-grown-will-covid-19-undo-that/

[xiv] https://about.americanexpress.com/files/doc_library/file/2019-state-of-women-owned-businesses-report.pdf

[xv] https://www.bcg.com/publications/2018/why-women-owned-startups-are-better-bet.aspx

[xvi] Interview with Michele Bongiovanni, CEO of HealRWorld, LLC

[xvii] https://www.prnewswire.com/news-releases/are-female-entrepreneurs-more-successful-than-males-data-says-yes-300643927.html

[xviii] https://herahub.com/phoenix/celebrate-5-reasons-why-women-entrepreneurs-are-better-than-men/

[xix] https://www.forbes.com/sites/morgansimon/2020/05/22/congress-needs-to-act-before-half-of-the-uss-black–latinx-owned-small-businesses-close/#1e472cb3b242

[xx] https://globalstrategygroup.app.box.com/s/2es493cxqa88381ha6klistcx4ml3tve

Shortly following trips to Davos during the World Economic Forum in late January, Erika Karp sat down with Juliet Scott-Croxford of Worth Media to compare notes on their experiences and most meaningful takeaways from the week. Below is a transcript of that conversation, which we captured via video.

Erika Karp, CEO Cornerstone Capital Group | Juliet Scott-Croxford, CEO Worth Meeting


JSC:  Hi everyone. I’m Juliet Scott-Croxford, CEO of Worth Media. And I’m excited to be joined by Erika Karp, CEO of Cornerstone Capital, to talk about our shared experience at Davos in the end of January.

EK:  I’m Erika Karp, the Founder and CEO of the Cornerstone Capital Group. As we think about investing for impact we’re here to talk about Davos, what happened at the World Economic Forum last week and some of the most interesting takeaways.

JSC:  What was your biggest takeaway from the event on based on what you attended and some of the conversations that you heard?

Systems Thinking

EK:  For me, the biggest takeaway is the extent to which we need more systems thinking if we’re going to meet these huge challenges. Because it seemed like there were a lot of events going on — whether it was about climate, whether it was about health or whether it was about technology and blockchain or women or  LGBTQ events  — each of these events touches on way more than it might seem.

JSC:  And, and how do we take action on creating big systems thinking around those types of challenges?

EK:  Well, it’s really hard. I think that that kind of thinking can’t just happen at the top. That is not just a high-level conversation. That conversation needs to go down to the grassroots level. And so I wonder … if everyone who needs to be in the room sometimes is in the room.

JSC:  Hmm. So just playing on that point a bit, I think there was 24% female attendance at Davos this year. Last year it was 23%. What were your takeaways around the sort of notion around diversity and inclusion?

EK:  By the way, that’s a big jump for Davos, because I know in many past years it’s been stuck at kind of 20% or even below. And that’s challenging. So the idea of women not just having more power but more influence is hugely important. And I think women’s voices, diverse voices are not being heard to the extent to which they need to be.

JSC:  I attended a lot of the sessions that were done at the Equality Lounge [hosted] by the Female Quotient and a big part of their focus was on UN Sustainable Development Goal 5, around closing the gender gap. What conversations did you hear around gender and diversity outside of perhaps one of those areas?

EK:  Unfortunately, very little. And here’s what I think we have to get to… people might talk about SDG 5 and women’s economic empowerment. But when you think of how you actually get there, you have to talk about all the other SDGs. So we think at Cornerstone in terms of the idea of access. Women will not be really empowered until we have access to water, to healthcare, to education, to broadband, to capital. And so that intersectionality, that systems thinking around diversity, I don’t think we’re there yet.

Capitalism and Sustainability

JSC:  The main sort of focal point for the event or the big theme was around better capitalism and sustainability. How encouraged or not were you by that kind of conversation and thinking?

EK: There was a lot of talk about stakeholder capitalism, what we’ve seen the Business Roundtable talking about. And I think that’s great, but it’s so much more than talk that we need to get it done. When we go back to those Sustainable Development Goals, that systems thinking, that’s what you really need to see. So we need data, we need accountability, we need measurability, we need intentionality — all the things that we talk about with impact investing. And if you think about it, any board of directors, you know, yes, they need to serve their shareholders. They need to serve their employees. They need to serve their customers. You can’t optimize profitability without doing all three. But the issue is, it has to be about long-term profitability. We have to stop [the impact of] externalities from not being accepted by the users of capital. We have to think about financial capital, but also human capital, natural capital. We have a long way to go, I think.

JSC:  Well, one of the key takeaways for me was that the business community is awake to the climate crisis. That was encouraging for me, whilst it’s possibly a little too late. I did feel like the conversation around that was baked into every conversation or session that I had. And perhaps more so outside of North America as well. I think there’s an interesting conversation coming out of a lot of the European businesses. I think that the key challenge is how do we take it beyond conversation and into real action. Seeing the letter that Larry Fink put out and, and some of the conversations around the Business Roundtable, what do you think the next steps are? How do we take that and. to your point, build that sort of systems thinking into —

EK:  Action? Well, one of the big next steps is to facilitate tangible information, data, decision-useful information. I think that kind of push for real information, real data accountability is the starting point. And so that’s one of the things that I take away from it. Because when you have real information, real data that data providers and index providers and ETFs and fund managers and ultimately investors can have, not flawed information all through that system, then I think we have a better start.

JSC:  And what about the sense of having a common language around how we’re describing this? So a common way to describe it, a common way to measure it, a common way to hold each other accountable to it. How important do you see that?

EK:  Hugely important and that leads on from what I talked about with regard to data. We don’t have a common language when it comes to the whole idea of sustainable investing. Cornerstone uses a very clear definition. We think sustainable investing is the systematic integration of material, environmental, social and governance factors into the investment process. That is sustainable investing. It’s not ideological, it’s not political, it’s not divisive. It is about pragmatism and enhanced analytics. It is a discipline. And that discipline in finance, I mean ultimately it’s just going to be called investing and investment research, but we’re not there yet. Sometimes you’ll hear people say ESG investing. There is no such thing as ESG investing. There’s ESG analysis. We have to bring this into the realm of finance, not ideology.

JSC:  And how important is partnerships and this notion of stakeholding when it comes to taking this to the next step?

EK:  It’s, it’s just critical. This goes exactly to what we’re talking about, with systems thinking and going from not just the top down but from the bottom up to have this interdisciplinary discussion about getting things done. Partnerships are a must-have if we go back to talking about achieving the Sustainable Development Goals, which, by the way, in and of themselves are not investible. So again, when we frame things at Cornerstone, we think about the idea of access, giving the world access to each of those SDGs, giving investors access to each of those SDGs. And that implies you’ve got to have partnerships.  SDG 17, right?

JSC:  Yeah, absolutely. And people like Greta [Thunberg], who I personally think is so essential to helping hold businesses and key influences accountable to make progress. What what were your thoughts on her speech?

EK:  Oh my God. The idea of, you know, this young person talking about what is blindingly obvious to almost the whole world, except certain administrations. I think it’s tremendous. I think she represents, you know, basically the whole world that’s not at Davos.

JSC:  Playing that forward to the point around inclusivity … she has such a loud voice, a voice that is so important to people that aren’t able to be at something like [Davos]. I just think her presence is so poignant.

The Davos Experience

JSC: So this was your first and my first Davos. I’m still processing it a bit ’cause there’s so many different layers and elements to it. It’s a place of many contradictions, and it has been and is under scrutiny. Having been there and come away, what are your sort of overall thoughts on the importance of it? The challenges with it?

EK:  You know, the biggest challenge is clearly the perception of eliteism, the few, the very few making decisions for everyone else. And so that’s a huge challenge now with regard to how Davos comes together.

For a number of years I worked on the Global Agenda Council which leads up to Davos — what should be included, what are the pivotal questions that we’re going to address at Davos? The question I have is whether the hard work done on the agenda councils and the work that becomes you know, very specific, [does that] get right into the Davos conversations? I’m not sure of that. So that’s something I think we have to be very thoughtful about, because I think that innovation and ideas come from everywhere. Are those [ideas] making their way into any decisions or actions that might be taken over that one week? I’m not sure.

JSC:  What were some of the most interesting sessions you attended?

EK:  Obviously the ones that I worked on! The Green Debate was about action. What I felt that was so interesting was the extent of the earnestness of that group, which really wants to get something done. The other [event] that I was involved with, which I’m really excited about is called the World Benchmarking Alliance, the WBA. And the reason I love this initiative is because it is really about a systems-based approach: Let’s look at the keystone companies in the global economy, those that potentially can have more impact than other companies by virtue of where they’re situated in the system. And let’s keep raising the bar for the industries.

JSC:  Fantastic. So you thought the WBA offers a solution to integrate this systems-based analysis?

EK:  From what I can see. It’s relatively new initiative. But yes, it is showing us which companies can be most powerful in driving everything forward. And I should say there is no perfect company. You know, every company has challenges, whether it’s upstream or downstream, whether it’s a technology company, consumer company — every company has challenges. But if the WBA can really identify what exactly those keystone companies are doing, what do they touch and how can they be most powerful, I think that’s terrific.

JSC:  What do you think the best way of integrating that into future Davos events, to your point and taking it to the grassroots? So it can’t just sit with this sort of small group of incredibly influential people. How much does the World Economic Forum take a lead in ensuring that happens?

EK:  I think the WEF really could take the lead. I’ll give you an example as it relates to these keystone companies, or companies that are not keystone companies but sit in industries that have an outsized impact on what’s going on. One of the things that I observed — or didn’t observe — was the extent to which there’s real entrepreneurship, real disruption inside the companies that are part of the WEF. I think a lot of companies have forgotten how to take risk. They have forgotten how to innovate. And I think that’s unfortunate, especially, I would argue, since some of the agenda councils, which over the past decade have come up with interesting solutions, innovative, entrepreneurial solutions. I don’t know that we’re seeing [such solutions] to the extent that we should.

JSC:  I think that’s an interesting point. I was surprised that there were quite a lot of young people at the event, more so than I expected, but also more representation from tech companies and data companies and software companies. And I’m surprised that they haven’t taken more of a lead on [creating] more of a systems-based universal way of an analyzing and assessing progress in some of these areas.

EK:  Did you feel, ’cause I did a little bit, did you feel that there was more a sense of fear of new technologies, the negative impact of new technologies by one generation than there was by the other? It felt to me like there was a little bit of a focus on the scary stuff.

JSC:  Yeah. I think you’re right. And I think, you know, Facebook’s been in the headlines a lot, so I think that there definitely is this sense of, yeah, how much do we embrace these platforms for good? I think that is a challenge both for those companies and for people, but there is this wealth of knowledge and expertise. Let’s apply it in these areas that we need to apply it.

JSC: Are there other conversations or interesting people that you met that have kind of stuck with you a few days later?

EK:  There was one particularly interesting woman I spoke to from a health research organization. One of the things she said that just really struck me is that, you know, we can talk about systemic change as much as we want. But when it comes to healthcare and the intersection of healthcare and the technologies we need, she said the funding picture is so off, you know, without government funding of basic research. She says we can talk all we want, but it’s not enough.

JSC:  Why do you think that is? Why, what is driving that lack of investment or capital in the area?

EK:  I think it does have to do with the short-termism, broadly, whether it’s in the private sector or the public sector. Some in the foundation world are doing wonderful work, but it’s a drop in the bucket compared to what we need. If the foundations are giving a kind of first loss capital [to attract the] private sector that’s great. But again, when it comes to basic research, it’s a drop in the bucket. And then our conversation went on to infrastructure spending and education spending and you know, the things that so need to come first. But it was that healthcare discussion that reminded me this is going to take everyone.

