Unveiling Impact Investing & Local Community Growth w/ Kevin Jones - Part 2

Ready to have your worldview shaken up? Prepare to meet Kevin Jones, the founder of Impact Investing Conference SoCap, who will challenge your perspective on the business world. Kevin reveals the often overlooked pitfalls of big businesses and their profit maximization – an often ruthless endeavor that overlooks worker welfare. He guides us through the intriguing notion of how investing locally can have a multiplier effect, leading to job creation and wealth accumulation over generations. Using the Shiloh community as an illustrative example, Kevin paints a vivid, compelling picture of the potential that local economies hold.

Our enlightening conversation with Kevin didn't stop there. We delved deeper with him into the fascinating world of catalytic investing and the promising shift towards impact investing. Kevin expertly deconstructs the concept of program-related investing, showcasing how it can be an effective tool in creating justice and fostering community growth. Also, we explore how innovations like immigrant saving circles are revolutionizing the investment field. Tune in and get ready to change your outlook on investing. You'll understand why it's not just about financial returns, but also about the long-term effects and the profound impact we can make in our world by simply investing in each other.

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Transcript

Joel: 0:33

What if investing in each other could change the world? I'm juleskeen with biz radio dot us, and this is the mindful marketplace. Welcome back to part two of my my fascinating discussion with kevin jones here on the mindful marketplace. I'm juleskeen with biz radio us, and if this is your first time Listening to us, welcome. We're glad to have you on this program. We talk to the entrepreneurs, advisors, industry leaders, investors and economic experts who are not only solving a market problem to make a profit, but also solving a social problem to make an impact. It's where we learn how to connect our money and our businesses to our values, our communities and ourselves.

Joel: 1:18

Today I'm continuing a conversation that was started last week with kevin dole jones, who is the founder of impact investing conference, so cap. He was also the co founder of impact hub, which is a co working company, and a co founder of a group called neighborhood economics that we're gonna get to dig into. Here's some more. So if you didn't get a chance to listen to the first half Of the episode, please go back and do that. We talked about what got kevin interested in community and impact investing, what the challenges that he's faced have been and the direction that things are headed now, which is where we're gonna really pick up the conversation with. So, kevin, welcome back.

Kevin: 1:57

Glad to have you glad to be here, joel.

Joel: 2:00

Yeah, so near the end of our last conversation you mentioned kind of this transition from the way things have been done over the past hundred years or so To the way that things you know could be transitioning towards. I know for me there was a big change in my mindset around finance, around the financial services industry, and I actually entered the financial services industry Following the two thousand eight and two thousand nine market crash, the bailout of the banks, the consolidation of things even more, and there seems like around that time there was really sort of a reaction. People could tell that hey, maybe this isn't working for us so well. We had people on the right in the tea party movement saying that. You had people on the left in the occupy wall street movement saying, you know, getting at a similar pain, at least they had different, obviously, ideas about that pain.

Joel: 2:52

But it does seem that there's been forming over this last decade or so this sort of push towards a new economy and that's something that we talk a lot about On this show. I'm curious what you know, having been someone who is really at the center of the development of this new economy and someone who's Hosting the conferences for people to get together to do this. I find you're in a really unique and special position to speak on what you see happening and what you have seen happen over these last ten years.

Kevin: 3:22

Okay, well, I can tell you what I've seen the work I do.

Kevin: 3:27

That is you know, really can be summed up now, as we're convening the people who repair local economies, the work is a lot easier, and I think the pandemic caused a lot of that to be happening, because people realized how broken the economies were when they realized that the business that your uncle worked for really just thought of him as an expendable resource. And the big business is not good business. Typically they are maximizing profits at the expense of the people they work for. They're similar to the NFL that is killing its employees and not doing anything about it. I mean, it's you know, and so and I think people realize that on a generational basis, I find more young people less bought in than before. I think they're you know people are. They don't know what to do about retention in the big businesses, and so I think people are looking for an alternative, and I think they're willing to try an alternative, and one of the things that is pretty interesting we work mostly in the local space now is that local investing makes a huge difference because it's you're keeping. If you buy from Walmart, the dollars go to Bentonville before the store closes. If you buy from a local business, they can circulate up to eight times in your local community, preserving and creating jobs.

Kevin: 5:01

And so we're what we're doing is we are investing in the disinvested neighborhoods, and, and you know, when you look at disinvested neighborhoods what we mean are typically neighborhoods that were redlined. And so there was government sponsored discrimination after the depression that said we will give African Americans no government backed mortgages. In Chicago for a little while they did a thing called yellow lining, which means we will give no mortgages to Eastern Europeans. But then there were 600,000 Polish Catholics that were had political clout and they got classed as white. After World War II all the GIs were supposed to get GI backed low cost mortgages, but no black GIs did so. That created a red line in those neighborhoods where African Americans lived.

Kevin: 5:54

And now you can look and the people in those neighborhoods live 10 years less long, they die 10 years quicker, and that's a result of systemic government backed prejudice. And so there's also a that keeps their housing prices low and makes them more subject to predatory developers who are trying to buy them out. So we're working with a local group here, rob Thomas's racial justice coalition, along with Urban Three from Joe Manacosi and the group Strong Towns, who are the new urbanists, the children of Jane Jacobs, who have typically advocated for tree line streets, and they're the folks who know and are the city planners and zoning people and economic development people, and they've discovered that taxation. They came in looking for transparent taxation and then they saw that taxation was unfair and then they discovered that it's unfair in the same neighborhoods. And so now, with a project funded by Dogwood here in Buckham County, they're trying to address that injustice. And here's what this historic injustice looks like the Shiloh community was moved to create the Biltmore, which is the foundation of our economy.