The Role of the Sustainable Development Goals

JSC:  Yeah. And, and how integral do you think the Sustainable Development Goals [SDGs] were to the entire conversation? Cause that, that was the other thing I noticed. They were very prominent in certain places, but in other places actually weren’t the lead focus. What can we do to use them as a way to align all of these stakeholders and companies around a way forward?

EK:  I was actually surprised that they were included in lots of places because I was expecting nothing. So I was pleased to see the SDGs around and in their own little building that was [colorful]. You know, the fact that the SDGs have branded themselves as eye candy is beautiful — whatever it takes. I wouldn’t call it prominence, but it was clearly there.

I think one of the problems we have, actually, is if companies kind of hang their hats on achieving SDG 5 or whatever. I think that’s really problematic because if you really try to go after one (and we talked about this before), you’re not going to get really much done. Yeah. So I think this was the WEF kind of tiptoeing into the SDGs.

JSC:  Yeah, I agree. I’d really love this sense of having a shared set of goals and I do think that’s a really powerful way of bringing different stakeholders together around a common issue and some of the biggest issues that we’re faced with. I think you just, you kind of want to see more of it. And I sense there have been quite a lot of laggards when it comes to adopting these or taking them seriously or thinking actually this is a good way to do it.

EK:  I mean with all due respect to the WEF, it’s astonishing that this is the first time that they’ve really tackled climate.

JSC:  Yes. And it is sort of slightly contradictory in the fact that the backdrop is the, you know, the mountains and the temperature was quite warm. Yes, there’s snow on the ground, but it, I sort of felt like it was almost quite stark in that the conversation was around climate crisis finally, and we were in the backdrop that we were in.

EK:  I put that aside to some degree because had it been snowing and freezing, then somebody would say, ‘Oh look, no climate change.’ I mean, you know this is about volatility, not about any particular day. So it didn’t bother me that much. It was convenient. Walking around was a little easier than it would have been. But you know, getting between all those black cars…

JSC:  I was going to say, it takes 20 minutes to walk end to end on the promenade and I would far rather walk. I was surprised at how much traffic there was and they weren’t, I don’t think they were electric.

EK:  Well, actually I have a picture of Prince Charles arriving in a fully electric vehicle. Yes. I think, I don’t know where that was published, but we’ve got that right.

JSC:  There’s definitely more that they could do there, I think.

EK:  I think there’s a little more they can do. Yeah.

JSC:  So you saw Prince Charles, who else did he see that kind of made you [perk up].

EK:  You know, no one, not really. Maybe I was looking down or doing my work. But I did see some of my favorite people. Nigel Topping, you know, I don’t know if everyone knows Nigel, but he’s amazing. A few other people that I’ve known for a long time that in my view are really the leaders, like Steve Waygood from Aviva. I don’t know if people know Steve, but yeah, he’s one of the leaders. So it was really nice to see those serious people.

Next Year at Davos?

JSC:  What would you, a year from now, thinking about Davos next year, what change would you like to see?

EK:  I would love for Davos to just take up the issue of entrepreneurship. You know, we know that in a global economy, impact comes from entrepreneurship, new companies revitalizing economic growth. You know, the fact that we have the world’s monetary authorities driving the stock market is not okay, right? Real economic growth comes from entrepreneurship. And I don’t know that there’s been a Davos that’s really taken that up.

JSC: And so how would you, how would you do that?

EK: I’d like to see the conversation truly be a catalyst for growth. Focus on the idea of entrepreneurship, in fact, impact entrepreneurship. That’s where growth comes. That’s where new companies come from. Why don’t we have, you know, a discussion about great companies that know how to disrupt themselves and innovate from inside. And then of course, the outside companies, the innovators, the disruptors that are outside. I think it has to be about entrepreneurship because ultimately that’s how we’re going to face the big challenges of the world.

JSC: So watch this space and we’ll work on impact entrepreneurship as a topic between now and next year. Thank you.

EK: Thank you.


Cornerstone Capital Group Founder and CEO Erika Karp addresses the state of impact investing, offering a clear distinction between impact investing, ESG analysis, and sustainability. No matter what labels are used, someday this will all simply be called “investing.” Note: This video originally appeared on cornerstonecapitalfunds.com

Gender Lens Investing 2.0 was originally published by Mission Investors Exchange, one of the foremost impact investing networks for foundations dedicated to deploying capital for social and environmental change.  Cornerstone is proud to support MIE’s mission. 

In 2001, as a philanthropic advisor, I started on a journey with The Denver Foundation to bring more racial and ethnic diversity to the boardrooms of Denver-area nonprofits.  Like many well-intentioned people in the foundation and nonprofit community, we assumed board diversity would address the racial bias that was evident in the programs, management and governance of many nonprofits.  In fact, we were so confident in this as a change strategy that we engaged a group of advisors and developed a program plan.

What we quickly found out of course, was that increasing diversity was only one part of the very complex process that nonprofits would need to take if they were to tackle the legacy of structural racism that affects virtually all of our institutions today. So we rebooted our efforts and like many foundations and organizations in the U.S. and globally, The Denver Foundation embarked on a journey to break down biases and assumptions and began working with nonprofit and philanthropic partners to help the whole sector to become more diverse and inclusive, and ultimately, more equitable. During this process it became very clear to us that the complex issues that affect people and communities cannot be addressed without considering their interrelatedness.

When I reflect on the state of the gender lens investing movement today, I am reminded of this journey from almost 20 years ago and the important lessons we learned then about the essential need to address the root causes of bias and discrimination. The same principles of digging deep to understand why biases exist in the context of race are also critical when it comes to gender. While many foundations have done important and deep work over the last two decades to understand and attempt to address the root causes of many forms of gender bias and discrimination in their grantmaking, there has been scant attempt in the investment field to do the same thing.  The discipline and rigor that many foundations take to understanding what drives inequality and the kinds of interventions that can help bring about true equality is critically needed today in the field of gender lens investing.  Foundations have the unique ability to support critical research; to invest in innovations; to take risks where traditional investors will not; and to convene and shed light on what is needed and what is possible through grantmaking and investment capital.

At Cornerstone Capital Group we work with foundations, individuals, and families who care about an array of social and environmental issues, including gender inequality.  Like our clients, we have been concerned about the discipline of gender lens investing and the limitations of what we think of as Gender Lens Investing 1.0, which has focused primarily on diversity — the diversity of women on corporate boards and in senior leadership, the diversity of fund managers, and the diversity of those who have access to capital.  While all these variables are critically important— and we must continue to exert pressure on those who can have an influence on gender diversity — we cannot stop there.  Like the foundations of the early 21st century that insisted on going more deeply into root causes, we have set about on a journey at Cornerstone to understand how investments can address the root causes of social and environmental issues, using the Sustainable Development Goals (SDGs) as the basis of our analysis.  We view foundations as natural partners in this work, which we think of as Gender Lens 2.0.

At its heart the challenge we set out to tackle was how investors who care about various Sustainable Development Goals — especially SDG 5 — could align their investments with the SDGs by focusing on common themes underpinning the SDGs. The SDGs provide a framework to demonstrate the inter-relationships between different social challenges including inequality, health, poverty, gender, and much more. They also reveal opportunities, such as the critical role of gender in climate justice, and other related topics such as water management and extractive industries. We were particularly mindful of the challenge that mission-aligned investors face in analyzing the impact of publicly listed securities — including gender lens investors, who have been limited primarily to screening out companies with no women on their boards of directors.

Cornerstone Capital Group’s Access Impact Framework [TM] was created to illustrate the alignment of investment strategies to each of the Sustainable Development Goals. We identified the concept of access — which accelerates the ability of individuals and societies to achieve desired social, economic, and environmental outcomes — as a key common denominator underpinning all of the SDGs. The framework maps 11 such access themes across the SDGs. By facilitating access required for individuals and societies to achieve the SDGs, investors can help address the root causes of inequality and do so holistically by addressing multiple barriers to opportunity simultaneously.

When analyzing SDG 5: Gender Equality, we incorporate traditional gender lens themes with an analysis of seven “access themes” that align most closely to SDG 5. The seven themes are:

  1. access to fair treatment/equal opportunity
  2. access to healthcare services
  3. access to financial services
  4. access to telecommunication systems
  5. access to education
  6. access to clean water, sanitation and hygiene
  7. access to adequate housing and living conditions

These access themes are interrelated. For example, improving women’s access to telecommunication tools such as mobile phones and internet services enables better access to online financial services, educational resources, healthcare, and career opportunities (see related resources). Becoming more educated and having better access to financial services may result in becoming more financially secure. Internet access seems to correspond with improved health for women, as they can learn about disease risks and prevention.  Access to clean water, sanitation, and hygiene along with access to adequate housing and living conditions clearly leads to better health and a more stable and secure living environment. The examples are limitless but the amount of investment that is flowing with an intersectional approach is not.

The Access Impact Framework represents a way to analyze the alignment of investments that is multidimensional and reflects how many foundations understand their work: it is rooted in rigorous research; it sits at the cutting edge of a critical discipline; and it has the potential for having an impact at scale.  But we cannot stop here. All of us — especially foundations who are concerned about gender equality — can play a critical catalytic role in advancing gender equality through an intersectional approach using the SDGs.  With virtually the whole world coalescing around the SDGs, the moment is ripe for foundations to ask hard questions of their investment advisors about how their investments are being used to advance gender equality and address the fundamental issues that are impeding progress. By working across sectors we can continue to innovate and develop new tools and products that gender lens investors can use to address the root causes of inequality in all its forms and to realize our shared vision of achieving a more just and equitable world.

In the second part of this series, we will review examples of how foundations can utilize gender lens investing options across asset classes.


I’ll never forget the first investing conference I attended where gender lens investing was discussed. From the mainstage, I listened as three powerful women leaders in finance commented on how much work had been done for women in the industry. At last, the woman who gave the keynote said, “Corporate boards are starting to seriously look at the lack of women in the boardroom… We should be celebrating that a handful of companies now have at least one woman on their board!” You might think this was 20th century talk, but it was not: it was 2014.

After spending more than 20 years in philanthropy, often working with women’s funds, I have accepted that the glacial pace of change in finance on matters of gender is the direct result of the systematic exclusion of women in finance. Research from McKinsey & Company shows that women remain significantly underrepresented in the upper levels of financial services companies. And while women and men begin their careers making up roughly equal portions of entry level staff, white women account for only 17 percent of C-Suite level positions and women of color hold just one percent of C-Suite level positions in financial services.

In investing, women are underrepresented as managers especially in private equity and venture capital firms, holding only 10 percent of all senior positions in the field globally. Further, in 2017, women-led enterprises garnished less than 3 percent of venture capital globally.

What might the world look like if women controlled how investments (of financial, human, and natural capital) were made? Would we continue to promulgate a system of extractive finance, where more value is removed as a result of investment than is returned to a community? Would we define success by the presence of one woman on a board of directors? Or would women tackle problems at their root cause, using an intersectional approach to understanding the interconnected nature of all of the world’s most intractable problems, including poverty, poor health and education, and climate change? I know without doubt that it would be something closer to the latter.

At Cornerstone Capital Group, a women-owned registered investment advisor, we believe that the UN’s 17 Sustainable Development Goals (SDGs) provide a powerful framework for addressing the complex challenges of our time. We believe the goals can help align all communities—regardless of geography, income, race or ethnicity, sexual orientation, or gender—to see how we are all interconnected. And, we believe it helps provide a framework for investing that is multi-dimensional and powerful in its ability to affect the root causes of the issues affecting people and planet.

The bottom line? For investments to have impacts related to achieving gender equality and truly supporting women and girls, investors do not have to invest solely in “gender lens funds.” Our approach to gender lens investing incorporates traditional gender lens themes with an analysis of seven “access themes” that align most closely to SDG 5:

It is abundantly obvious that these factors are interrelated, so why don’t we treat them as such?

For example, research from Intel, World Wide Web Foundation, and US AID tell us that improving women’s access to telecommunication tools such as mobile phones and internet services enables better access to online financial services, educational resources, healthcare, and career opportunities. Becoming more educated and having better access to financial services may result in becoming more financially secure. Internet access seems to correspond with improved health for women, as they can learn about disease risks and prevention. Access to clean water, sanitation and hygiene, along with access to adequate housing and living conditions, clearly leads to better health and a more stable and secure living environment.

The examples are limitless, but the amount of investment that is flowing to women and to women-led initiatives (with an intersectional approach) is not.

We are all guilty of looking for easy solutions to complex problems, but it’s time that we come together to align our efforts to make life better for everyone, regardless of where they live or their gender.

To read more about intersectional approaches to investing with a gender lens, see  Advancing Access: Looking Beyond Traditional Gender Lens Investing Approaches Using Our Access Impact FrameworkTM  in Support of SDG 5: Gender Equality.

This piece was originally published at What Will It Take Movements as part of What Will It Take Movements’ Women and Money initiative. Join leaders in gender lens giving, spending, and investing September 16-17 in Austin.

The International Renewable Energy Agency (IRENA) published a report earlier this year highlighting the potential for renewable energy to alleviate some of the world’s most pressing social and environmental challenges. Their work aligns with Cornerstone’s thinking about the intersectional nature of these issues, as expressed by our Access Impact FrameworkTM. Below is an excerpt from IRENA’s report, republished with permission and lightly edited for length.

The ongoing energy transformation, driven by renewables, is bringing far-reaching, systemic change to our societies. This offers important opportunities for greater inclusion and equality.

Accelerating the deployment of renewables can alleviate poverty, create jobs, improve welfare and strengthen gender equality. Still, to fully realise this potential, the renewables industry has to tap a wider pool of talent – notably that of women, who have been largely underrepresented, depriving the energy transition of critical capacities.

Renewable Energy: A Gender Perspective provides new insights on women’s role in renewable energy employment and decision-making globally. This key report aims to help fill the knowledge gap in this field. Based on a ground-breaking, first-of-its-kind online survey combined with in-depth research, the study highlights the importance of women’s contributions in the energy transformation, the barriers and challenges they face, and measures that governments and companies can take to address these.

Adopting a gender perspective[1] to renewable energy development is critically important to ensure that women’s contributions – their skills and views – represent an integral part of the growing industry. Increased women’s engagement expands the talent pool for the renewables sector. In the context of energy access, engaging women as active agents in deploying off-grid renewable energy solutions is known to improve sustainability and gender outcomes.

In recognition of these opportunities, the 2030 Agenda for Sustainable Development adopted in 2015 introduced a dedicated goal on gender equality (SDG 5), noting that the “systematic mainstreaming of a gender perspective in the implementation of the Agenda is crucial”.

Women in Renewable Energy: Access Context

Energy access and gender are deeply entwined components of the global development agenda. The transformative effect on women of gaining access to affordable, reliable and sustainable modern energy is well-known. Energy access frees up time for women who otherwise may spend an average of 100 hours a year collecting fuel wood and gives them more flexibility in sequencing tasks, since lighting allows them to do more at night. It also improves access to public services and opens new opportunities for part-time work and income-generating activities.

The distributed nature of off-grid renewable energy solutions offers tremendous opportunities for women’s engagement along multiple segments of the value chain. Many of the skills needed to take advantage of those opportunities can be developed locally and women are ideally placed to lead and support the delivery of energy solutions, especially in view of their role as primary energy users and their social networks.

Organisations have found it difficult to ignore the value of involving women in the renewable energy supply chain. SELCO India, for instance, trained female solar technicians in the early 2000s simply (at least initially) as a means to accomplish its business goals: technicians were needed to enter the homes of customers to repair solar lanterns and cookstoves. As women become engaged in delivering energy solutions, they take on more active roles in their communities and consequently facilitate a gradual shift in the social and cultural norms that previously acted as barriers to their agency.

Barriers to engagement

Over two-thirds of survey respondents noted that women face barriers to participation in the renewables-based energy access sector. Cultural and social norms were cited by respondents as the most common barrier, followed by lack of gender-sensitive policies and training opportunities and inequality in ownership of assets. Security and the remoteness of field locations were also mentioned as other barriers to participation.

Policies and solutions

Training is often an integral part of energy access programmes, but greater efforts are needed to make them more accessible to women. Training sessions must be tailored and scheduled around women’s childcare responsibilities and be sensitive to mobility constraints, security concerns and social restrictions that may prohibit women from participating.

Dedicated financing schemes are particularly important if women are to play an active role in the off-grid renewables value chain (e.g., as technology distributors) and tap into the entire spectrum of opportunities created by modern energy access (e.g., investments in productive appliances). The Self-Employed Women’s Association in India, for instance, connects women to financing options through the Thrift and Credit Cooperative, providing affordable payment options so that women can invest in livelihood options, family education and household safety. SEWA also provides a special energy loan product and has set up a company that employs women to market, sell, install and service solar home lighting solutions that benefit over 20 000 people.

Opportunities and gaps will become evident if gender is mainstreamed at the level of energy access policies, programmes and projects. In 2013, the Economic Community of West African States established a programme to mainstream gender in the formulation of energy access policy and in the design and implementation of energy projects and programmes. A dedicated policy for mainstreaming gender in energy access, endorsed in 2015, aims to ensure that women are part of the solution and leverage their role as energy users, community members, business owners and policy makers.

Gender audits, as tools, can ensure due consideration of the known gender differences in household decision-making, preferences and priorities. These have been used in Botswana, India and Senegal, among other countries, to support the integration of gender into energy access projects. The socio-economic dividends of gender mainstreaming are immense; several examples covered in the report suggest improvements in women’s self-perception and empowerment within the community. In Indonesia, for instance, over 500 “wonder women” have been trained as social entrepreneurs, selling clean energy technologies that have reached over 250 000 people. It is estimated that around 20% of women became more empowered within their families – taking on a greater role in household decision making – and almost half of them perceived an improvement in their status.

In closing

Advancing equality and diversity in the energy sector is a compelling proposition rather than a zero-sum game. Establishing gender as a pillar of energy strategies at the national and global levels will produce a swifter and more-inclusive transition to renewable energy while accelerating the attainment of multiple Sustainable Development Goals.

[1] For the purposes of this report, gender refers to men and women.

Gender lens investment approaches have expanded in recent years. All asset classes have seen a tremendous increase in the number of funds and assets under management since 2014. Fund strategies range from empowering women and funding women-run businesses to reducing gender violence and poverty for women and children.

At the same time, investors have also been seeking ways in align their activities in support of the United Nations Sustainable Development Goals (SDGs). Cornerstone Capital Group has contributed to this effort by introducing the Access Impact FrameworkTM, which illustrates the alignment of investment strategies to each of the SDGs. We identified the concept of access — the ability of individuals and societies to achieve desired social, economic and environmental outcomes — as a key common denominator of the SDGs and identified 11 “access themes” that translate the SDGs into investable opportunities.

SDG 5 is “Achieve gender equality and empower all women and girls.” For investments to have an impact related to achieving gender equality and empowering women and girls, investors do not have to invest solely in gender lens funds. Our approach to gender lens investing incorporates traditional gender lens themes with an analysis of the access themes that align most closely to SDG 5.

In this report we discuss each of the access themes that underpin SDG 5 in some depth. We also offer examples of investment vehicles that bolster access to these themes for women, their families and communities. Download the full report here.

UN Sustainable Development Goal 5: Gender Equality targets the systemic barriers women face and aims to transform cycles of disempowerment into cycles of empowerment. Women are too often denied access to healthcare, education, financial services, housing and employment, or face significant roadblocks to such access. Not only are these services linked to basic human rights, but each is a fundamental building block for autonomy and agency. Though it is a large task, contributions to this goal can reinforce one another from many angles. SDG 5 is further refined by targets that can be more readily translated into actions. These targets highlight the interconnected nature of the goals: For example, strategies to support Gender Equality also promote progress toward SDG 4 (Quality Education) and SDG 8 (Decent Work & Economic Growth). Below are a series of synergies that can come from providing access to products, services and systems that address Gender Equality.

Invest in Access to Telecommunication Services

As more of the world’s communications and business takes place online, those without access to supporting tools risk being left behind.1,2 Currently, some 200 million fewer women are online than men, and women are 21% less likely to own a mobile phone than men.3 With access to the internet, women are better able to obtain education, employment, government services and financial services that are otherwise hard to reach,4 and to increase personal income.5 Women’s online participation also sparks systems-level change, as it enables them to engage in self-expression and engage in key policy and decision-making processes.6 Meanwhile, women are underrepresented as workers and leaders in the technology sector, despite the rapid growth of the field and demand for tech skills.7 Furthermore, jobs in which women are widely employed are at risk of automation, necessitating transition to new fields.8 Greater access to telecommunication services will enable women to develop skills required for the future.

Learn More About Investing in Solutions for Gender Equality

Invest in Access to Healthcare Services

The healthcare needs of women and girls in many global regions are not being met,9 especially in reproductive health.10 Women lack adequate access to healthcare due to distant service locations, cost and gendered stigmas associated with seeking treatment.11,12 These access issues are compounded by gender norms in regions where women do not have control over household financial resources and are unable to seek care without partner or employer permission.13 When women have access to healthcare, the benefits multiply. For example, women who receive services to avoid unintended pregnancy have greater educational opportunities and are better able to enter and remain in the workforce.14

Invest in Access to Financial Services

Women have less access to financial services than men globally. Women are less likely to hold an account at a financial institution, especially in developing economies, and they save and borrow less than men.16 Women have more difficulty acquiring external business financing;17,18 for example, in the US, women received only 2% of all venture capital in 2017.19 Access to financial services provides a key pathway to women’s empowerment.20, 21

Learn More About Investing in Solutions for Gender Equality

Invest in Access to Fair Treatment and Equal Opportunity

Despite increasing participation in the workforce, women earn only 77% of what men earn globally and are given fewer advancement opportunities.22 In the workplace, women are given less support, and are more likely to be passed over for important assignments, than men.23 Violence against women is common in all societies and at all income levels, causing more deaths than those linked to civil wars.24 Child marriage, genital mutilation, and assault not only result in serious health problems for a woman,25 but prevent her from attending school or keeping a job, and undermine her ability to make her own decisions. 26

Invest in Access to Education

Promoting access to education empowers women to contribute economically; studies have shown that women’s participation boosts the economic power of a country.27 Access to education also helps break down perceptions of limitations or differences between the capabilities of men and women. 28 Globally, however, nearly 10% of primary school-aged girls are out of school, and only two-thirds of all countries have achieved gender parity in primary education. 29 The disparity is even greater at the secondary and upper-secondary level, where only 45% and 25% of countries, respectively, have reached gender parity.30 Increasing access to education to bridge this gap will open the door for more women to live empowered and prosperous lives.

Learn More About Investing in Solutions for Gender Equality

Invest Access to CleanWater, Sanitation and Hygiene

Women worldwide spend 200 million hours gathering water.31 Water is also closely connected to hygiene and health, which impact women’s livelihood and economic opportunities. For example, clean water facilitates healthier pregnancies. The evidence shows that birthing rates, complications and child growth are affected by the lack of safe, clean water.32

Invest in Access to Adequate Housing and Living Conditions

Unequal access to housing for women limits opportunities for upward mobility. Quality housing leads to increased physical and financial security, healthier living conditions, and the stability to seek employment.33 However, women in many countries are prevented from owning property, including housing, due to gendered laws and social norms.34 Furthermore, women often have greater difficulty securing housing due to their lower economic standing than men.35 In the US, this challenge is intensified as a shortage of affordable housing for low-income households persists, disproportionately affecting the many households led by single mothers.36,37

Learn More About Investing in Solutions for Gender Equality

SDG 5: References

1 The Case for the Web, The Web Foundation, 2018;
2 Women & The Web, Intel, 2012;
3 Closing the global gender gap in technology, Global Fund for Women, 2018;
4 Women & The Web, Intel, 2012;
5 Women’s Rights Online Report, The Web Foundation, 2018;
6 Doubling Digital Opportunities, The Broadband Commission, 2013
7 Making Innovation and Technology Work for Women, UN Women, 2017
8 CSC’s Gender and Automation Report, 2018
9 UN Development Programme Goal 3 Targets, 2018
10 “Issues in Reproductive Health,” Fatalla, Mahmoud, UN News Center
11 “…Gender Inequity in Health…”, WHO, 2007
12 Women’s Lives and Challenges: Equality and Empowerment Since 2000, US AID, 2014
13 Key Barriers to Women’s Access to HIV Treatment: A Global Review, UN Women
14 Promoting Gender Equality Through Health, US AID
15 Global Findex Database
16 “Small and medium enterprise finance: new findings, trends and G-20/Global partnership on financial inclusion progress,” International Finance Corporation, 2013
17 International Finance Corporation Enterprise Finance Gap Database
18 Making Innovation and Technology Work for Women, UN Women, 2017
20 Increasing Gender Equality through Financial Inclusion, GIIN
21 “Empowering Women with Micro Finance: Evidence from Bangladesh,” Pitt, M et. al., 2006
22 “Women at Work: Trends 2016,” International Labour Office
23 Gender Discrimination in many forms for today’s working women, Pew Research, 2017
24 “Conflict and Violence Assessment Paper”, Anke Hoeffler and James Fearon, Copenhagen Consensus Center, 2014
25 “Global and regional estimates of violence against women,” WHO
26 “Voice and Agency: Empowering Women and Girls for Shared Prosperity,” World Bank. 2012
27 Why is Gender Equality Important to Economic Development?, GVI, 2018
28 Promoting gender equality in schools, Gender and Education Association
29 Global Education Monitoring Report Gender Review: Meeting Our Commitments to Gender Equality in Education. 2018. UNESCO
30 Ibid
31 Unicef, 2016
32 Unicef, 2016
33 “Level the Field: Gender Inequality in Land Rights,” Habitat for Humanity, 2016
34 Social and Gender Inequalities in Environment and Health, WHO, 2010
35 Gender Lens on Affordable Housing, ICRW, 2016
36 “The Gap: A Shortage of Affordable Homes,” National Low Income Housing Coalition, 2017
37 “Hunger and Poverty in Female-Headed Households,” Bread for the World, 2016

As investors continue to make the case for LGBTQI equity, there is a practical and ethical mandate to fuse LGBTQI interests with those of gender lens investors who recognize the many benefits of establishing corporate cultures and practices that embrace all stakeholders. Cornerstone explored investing for the issue of LGBTQI equity in our recent report, Two Lenses, One Vision: Investing for LGBTQI and Gender Equity 

Following on from the report, Cornerstone Capital CEO Erika Karp and Head of Impact Strategy Katherine Pease hosted a live video session with Dr. Vivienne Ming, Founder of Socos Labs. Socos is an independent think tank that explores the future of human potential to guide private and public policy toward a more effective, human-centered world. The conversation focused on the interplay of gender identity and sexual orientation and offered practical insights into how investors can advance LGBTQI equity by aligning with gender lens investing strategies.

In the absence of clear and consistent government regulation, corporate policies have been pivotal to the provision of legal protections for LGBTQI workers. For companies, greater inclusion is associated with improved brand reputation, reduced turnover, and increased productivity and innovation. The most progressive companies seek to integrate their values into their operations, using their financial clout to push back on harmful practices even if they risk additional costs in the near term.

To be clear, policies have not eliminated discrimination: More than half of LGBTQI employees report that discrimination negatively affects their work environment.

As bias and discrimination toward LGBTQI people are related, at least in part, to normative expectations of gender within the workplace. Recognizing the intersection between gender discrimination and LGBTQI equity results in a profound reorientation of how investors and advocates can approach companies and their attitudes toward full inclusion.

As investors continue to make the case for full inclusion of LGBTQI people, there is a practical and ethical mandate to align LGBTQI interests with those of gender lens investors and others who recognize that the establishment of corporate cultures and practices that embrace all employees, customers and stakeholders, will benefit everyone.

In this report we make the case for this thematic fusion, discuss how investors and asset managers can consider LGBTQI alongside gender equity in their investment analysis, and highlight existing investment strategies that reflect this approach.

Download the full report here.

On May 20, we hosted a video webinar with Cornerstone’s Katherine Pease and Craig Metrick, who provided an overview of our new impact measurement framework, the Access Impact Framework.  Katherine and Craig provided background on why Cornerstone created the framework, our rationale for basing our framework on the UN Sustainable Development Goals, and described our methodology.

This article originally appeared in Investment News on December 13, 2018. 

Sustainable and impact investors are set to intensify their decades-long support for action on climate change on the heels of a recent report from the Intergovernmental Panel on Climate Change and the Fourth National Climate Assessment, issued by the U.S. government.

The U.S. government notes that unless urgent action is taken, climate change could shrink the U.S. economy by hundreds of billions of dollars every year in direct costs. Consistent with these findings, the IPCC’s alarming (and unsurprising) conclusions are that urgent global economic transformation is needed to head off catastrophic damage to ecosystems, communities and economies beginning within a quarter century.

Many investors now understand that climate change is not merely an environmental issue but a material economic risk for long-term portfolios. However, investors should avoid a single-minded focus on climate change that ignores the relationship between ecosystems and human development.

The IPCC report stresses that an effective fight against climate change must include efforts to achieve sustainable development goals such as gender equality, the eradication of poverty, and food security.

In other words, how we fight climate change matters. Even the most optimistic scenarios will require substantial human adaptation to changed ecosystems, which will be especially challenging for poor or marginalized communities. Achieving sustainable development goals will strengthen the ability of poor communities to adapt to inevitable change and complement more direct efforts to mitigate climate change. However, these climate mitigation efforts by themselves may either help or hinder progress towards the sustainable development goals.

For example, mitigation strategies such as reforestation or biofuel development may reduce the land available for agriculture at a time when crop yields are already declining because of rising temperatures and water stress. The resulting increases in food prices have the effect of reducing buying power and possibly destabilizing civic and political cultures in developing countries.

Conversely, sustainable agricultural strategies, conducted with attention to social equity, can increase food security and counteract some of the negative effects of climate change on drinking water, biodiversity and income inequality, while reducing greenhouse gases associated with intensive farming practices.

The empowerment of women can also support and reinforce both climate change mitigation and adaptation. Improving the quality of cookstoves available to poor women has the direct effect of reducing fuel use and deforestation. It also reduces asthma rates, which improves educational outcomes, and empowers women by freeing them from the labor-intensive “drudgery” of traditional cooking methods.

Numerous studies have also shown that as women gain education and empowerment, they earn more income and often choose to have fewer children, which is associated with reduced poverty and lower greenhouse gas emissions.

The introduction of modern technologies such as cookstoves into poor households would have an undeniably positive effect on quality of life for the poor and the resilience of their communities. However, the resulting increase in the demand for energy could undermine the intended climate benefits unless these strategies are accompanied by investments in renewable energy and energy efficiency — both of which come with additional benefits for income and energy access.

These and many other examples demonstrate the need for a holistic understanding of the connection between issues of climate and human development. Yet much of the financial capital flowing into climate mitigation today is motivated solely by opportunities for financial return arising from new public policies and the dramatic improvement in renewable energy technology.

These flows are important for achieving global scale for environmental solutions. However, a lack of attention to the social dimension of investment decisions may create a blind spot for unintended consequences that counteract environmental benefits.

The insights of sustainable and impact investment offer an essential complement to mainstream financial analysis. Integrating environmental, social and economic concerns into investment analyses can yield a more nuanced understanding of the complex interactions between climate and society. As part of this analysis, a commitment to stakeholder engagement will help investors incorporate the perspectives of local communities who will be impacted by investment decisions — because, as the IPCC report notes, climate change will impact people differently depending on geography, income and culture.

So what can investors who are concerned about climate change do? First, their investment policy statements should explicitly incorporate both climate change and key related social issues, such as gender equity, poverty, food security, and health. Second, the evaluation of investments or investment strategies intended to address climate change should integrate an analysis of their impact on broader sustainable development goals. Third, investors should use their voice to ask companies, governments and financial markets how climate change and sustainable development is incorporated into policy, planning and performance measurement.

An effective response to climate change will require the mobilization of every resource available to society, including governments, business, and civil society. Given the unique power of financial markets, investors can contribute to a long-term solution or exacerbate existing problems. Sustainable and impact investors have an opportunity to influence the outcome, if they choose to take it.

When we at Cornerstone Capital Group first discussed the idea of exploring arts and creativity as an impact investing theme, our greatest challenge was narrowing the scope. To our thinking, creativity fuels every successful human enterprise.  Creativity, to form something new and valuable based upon a different perspective, is essential for economic development and capital formation.  In fact, in the ancient world the concept of creativity was simply seen as “discovery.”  In truth, it is.   And there is no better time than now to put this capacity to work.  If we are to address to world’s pressing challenges ranging from climate change, the extinction of species, and the poisoning of our seas, to advancing gender and racial equity, and access to nutrition, healthcare and education, then we need to deploy all the resources at our disposal to discover and scale solutions.  After all, as Sharon Percy Rockefeller has stated, “Art is the conscience of a nation.”

And there are compelling reasons to consider “creativity and the arts” as an investment theme in its own right. Cornerstone’s Head of Research and Corporate Governance, John Wilson, lays out the case for investing in the “creative economy” as one way to counter the negative effects of widening income and wealth inequality, and the opportunity gaps, that have resulted from the “knowledge economy.” Laura Callanan, a Founding Partner of the field-building organization Upstart Co-Lab, cites creative enterprises as “an on-ramp to wealth-building for entrepreneurs including women, people of color and others who benefit from lower barriers to entry to a sector of the economy more interested in merit than advanced degrees and pedigrees.”

As for the historical tendency to view “the arts” as the purview of nonprofit organizations and grant-making, Gary Steuer of Bonfils-Stanton offers a compelling argument for eliminating the “artificial distinctions between enterprises rooted in what are often arbitrary or historical decisions on legal corporate structure,” instead finding the best mix of funding, whether philanthropic, concessionary lending or market-rate equity or debt, to invest in creative enterprise. His unique perspective as a leading philanthropic voice whose career has spanned a variety of roles in the for-profit, government and nonprofit worlds has led him to see the “enormous opportunity to drive economic growth and employment through coherent, broad-based strategies to invest in this space.”

This report is intended to provide a window into the rich array of opportunity to make meaningful and profitable investments that empower entire communities both economically and culturally. We thank all of our contributors for their enthusiastic support in bringing these stories together. We would like to offer special thanks to Laura Callanan and Upstart Co-Lab for their tireless efforts to build awareness of creative enterprise as a distinct impact investing theme, and for introducing us to a number of the organizations and individuals who made this report possible.

Download Creativity & The Arts: An Emerging Impact Investing Theme

Individual contributor posts:

Investing to Sustain Innovation, John K.S. Wilson, Cornerstone Capital Group

A Creativity Lens for Impact Investing, Laura Callanan, Upstart Co-Lab

From “The Arts” to “Creative Enterprise”: Perspective from the Philanthropic Sector, Gary P. Steuer, Bonfils-Stanton Foundation

Creating a Seat at the Table, Adam Huttler, Exponential Creativity Ventures

The Creativity Lens in Practice: LISC’s NYC Inclusive Creative Economy Fund, Sam Marks, LISC NYC

Artists, Cultural Enterprises and the Affordability Crisis, Mark Falcone, Continuum Partners LLC

Public/Private Partnerships Fueling a Renaissance, Franklyn Ore, The Newark Community Economic Development Corp

Unlocking Embedded Community Assets, Deborah Cullinan, Penelope Douglas, CultureBank

An Exceptional Model: The Bell Artspace Campus, Greg Handberg, Artspace

Investing for Good: A Creative Land Trust for London, Will Close-Brooks, Investing for Good

Everyone Together, All Forward, Christopher Johnson, Danika Padilla, Drew Tulchin, Meow Wolf

Gaming on a Mission, Amy Fredeen, Alan Gershenfeld, E-Line Media

Make Local Work: The Story of an Artist Entrepreneur, Mary Stuart Masterson, Actress, Filmmaker and Entrepreneur

Why and How Impact Investing in the Creative Economy Fosters Innovation, Todd Siler, Ph.D., Visual Artist and Educator

How Consciousness and Creativity Amplify Impact, Robyn Ziebell, Resolve4Life

Creativity and the Arts: Integral to Impact, Phil Kirshman, CFA, CFP, Cornerstone Capital Group

Note: Certain contributors to this report may represent asset managers or specific investment opportunities. Their inclusion is not intended to be, nor should it be construed, as a recommendation or endorsement of their products or services by Cornerstone Capital Inc. The views expressed by external contributors do not necessarily reflect those of Cornerstone Capital Inc.

Do we invest enough in creativity?  The question may seem absurd in an era dominated by the “knowledge economy,” in which companies create value through ingenuity and expertise, while many of our most important emerging product lines enable the advance and communication of knowledge.  But a casual review of the business press reveals that some companies that market themselves as innovators also suffer from toxic workplace cultures and dysfunctional corporate governance.  These problems suggest that it is not enough to invest in “knowledge” while neglecting the people who create this knowledge. The contributions to this report offer impact investors a roadmap for investing directly in the individuals and communities that make creative enterprises possible.

Challenges of Today’s “Knowledge Economy”

Why have so many companies dependent on a motivated and engaged workforce become so toxic for employees?  Finance may be part of the problem.  The need to deliver financial returns pressures companies to bring products to the broadest possible market in the shortest amount of time.  Achieving scale rapidly allows companies to dominate their market and generate outsized returns to investors, while companies that fail to deliver scale in a short timeframe often get left behind.  The pressure to focus solely on growing revenues, market share and company valuations can distract from critical, but less tangible, imperatives such as developing constructive corporate cultures in which creativity can thrive over time.

This model of growth fuels expanding inequality as a few companies come to dominate the market.  The six largest U.S. technology companies make up almost 18% of the S&P 500 by market capitalization.  Despite their size, these companies employ few workers relative to the industrial giants of the past—General Motors employed about 10 times as many people in 1979 as Alphabet does in 2018.

While those who work at top companies enjoy generous pay and benefits, incomes for the most families have stagnated as middle-class manufacturing jobs have been replaced by lower-paying service jobs.  By 2017, median household income in the United States had grown only 2% since 1999. During this time the typical household had suffered through two substantial downturns in median income (2000 and 2008), both of which exacerbated inequality as top incomes recovered quickly and continued to grow.

Inequality may insulate top corporate executives and professionals from the communities that are impacted by their actions. They may forget that their companies can do harm as well as good, and may come to tolerate inappropriate and unacceptable workplace behaviors.  Their product offerings may cater to the elite audience that is familiar to them, neglecting the needs of the broad population that may have very different needs and interests.

Employees may hesitate to bring concerns for fear of seeming disloyal or insufficiently committed to the goals of the company.  Customers may feel powerless to challenge companies with near monopolies over services that seem essential to modern life. Many traditionally marginalized social groups, including women, people of color, and rural communities, find that barriers to inclusion in the “knowledge economy” remain as high as ever.

As numerous examples (e.g., Uber, SoFi, Weinstein Co.) demonstrate, the resulting tensions and resentments may undermine the company’s ability to continue to innovate.  This is bad news not only for investors, but also for employees and a public that hopes for a continual flow of new products and services that improve lives.

An Alternative Approach

An alternative is to invest directly in enabling and nurturing creativity itself.  Each of the business models described in this report exists to develop the human capital embedded in every community, especially those marginalized groups who struggle to compete in the economy because of a lack of resources or because the existing knowledge economy does not sufficiently value their unique capabilities.  The role of these entities is to empower people to transform local artistic, design and cultural resources into sustainable businesses that serve their communities and create engaging work opportunities that will not be lost to outsourcing or automation.

Scale is achieved not by dominating markets with commoditized products but by replicating successful local models in ways that are tailored to the needs of each individual community.  While financial capital is an important resource for these companies, the interests of the community, not the demands of capital, drive business strategy.  Market returns are delivered by unlocking talent untapped by the market and by the creation of sustainable businesses that are deeply embedded in local culture and traditions.

There may be many strategies for accomplishing these goals.  The organizations represented in this report are each involved in one or more of four “enabling technologies” that provide access to resources that are critical to the success of local, sustainable, and replicable cultural production.

Access to Affordable Spaces: The concentration of U.S. economic activity into a relatively small number of urban centers has created an affordability crisis for many artists and creative professionals who live there. In many cases, the appeal of these cities is in part the presence of art and cultural institutions that moved in and preserved these communities when industrial and retail companies abandoned them.  Artspace and Continuum are now in the process of developing affordable living and working spaces that will nurture artistic communities and allow them to continue to serve their surrounding areas, network and collaborate with one another, and serve as a platform that amplifies their work. Over in the U.K., where London’s notorious real estate prices have created a similar squeeze on artists, impact investing firm Investing for Good has formed The Creative Land Trust, which intends to build a network of sustainable, permanent spaces that will remain affordable for artists and creative producers in perpetuity.

With projects such as these, government entities often have a role to play, as illustrated by the work of the Newark Community Economic Development Corporation to close funding gaps for private development projects that bring specific benefits to the arts and creative communities; in representing the city of Newark, New Jersey, the NCEDC’s goal is to foster economic revitalization while preserving that city’s vibrant identity as a cultural melting pot.

The actor Mary Stuart Masterson is taking a slightly different approach with her nonprofit organization Stockade Works and intention to launch a for-profit production facility, Upriver Studios. These organizations are intended to build a television and film production industry in the Hudson Valley of New York, which not only offers a beautiful backdrop for the creation of content, but also a high quality of life and reasonable cost of living, making it attractive to the thousands of professionals who work in the film and television industry.

Access to ownership and influence:  Core to the philosophy of the creative economy is inclusive decision-making and common ownership of resources.  CultureBank and Meow Wolf are exploring new models of inclusive ownership that give creative professionals a stake in the organization and ensure that the organizations serve the interests of their stakeholders.  Meow Wolf is expanding on the initial success of its business model in the Santa Fe area by constructing and operating arts and entertainment spaces that are in part owned by the artists who will display and perform their work there.  In exchange, the artists donate their time to building and maintaining the space itself, which ensures that the properties will themselves be entertaining works of art.

CultureBank seeks to unlock the “assets of value, opportunity and inspiration” held by communities “traditionally understood as poor.”  It seeks to create businesses where all stakeholders are considered investors.  Founded in collaboration with the Yerba Buena Center for the Arts, CultureBank plans to include local academics and cultural institutions to perform due diligence on possible investment recipients and to invest through collaborative “gifting circles” that unlock community assets such as language skills, natural green spaces, or creative approaches to food security.

Access to Expertise: Local communities, such as indigenous communities or communities of color, are often rich in history, tradition and capability but may not possess the technical skills to bring their narratives to a wide audience.  Creative economy companies can connect this needed expertise with local cultural assets to reach a wider audience.

E-Line Media offers a compelling case study of the possibilities. What began as an idea of Alaska’s Cook Inlet Tribal Council—to use gaming as a way to connect Alaska Native individuals to their culture and to increase self-sufficiency—grew into a highly profitable partnership that is now extending to other creative initiatives. E-Line media made this venture possible by connecting the community to experienced game designers who could make their vision a reality.

Stockade Works, mentioned above, is training local people in the Hudson Valley for well-paying jobs in the film production industry.

More broadly, Think Like a Genius® makes use of some proven, arts-based learning methods and tools for catalyzing and cultivating innovative thinking, while creative entrepreneur Robyn Ziebell uses her unique methodology to help clients from a variety of backgrounds tap their innate creativity to see solutions and opportunities.

Access to Capital:  Often, creative enterprises lack access to finance, which flows more readily to technologies that scale.  Fortunately, there are companies exploring ways to provide essential financing to distinctive cultural products that can sustainably serve niche markets and maintain market diversity.

Exponential Creativity Ventures believes “creativity and self-expression are human rights.”  It makes market rate investments in “human centered creativity platforms, global networks for developing creative voices, and frontier innovation.”

LISC (Local Initiatives Support Corp) has a long history of serving as an intermediary connecting funding sources with hard-to-reach communities. The LISC NYC branch of this community development organization is launching a fund specifically targeting investments to support creative businesses in the city.


Our present era of inequality of opportunity brings with it previously unimagined new products and services that enrich lives.  It also brings abuse, exclusion, and inequality. By investing in creativity and the arts, investors can contribute to sustainable innovation that nurtures talent, empowers communities and brings diversity of thought to the market.

This is an excerpt from Cornerstone Capital’s report Creativity & The Arts: An Emerging Impact Investing Theme.

The creative economy is large and growing. But until now impact investing has not focused on the creative economy in a significant way.

Defining the Creative Economy

The term creative economy was introduced in an article by Peter Coy in 2000 about the impending transformation of the world’s economy from an Industrial Economy to an economy where the most important force is “the growing power of ideas.” John Howkins elaborated in his 2001 book, The Creative Economy: How People Make Money from Ideas, calling it a new way of thinking and doing that revitalizes manufacturing, services, retailing, and entertainment industries with a focus on individual talent or skill, and art, culture, design, and innovation.

Today, creative economy definitions are typically tied to efforts to measure economic activity in a specific geography. A relevant set of art, culture, design, and innovation industries is determined, and the economic contribution of those industries is assessed within a region. A unique set of industries defines each local creative economy reflecting the culture, traditions and heritage of that place.

Based on research by the Creative Economy Coalition (CEC), a working group of the National Creativity Network; the National Endowment for the Arts and the Bureau of Economic Analysis; Americans for the Arts; the U.K. Department for Culture, Media and Sports; Nesta, a U.K.-based innovation foundation; and the United Nations Educational, Scientific and Cultural Organization (UNESCO), Upstart Co-Lab identified a set of industries comprising the creative economy using the North American Industry Classification System (NAICS). Available here, these NAICS codes describe businesses engaged in the inputs, production, and distribution of creative products.

Impact Investing and the Creative Economy

The creative economy in the U.S. represents more than 10 million jobs and $763 billion of economic activity, or 4.2% of U.S. GDP. The creative economy is growing at 9% annually around the globe, and even faster—at 12%—in the developing world.

Despite the growing significance of the creative economy, in 2018, the Global Impact Investing Network’s (GIIN) Annual Impact Investor Survey reported Arts & Culture as 0.3% of the $228 billion worth of impact assets under management by its 226 global members[1]. This conclusion overlooks the likelihood that investments in the creative economy are counted in the survey’s other categories such as Microfinance, Food & Agriculture, Manufacturing, ICT and Other.

A narrow framing of “Arts & Culture” misses the significance of creativity and culture as targets aligned with four of the Sustainable Development Goals. It overlooks the creative economy as a source of 21st century quality jobs.  It fails to recognize the creative economy as an on-ramp to wealth building for entrepreneurs including women, people of color and others who benefit from lower barriers to entry to a sector of the economy more interested in merit than advanced degrees and pedigrees.

The creative economy has been flying under the radar of impact investing. In low-income communities, creativity and culture have been part of comprehensive community development for decades.  But only this year is the first dedicated investment opportunity—the LISC NYC Inclusive Creative Economy Fund—available to investors looking to direct their capital to support creative workspaces and quality jobs in the creative economy for low-income workers.

Although Upstart Co-Lab has identified 100 examples of impact funds that have included fashion, food, media and other creative businesses as part of their portfolios, when impact wealth advisors are asked by their clients for opportunities aligned with art, design, culture, heritage and creativity they typically—and erroneously—answer that no such opportunities exist.

Introducing a Creativity Lens

The creative economy’s lack of visibility within impact investing is why Upstart Co-Lab borrowed from the lessons of gender lens investing to introduce a Creativity Lens. A lens brings things into focus, magnifying what may be hard to see with the naked eye, and allows viewers to spot what’s approaching on the horizon. Upstart Co-Lab proposes a Creativity Lens to help see the impact investment potential of creative places and creative businesses, to reveal opportunities that up until now have not been fully recognized but are becoming more significant as the creative economy grows.

A Creativity Lens gives investors the chance to spot these types of opportunities, and to help shape a creative economy that is inclusive, equitable, and sustainable.

Why Impact Investors Should Invest in the Creative Economy

There are three key reasons for impact investors to embrace a Creativity Lens:

More prospective investment opportunities and portfolio diversification: As impact investing goes mainstream, there need to be more quality opportunities to absorb the additional capital; including the creative economy puts new high-potential companies in scope. Adding another segment of the economy to the impact investing universe also offers investors a chance to diversify their market exposure. It offers diversification from an impact perspective as well, bringing cognitive diversity by including creatives as problem-solvers and getting more eyeballs on the issues.

More ways to get social impact: Investors can further their current impact goals by including creative businesses in their portfolio. Businesses in creative industries are delivering impact for the environment, health, and education, among other priorities. Investors aligning with the Sustainable Development Goals will find synergy as well. And the impact that creativity and culture contribute to low-income communities has already been well documented.

Build a sustainable creative economy now; no need to fix it later: The presence of capital that values inclusion, equity, and sustainability can ensure companies in the creative economy are providing quality jobs, acting positively for the environment, and strengthening their communities. Entrepreneurs leading companies in creative industries want to deliver impact and need impact investors to stand with them. The creative economy is growing. Let’s help shape the creative economy now so as grows, it grows the right way.

Looking Ahead

Upstart Co-Lab has identified a current pipeline of 125 investable opportunities in the creative economy that will drive impact.  In aggregate, they are seeking more than $3 billion in impact capital. One-third of the opportunities are funds. Two-thirds are direct company and real estate investments, many of which are seeking a lead investor.

In the U.S., museums, performing arts centers, art and design schools, performing arts conservatories, artist-endowed foundations and other institutions connected to art, design, culture, heritage and creativity—with an aggregate $50 billion-plus in assets under management—have been sitting on the sidelines of impact investing. The creative economy can be the door to welcome these institutions into a larger conversation about aligning their financial assets with their missions and values.

This report demonstrates that the time is right to make a market connecting viable businesses in the creative economy that seek values-aligned capital with investors who understand the power of creativity to drive economic opportunity, offer quality jobs, strengthen communities, and improve social well-being and our quality of life.

This is an excerpt from Cornerstone Capital’s report Creativity & The Arts: An Emerging Impact Investing Theme.

Photo: Upstart Co-Lab meeting on definiting the Inclusive Creative Economy. ©Upstart Co-Lab.

[1] https://thegiin.org/assets/2018_GIIN_Annual_Impact_Investor_Survey_webfile.pdf

I have been thinking about and working in and around the role of capital in arts and creative enterprise for over 40 years. I have watched the rise of the terms creative economy, impact investing and creative placemaking. We may finally now be reaching a critical place where we can do away with the artificial distinctions between enterprises rooted in what often are arbitrary or historical decisions on legal corporate structure—nonprofit, for-profit, independent artist—and consider creative enterprise as a sector that encompasses all these structures. And we can then look at sources of capital — equity, debt, philanthropy—based on their appropriateness for the project or organization.

The arts sector is filled with many for-profit activities. Broadway and dinner theatre; most community dance schools; many music venues (and related music businesses such as producers, recording studios, music publishing, promotion); art dealers, galleries, framers and art handlers; lighting and sound supply companies; literary publishers and agencies—just to name a few.

It has long concerned me that in both the government and philanthropic arenas we have treated “the arts” as consisting purely of nonprofit arts organizations. The truth is that the arts is a fluid ecosystem that includes individual artists and for-profit creative enterprises. By focusing on only one segment of the sector, funders and policy-makers miss significant opportunities to build a holistic, thriving creative community and industry, at both local and national levels.

The U.S. Bureau of Economic Analysis in 2017 reported that the arts and “cultural production” contributed $764 billion to the U.S. economy, representing 4.2% of GDP (based on 2015 data), more than such other industries as construction, transportation/warehousing, travel/tourism, and agriculture. The analysis includes both nonprofit arts enterprises as well as such for-profit industry areas as advertising; interior design; landscape design; “arts support services” like lighting and sound rental, framing and art handling, etc.; publishing; motion pictures and broadcasting; and musical instrument manufacturing, just to name a few. In some states and localities the percentages can be much higher. Clearly there is enormous opportunity to drive economic growth and employment through coherent, broad-based strategies to invest in this space.

An Evolution in Thinking

Perhaps my perspective on this issue is shaped by having moved fluidly during my 40-year career in the arts between the for-profit side and nonprofit side, government and private philanthropy, actively producing and presenting art, and working more behind the scenes on advocacy and policy.

My jobs included serving as an aide to a US Congressman, managing a cabaret/musical theatre program at a nonprofit theater (that was actually structured as a largely earned income supported enterprise), directing programs for an arts service organization, producing commercial theater, serving as managing director of an Off Broadway theatre, running a facilities grant program for a state arts agency, leading a nonprofit theatre on Broadway, and then for over ten years serving as CEO of the Arts & Business Council in New York, up to and through its eventual merger with Americans for the Arts.

In 2008 my growing belief that we needed to change the paradigm of “arts = only 501c3 arts organizations” led me to take a position as the first Chief Cultural Officer for the City of Philadelphia, directing a newly created Office of Arts, Culture and the Creative Economy. While exact statistics are hard to come by, I believe that made me the first major city “arts agency” head to report directly to the Mayor and be part of the Mayor’s cabinet, AND the first to head an agency with an explicit creative economy focus. We commissioned a Creative Vitality Index study over a three-year period, which was the first time Philadelphia had looked at its “creative sector” including both for-profit and nonprofit businesses. The study methodology was not perfect, but it helped advance the conversation. We also used case studies that helped “tell the story” of creative entrepreneurs—including a maker space, an individual artist who worked in both nonprofit and commercial settings, a commercial manufacturing and cultural hub operating out of a former textile factory, and an innovative partnership between a commercial music club and a public radio station.

At one point we were able to access a significant allocation of the City’s Community Development Block Grant funding (CDBG) to support the creative economy in lower-income neighborhoods, and we created a program to invest in creative workspace facilities projects. This was open to both for-profit and nonprofit projects. That seemingly small detail made it groundbreaking. We did away with the artificial distinction and looked at our underlying objective: securing affordable space for artists and creative enterprises. Why should it matter that this was being executed by a business or entrepreneur marrying our capital with other sources, such as bank loans and tax credits, versus a nonprofit perhaps using entirely philanthropic capital?

The Challenge for Foundations

And now here I am in Denver, serving as President of the Bonfils-Stanton Foundation, which has a philanthropic focus on the arts in our local community.  How do I bring this more expansive definition of creative enterprise to the work we do? As a private foundation we cannot make grants to for-profit creative enterprises, but we can explore utilizing impact investing with our corpus as a vehicle for helping to foster a robust creative sector. And this is what has led me to explore the role of impact investing in the arts and creative enterprise. My interest is on behalf of my own foundation, but is also based on my conviction that there are investment opportunities in this area and many other investors like us eager to deploy capital in pursuit of both reasonable financial returns and an arts and creative economy mission return.

While we have engaged in Program Related Investments within the arts—significantly below-market loans that from an accounting standpoint count as grants even though they are returned (one anticipates) with modest interest—we have yet to implement an impact investing program. Why, given our keen interest? Here are the questions we need answered:

It is my hope that research and education efforts like this publication can lead to greater understanding and awareness, the creation of new creative enterprise investment vehicles that meet what I believe IS a significant enough market demand, and ultimately the deployment of capital into creative enterprises that will help fuel creativity, innovation and vibrancy in our communities while also generating market returns that can satisfy boards and investment committees. Interest in impact investing in general is growing, and evidence of its efficacy now exists. What we need is the cultivation of comparable interest, tools, and evidence in the creative enterprise space. We, and many others, are poised to act.

This is an excerpt from Cornerstone Capital’s report Creativity & The Arts: An Emerging Impact Investing Theme.

Photo: Gary Steuer at the Museum of Contemporary Art Denver, where a Bonfils-Stanton Foundation-led PRI was part of a package of capital that resulted in dramatic debt service savings. ©Kelly Shoads.


Media consumption is passive. At least, that’s been the dominant paradigm for the last century or more. Under this unidirectional model, a small number of people control both production and distribution, deciding in the process whose stories are told and whose are silenced.

In recent years, however, the internet has lowered—and sometimes demolished—barriers of access, unleashing an explosion of meaningful creation, an increase in both the quantity and quality of work by amateur creatives, and an increasingly blurred line between consumer and creator.

Silicon Valley has largely failed to adapt to this emerging paradigm shift, choosing instead to continue pursuing maximum-growth-at-any-cost via the relentless commoditization of content. At the same time, existing models of impact investing in the arts have tended to follow a quasi-philanthropic model, emphasizing arts and community development, studio and performance spaces, and nonprofit arts organizations.

There’s nothing inherently wrong with either of those approaches, but at Exponential Creativity Ventures, we have a different philosophy that offers an alternative model for investors.

We’re in the midst of an historic moment for value creation in human-centered creativity platforms, thanks to the democratization of technological infrastructure and the disintermediation between artists and audiences (think YouTube, Etsy, Kickstarter, and many others). Fractured Atlas, our nonprofit parent organization, was an important player in the first wave of this trend: the DIY and indie arts movements. Its software platforms have come to provide 1.5 million artists across North America with essential back-office business infrastructure, freeing their time and energy for creative work. By leveling the industry playing field, Fractured Atlas has given independent artists and underrepresented voices opportunities to be heard.

In the continuing democratization of arts and media tech, Fractured Atlas saw both a danger and also an opportunity. The danger was in allowing those technologies’ development to be driven and guided exclusively by profit-maximizing investors whose interest in appealing to the broadest possible audiences tends to lead to the commoditization of content. Allowing that to happen threatens one of our most cherished values: that creativity and self-expression are human rights. Allowing that to happen also marginalizes minority voices, fosters dangerous echo chambers, and leads to a global homogenization of culture, expression, and representation.

The flipside of this threat, however, was an opportunity. Fractured Atlas realized that it could pull up an alternative seat at the table, one committed to supporting an ecosystem of human-centered, creativity-enabling tech; to helping the entrepreneurs and innovators who are driving the paradigm shift toward creation; and to nudging the continued progress of these technologies in an inclusive, humanistic direction. We sensed we could provide that seat while also capturing some of the extraordinary economic value being created.

So, with an initial $2 million commitment from Fractured Atlas at the start of this year, we officially launched Exponential Creativity Ventures, a $20 million evergreen fund investing in human-centered creativity platforms, global networks for developing creative voices, and the underlying frontier tech innovation that makes it all possible.

Before re-entering the creative tech space as venture capitalists, we first had to ask: Would there be sufficient deal flow to achieve both the social and financial returns we were targeting? Very quickly, we determined the answer was a resounding yes. By leveraging Fractured Atlas’s existing network, we found ourselves with an extraordinary pipeline of opportunities straight out of the gate. Within our first month, we met with hundreds of great companies in their earliest stages. The founders who came to us included accomplished artists and casual creatives alike, and we were also pleasantly surprised by the diversity of this community.

The biggest challenge we’ve faced has been in explaining our model to investors. Exponential Creativity Ventures has an unapologetic mission orientation that prompts skepticism from “pure money” investors. At the same time, our focus on technology startups and market-rate returns means we don’t fit the traditional “impact investor” mold either. This straddling of silos led to some frustrating initial conversations with potential backers.

We eventually hit our stride, however, when we launched an “Ambassador Round,” targeting small investments from arts and creative industry thought leaders and influencers. From March to July 2018, we raised $300,000 (exceeding our $250,000 target) from an extraordinary mix of people—a Broadway producer, the CEO of a leading digital arts marketing firm, the founder of Creative Capital, a Google executive, a slow food movement entrepreneur, and a music industry data scientist, to name a few. None of these individuals are traditional LPs, but they deeply understand the markets, use cases, and constituents we’re serving. They also have some context for understanding Fractured Atlas’s track record and our credibility as investors.

As an evergreen fund, we can invest and raise in parallel, and to date we have made initial investments of a combined $1,085,000 in 11 companies. More often than not, we’ve been the first institutional investors on their cap tables, positioning us to help them raise much larger amounts in later rounds. These portfolio companies are working on projects ranging from augmented reality and artificial intelligence to new musical instruments and a global market for culturally iconic indigenous art. A complete list of these exceptional companies can be found on our website.

Among our bedrock values is the belief that a healthy foundation for creativity must be maximally inclusive. To that end, we are proud to report that 70% of our investments to date have gone to founders of color and 60% have gone to women founders.

Each of these creative technologies represents the kind of impact that Exponential Creativity Ventures aims to make: lowered barriers of access, the continued democratization of creativity and tech, and financial competitiveness, both for communities of artists and creatives and for underrepresented and underestimated founders, entrepreneurs, and communities writ large.

This is an excerpt from Cornerstone Capital’s report Creativity & The Arts: An Emerging Impact Investing Theme.

Photo: ECV portfolio company Roots Studio digitizes the work and stories of traditional artists in the developing world, then licenses and produces prints, apparel, and stationery. ©Roots Studio, Inc.

Note: Certain contributors to this report may represent asset managers or specific investment opportunities. Their inclusion is not intended to be, nor should it be construed, as a recommendation or endorsement of their products or services by Cornerstone Capital Inc. The views expressed by external contributors do not necessarily reflect those of Cornerstone Capital Inc.

LISC’s newly launched NYC Inclusive Creative Economy Fund marks both a bold, new direction for our organization and a natural extension of our long track record of bringing technical and financing resources to low- and moderate-income communities.

Over our four decades as a Community Development Financial Institution (CDFI), LISC has been an impact investing pioneer, raising and blending capital and then deploying that capital with a social purpose, making loans to borrowers in low- and moderate-income communities where typical financial institutions don’t reach. While LISC’s financing activities may be best known for affordable housing, our diverse loan portfolio has historically included a significant commitment to arts, culture, and creativity. As part of our partner Upstart Co-Lab’s 2017 report study, “Creative Places and Businesses: Catalyzing Growth in Communities,” LISC reviewed its lending activity since 1980 and found that we have financed 98 projects related to arts, culture, and creativity representing $139 million in direct lending volume and over $900 million in total development costs.

Thus, to some degree the NYC Inclusive Creative Economy Fund builds on LISC’s established tradition of financing the creative economy. Yet our new initiative signals a deepening of LISC’s commitment to arts and culture and a more intentional strategic approach. Working with Upstart Co-Lab, LISC has been applying a “creativity lens” to our core impact investing activities, which is having dynamic implications for our overall strategy, expanding our market niche as a provider of capital for arts and creativity and broadening our investor relationships. As Upstart Co-Lab founder Laura Callanan is fond of saying, “A lens is a view finder; it helps you to see, and it brings things into focus. Creative places and businesses have always been part of comprehensive community development. But it’s been flying under the radar.”

Solving for Today’s Challenges

LISC NYC was born in 1980 to solve for the problem of disinvestment in “redlined” neighborhoods like the South Bronx, helping reverse the city’s decline by investing in abandoned housing stock and bringing residents back to these communities. Today, by contrast, New York City is booming. The city’s population is growing, and private investment is flowing, even to neighborhoods that historically have been underinvested. The problem we are solving for today, then, is the danger of displacement for low- and moderate-income New Yorkers who are squeezed by the combination of high real estate costs and flat wage growth due to structural changes in the economy.

Historically, LISC NYC had focused on the affordable housing side of that equation. When Upstart Co-Lab and LISC began talking about teaming up to launch an impact investment opportunity, LISC NYC was in the process of reframing its local strategy to be more responsive to contemporary conditions. In 2016, with significant philanthropic investment from Citi Foundation’s Community Progress Makers Fund, we invested in staff and expertise to develop a strategy to apply our lending expertise to equitable economic development, with a focus on creating and preserving middle-skill jobs for New Yorkers.

With Upstart Co-Lab as a strategic partner, LISC NYC began to view its equitable economic development activities through a creativity lens. We began to build a pipeline of loans to a range of new partners that were building and stewarding spaces for enterprises that provide middle-skill jobs: supporting affordable artist studios, spaces for artisans and light manufacturers, and cultural venues that enable creative endeavors that would otherwise not find space to work or perform in New York City. ArtBuilt NYC, for example, has developed 50,000 square feet at the city-owned Brooklyn Army Terminal in Sunset Park, providing affordable work spaces with long-term leases to artists, artisans, and creative entrepreneurs.

We are also lending to partners like the Brooklyn Navy Yard Development Corporation and the nonprofit developer Greenpoint Manufacturing & Design Center. Both of these nonprofits are providing affordable space to high-value, small-batch manufacturing firms that bridge so-called “knowledge workers” (the “design” side of design-build) with fabricators, machine operators, and craftspeople (on the “build” side). And our initiative includes loans to vibrant arts organizations like La Mama on the Lower East Side, whose mission is to provide performing space for artistic voices that otherwise might not be heard in this city. The lending activities emerging from this pipeline have not only adhered to LISC’s rigorous credit standards but also fit squarely in our mission to catalyze opportunities for low- and moderate-income people.

Applying a creativity lens to LISC NYC’s lending work has also opened an opportunity for us to attract new forms of impact capital. Like most CDFIs, our lending capital has come largely from financial institutions motivated by regulatory obligations under the Community Reinvestment Act (CRA) to lend and invest in low-income neighborhoods, leveraging equity-like investments from the US Treasury’s CDFI Fund. While LISC has successfully attracted program-related investments (typically from some larger national foundations), LISC has only rarely gained traction with impact investors such as high net worth individuals, family offices and endowed institutions.

We have just begun formally marketing our NYC Inclusive Creative Economy Fund and gaining traction with impact investors who find the impact, risk, and return profile of this opportunity compelling. LISC is issuing notes with an 8-year maturity that pay interest of 2.75% per annum. While proceeds from the notes will be used to fund loans supporting the inclusive creative economy, the notes are a general obligation of LISC, with recourse to the organization’s diversified balance sheet. In other words, purchasers of the notes do not take on project risk and can underwrite to LISC, which has been rated AA by Standard & Poor’s and has, for 40 years, repaid all of its borrowers on time and in full.

We are hopeful that LISC NYC’s initiative will be replicated across LISC’s national platform of 31 sites, and further, that the Fund will help make the case for a broader adoption of a creativity lens across impact investment capital. To accomplish this replication, LISC and its fellow impact investment practitioners could do the following: advance more locally driven intentional strategies to cultivate arts, culture, and creativity; and advocate for a more robust policy and subsidy support, to create a better enabling environment for inclusive creative economy real estate, making it a more central part of the public discourse.

This is an excerpt from Cornerstone Capital’s report Creativity & The Arts: An Emerging Impact Investing Theme.

Photo: A creative business housed at a building owned and operated by Greenpoint Manufacturing and Design Center in Crown Heights, Brooklyn. ©Tim Soter courtesty of LISC NYC.

Note: Information regarding the NYC Inclusive Economy Fund is provided for informational purposes only, and is being shown to illustrate the growing variety of impact investment opportunities creativity and the arts. It should not be construed as an endorsement or recommendation of the fund by Cornerstone Capital Inc.


One of the most significant legacies of the housing collapse, which triggered the Great Recession of 2008-11, was the undermining of confidence Americans had in the venerable single-family home.  For generations, owning a single-family suburban home was a linchpin of most Americans’ retirement and savings strategies. The fracturing of that doctrine coincided with the demographic rise of the millennials into the housing market.  These factors combined to shift capital flows to center-city rental housing at a pace city planners could only fantasize about for decades.

While this newfound prosperity in our urban centers is exciting news for policymakers long frustrated by the post-World War II decline of these downtowns, it has brought some unintended consequences. The pace of investment in these neighborhoods has driven up the cost of space for all property types at extraordinary rates. This has been good news for those of us in real estate with significant exposure to the affected markets; however, there is another side to that coin.  For many residents and institutions that have historically been located in or near center-city neighborhoods, the market is now pushing them aside at alarming rates.

Continuum was formed in 1997 around the belief that the failed urban development policies of post-war America had caused intolerable long-term stresses on our center cities, their citizens and the broader regional environments.  By the early 1990s, the complex set of regulations, tax subsidies and design doctrine that accumulated to drive the great American suburb had resulted in a systemic shift of investment capital away from center cities and their historic infrastructures to the green fields of these new suburban regional centers. Since 2010, however, center-city neighborhoods in all 30 of the largest U.S. metropolitan areas gained significant market share over their suburban counterparts[1]. Gentrification is now the new crisis city leaders are urgently mobilizing resources around.  Metro areas from Los Angeles to Denver are rushing to raise new tax dollars to provide more housing assistance to low- and median-income residents.

This abrupt shift in prosperity is having a broad range of unintended consequences. One particularly unexpected effect has been the backlash against artists and cultural enterprise spaces (such as art studios and galleries), which are now seen by some vulnerable communities as the tip of the spear for fresh waves of gentrification.

It is an ironic consequence given that during the decades of decline in American urban centers, employers moved out, retailers abandoned their downtown flagships, and even the churches relocated to new mega facilities on the urban edge, but artists and the institutions that support them steadfastly remained committed to the urban cores.  In many situations the leadership of the signature art museums and performing arts organizations became essential drivers of the booster network for these center cities.  Their employees also found reasonably priced housing in city neighborhoods and were engaged in neighborhood activism.  Over the years Continuum has been a significant supporter of these institutions—and we are now confronting the realization that our business success is severely hampering their ability to continue to prosper.

Supporting the Link Between Culture and Neighborhood Stability

From our early days as a mission-focused development firm, we saw an essential link between a robust cultural economy, neighborhood stability, and real estate value.  One of our earliest projects included a new Museum of Contemporary Art for the City of Denver.  My wife and I donated a piece of land to the Museum in an up-and-coming neighborhood, around which Continuum went on to develop multiple projects.  In the early 2000s we funded a new contemporary art space called the Lab at Belmar, embedded in the center of a 100-acre neighborhood we transformed from a broken regional shopping mall to a new 30-block precinct in Lakewood, Colorado.

As an organization we continue to find ways to support our local arts communities; for example, we recently opened the new Hotel Born at Union Station in Denver and commissioned more than 700 original works of art from Denver artists for the building.

None of these efforts is enough, however, to stem the generation-long effects which will result if we as a society allow the diasporization of these important creative thinkers and enterprises within our communities.  We at Continuum think of ourselves as human ecologists and understand the value that diverse and politically courageous voices bring to the governance of our center cities.  We are committed as an enterprise to working towards more equitable housing solutions for all constituencies in our society, but we see the challenge for artists as becoming particularly complex.  Over the last couple of years, this issue hit a flash point in the Boyle Heights neighborhood in Los Angeles, where artists and gallerists were aggressively harassed when they entered that neighborhood in pursuit of more affordable spaces.  Some members of this historically Latino working-class neighborhood decided they needed to send a clear message to the artists, some of whom ultimately closed their studios and galleries.

The link between neighborhoods rich in cultural enterprise and rising real estate values has become a foundational principle of real estate investing.  New arts districts spring up in rural towns from Oregon to Georgia; suburban communities in Kansas City are onto the trend as well.  The strategy has become a key economic revitalization tool for any aspirational community in search of a marketing message.  The challenge for center cities is that the romantic notion of the bohemian creative seeking out a cheap space in an overlooked ghetto is a trite memory of an era gone by.   Maintaining a healthy population of creatives is something no big city mayor or civic booster can take for granted.  And now, instead of the artists living peacefully amongst an underserved population linked in common neighborhood advocacy, they are viewed by those same communities as the leading edge of the bourgeoisie who will follow.

Finding New Solutions for Coexistence

Over the past 18 months, Continuum has been doing research on new ownership vehicles for real estate projects that are designed to create long-term rent security for their occupants.  We are interested in establishing a new capital platform that can bring a more holistic solution to these complex societal challenges.  We believe the existing capital and ownership vehicles driving this current transformation of our communities need to be reconsidered in a manner which allows more of the wealth created by the escalating values of these neighborhoods to remain in the local communities.  It is our hope that through these new vehicles we can offer long-term neighborhood stability both to the artists and to the historical residents.

We expect to launch our first projects under this model in early 2019.  Inherent in this model is a mechanism which would slow the rate of rent growth in high-value areas in perpetuity.  The enterprises will be funded with tax-exempt debt instruments and include investments by a network of social impact investors.  While our initial focus will be for members of our creative communities, over time we expect this vehicle can be extended to address other key populations such as teachers and other essential service providers in our cities.

Cities are dynamic ecologies.  Stresses and opportunities shift constantly.  The physical framework of our cities has deep impact, not only on the environmental footprint of our habitat but also on the social cohesion of our populations.  We believe it is essential that our settlements are conceived and regulated in ways that ensure all its residents have reasonable access to jobs, education and cultural enrichment in order to maintain a healthy and durable community.  It is our belief that the private sector should lead the path to these outcomes–after all, our investments depend on healthy and resilient neighborhoods to grow in value.

Photo: ©Shifting Narrative/Shutterstock

[1] Foot Traffic Ahead 2016 – The Center for Real Estate and Urban Analysis at George Washington University.

This is an excerpt from Cornerstone Capital’s report Creativity & The Arts: An Emerging Impact Investing Theme.

Note: Certain contributors to this report may represent asset managers or specific investment opportunities. Their inclusion is not intended to be, nor should it be construed, as a recommendation or endorsement of their products or services by Cornerstone Capital Inc. The views expressed by external contributors do not necessarily reflect those of Cornerstone Capital Inc.

The heart of CultureBank is this:

Communities that have been traditionally understood as “poor” are not. They hold assets of value, opportunity, and inspiration. Undeveloped assets in marginalized communities—assets like music, dance, cultural tradition, diverse language skills, natural green spaces, oral narratives, and people themselves—are extremely valuable in achieving long-term health and shared prosperity. Identifying and unleashing the potential of these assets will help communities thrive.

But developing these assets requires a new model for investment and for assessing returns on investment. CultureBank is an entirely different investment platform, seeking to trigger a cultural shift in social impact investing and community development so that assets of all kinds can be understood, leveraged, valued, and shared. In its very early stages of development, CultureBank is founded on three critical concepts:

  1. CultureBank believes that artist-driven enterprises are essential to nurturing and revealing community value because of their demonstrated ability to identify and lift assets in communities; we therefore seek to develop our ecosystem of artist-driven enterprises.
  2. Rather than return on investment, CultureBank seeks a “ripple of investment” through imaginative structures that create value that can be commonly experienced, and where everyone is an investor—the artist, the financier, the community members.
  3. By leveraging unique investment structures, CultureBank aims to feed a rich but underinvested ecosystem of artists and connect them to growing movements to incorporate health outcomes into broader equity efforts.

What Is CultureBank, and How Will It Work?

CultureBank began as a series of conversations between Deborah Cullinan, CEO of Yerba Buena Center for the Arts (YBCA), and Penelope Douglas, a longtime community investment and social enterprise leader.

YBCA is pioneering a new model for an arts organization, one that builds the ecosystem of artist entrepreneurs and creates the conditions for diverse thinkers, inventors, innovators, and artists to come together around the critical questions in our communities and our society. CultureBank is a leading example of the kind of big idea that YBCA is interested in bringing into the world. We focus on a process of inquiry and then investment, empowering artists to become truly important early-stage investors in communities.

The concept behind CultureBank is best illustrated through our first pilot community, in Dallas.

The initial work establishes new forms of collaboration among academia (Southern Methodist University and its Meadows School), community arts and culture intermediary organizations (Texas Arts and Culture Alliance), civic engagement leadership (Ignite Arts/Dallas), formal and informal community leaders (social activists, citizens of all kinds, private wealth holders and entrepreneurs), and artists.

These collaborators participate in conversations led by artists who are working in Dallas’s underserved communities. The conversation focuses on critical questions about community assets. Inquiry might look like this:

For CultureBank, these conversations are the part of investment. Mainstream impact investors go through a due diligence process; CultureBank follows a model using a process of inquiry initiated by artists and their community. In the CultureBank model this core function is called Asset Discovery and Development.

In the next step of the Dallas pilot, philanthropic capital will be raised through Donor Advised Funds and invested in a radically different manner. Decisions regarding investments (likely to be grants in the first several cases)—who will receive them and what results will be targeted—will be made by and through a gifting circle. For CultureBank, everyone in the circle is considered an investor, and investments focus on supporting artists who are lifting and celebrating assets in the community. Assets in a community might include language skills, knowledge of local geography, natural green spaces, creative approaches to food security, or the factual narratives of communities. Investments are successful if the collaborators are able to identify and plan to further develop these assets. Within the first year of the pilot, our aim is to make between two and four grants for such development.

Later stages of investment will further these goals, so that pilot communities develop their shared vision for their future, focused on stewardship of value built within the community. Debt, non-controlling equity, and equity for shared ownership investment forms will be refined and put to use, based upon the learning from the pilot. As value is built, CultureBank will collect and share the early indicators of impact to build the next phases and collaborations. CultureBank is based on a long-term theory of change, as its goal is to effect outcomes that are enduring.

In addition to processes of Asset Discovery and Development and Investment, CultureBank is also focused on building a rich knowledge base by collecting stories and cases of artists and their community-changing enterprises around the country.

The Development of CultureBank to Date

There have been several milestones in the development of CultureBank to date:



Current Funding and Structure

CultureBank has its home and is being incubated at YBCA in San Francisco. It is designed to be replicable in other communities. Culture Bank is built on a series of somewhat radical collaborations among unlikely partners and will continue to form partnerships for pilot initiatives in local communities.

Funding for the early phases of CultureBank has come from two major funders, the Surdna and Kenneth Rainin Foundations. These funds have been invaluable, and now CultureBank is at the stage where new and talented people need to be hired.

The Pilot Phase, late 2018 – 2020

For each pilot initiative, CultureBank and its local partners will raise approximately $2 million of donor funds for investments, and $2 million for operating expenses for CultureBank at YBCA. In addition, CultureBank is exploring the use of art assets as part of the inflow of resources to be invested in communities. There is an important opportunity for CultureBank investors to reimagine the use of their own assets as part of a transformation in communities. Art assets held by investors might be pledged, for example, as a means of providing credit enhancement or risk mitigation for loans and other investments by CultureBank in artists’ enterprises.

Each pilot will demonstrate the four core functions of the CultureBank business model. These are:

  1. Asset Development and Discovery Services
  1. Funds Development and Demonstration Investments
  1. Knowledge and Storytelling
  1. Education and Convening

For the pilot phase, donor capital is the most important financial support mechanism. These early donor/investors will be inspired to experience the initial steps in a model of community investment for shared prosperity and greater well-being. CultureBank seeks to build value within communities and does not aim for any sort of traditional ROI during its pilot phase.

At the next phase, CultureBank will source capital from impact investors seeking an “evergreen” investment model, with return of principal as well as the direct experience of a community’s cultural assets as a participant in the CultureBank Commons.

For any individual or institution considering how to rethink the design of a community investment system, or how to transform hidden value in marginalized communities into shared inspiration, CultureBank offers a new model.

Photo: Black Women Rock at the YBCA Transform Festival. Hunter Franks, ©Tommy Lau.

This is an excerpt from Cornerstone Capital’s report Creativity & The Arts: An Emerging Impact Investing Theme.