Kevin: 7:09

And they were moved to a place with Hair сейчас Dr James, bad drainage, no sidewalks and Biltmore Forest, the affluent neighborhood. Little Bitty Town has been created where they used to be, and so Joe has documented Joe Minnicozzi at Urban 3, locally here that Biltmore Forest has been undertaxed by four and a half million over the last 20 years, whereas Shiloh the poorest neighborhood that didn't get good mortgages there, being ripped off by developers offering old folks cash to buy their houses and flip them for five times the price has been. Shiloh the folks that were moved to create the Biltmore has been overtaxed, based on the value of their houses, by a million and a half over the last 20 years and the county has not addressed that. But it's a national problem and what's important now is that the new urbanists, who are the folks who know the folks in zoning and planning and auditing, are aware of it and they're taking action. So we're making strong common cause with them and we're doing a single issue of partnership.

Kevin: 8:22

I don't want to talk about why that matters. If you look back to the right to life versus freedom of choice the freedom of choice who are on the left to be a partner and to be linked to their website. You had to agree with six or seven issues. You had a whole litmus test, whereas the right to life could only have a single point of agreement. You could disagree about everything else, but if you agree about abortion, then they'll let you in, and so you know, in the world.

Kevin: 8:50

I'm in the black caucus of the Episcopal Church, who is socially liberal on everything else was an ally, and so that's why the right to life punches above its weight, and so, whereas the typical leftist thing is to demand a completed adherence to your agenda, so we're doing a single. These new urbanists from strong towns. They are not. They don't get to where we get by being outraged and strongly against economic justice. They get there by wanting taxation to be fair, so we're making a strong partnership with them.

Kevin: 9:26

The other thing that we're doing to extend our platform at Neighborhood Economics to make our event where everybody who wants to repair their local economy comes, is that we're bringing together the shards of the Bali group, which he mentioned, the business alliance of local living economy.

Kevin: 9:43

It broke when they couldn't reconcile the discrepancy or tension between being the gentrifiers and not wanting to be the gentrifiers, but in a dozen cities, those groups are still active, and Michael Schumann, who's kind of the godfather of local investing, has agreed to work with us, and so we want to be the place where the people who are investing in local businesses through the crowdfunding platforms like Mainvest, honeycomb Credit and a version of WeFundr that's got a revenue share fund come as well as all the cities and places where Michael Schumann knows people creating new local investment funds.

Kevin: 10:24

There is no local economy conference and we can do it because we have credibility on economic justice and then we can reach out to the folks who are living in tree line neighborhoods who also want to invest in local businesses. So we think we can create a platform where people can invest in local businesses and they can repair the economy by taking back the money from the big box retailers and investing in local businesses to keep those dollars circulating. And we can be the place where the disinvested neighborhoods get new injections of capital to create assets in communities that haven't had assets before.

Joel: 11:01

It sounds like a real shift from an extractive model to a regenerative one. Earlier in the first half you mentioned the work that you guys are doing for small black-owned businesses because they have difficulty sometimes they may not have the same connections on the whole, on the aggregate for resources from their friends and family to be able to raise money and it's difficult for them to get to that next level. We hit on Bruce Waller a couple times here on the show, who's the director of Black Wall Street, asheville, talking about the programs that they're doing for black entrepreneurs.

Kevin: 11:41

Our community investment fund invested in that.

Joel: 11:44

Yeah, yeah, that doesn't surprise me in the slightest. It makes total sense and we talked about that and you know, with the work that you're doing with neighborhood economics around investing in the divested communities and working with the new urbanists in giving these businesses assistance during the Friends and Family Round, it seems like you've done it through a real coalition that a lot of people may not have expected to come together, which you list as entrepreneurs, catalytic investors and people of faith. Could you talk about that coalition and that partnership and why that works?

Kevin: 12:20

Yeah, you know, it's an interesting thing actually about that coalition. There was a study by Bridgeband, which does these big studies, last year or the year before that found that 40% $2 out of 5 of the local safety net was put forward by local communities of faith. But they only get 11% of the funding from big foundations. And the study went on to say a lot of that is because, you know, the foundation execs have a New York secular way of looking at life it's just kind of a shorthand but that they also may have had some, you know, faith-based trauma and so they don't see that the communities of faith are doing or actually there is no other group that comes close to doing 40% of the social safety net, and so these catalytic foundations that we're being really successful in getting to come have not done deals with communities of faith and so they're learning to partner across cultural divides. It's not a racial divide, but it's a cultural divide. It's a secular divide, having to see, oh look, these communities of faith are actually doing more than anybody. And in our work in Jackson we were able to our recent conference in Jackson, mississippi, we were able to show that they could partner across those cultural divides.

Kevin: 13:58

And the other part is that communities of faith you know, post-george Floyd we're in a post-George Floyd world and that still matters to some folks and so there's been a real awakening by the mainstream church and by kind of the parish collective local church movement that they need to be engaged beyond personal salvation into their local economy.

Kevin: 14:23

And it's actually been. It's been hidden by the Christian nationalists who are sold out to the right wing. That's another whole thing. But because they want to differentiate themselves from the Trump-Maga version of evangelicals, they are doing more, and the fact that they are not getting the headlines just means that they are more dedicated locally. And so those are two of the things. And then, with the people investing in their local communities that we're bringing in through Michael Schumann and his May Street Journal and the strong towns with the new urbanists, we want to create the third leg, which is people who are investing in their local economy, who have money, who have friends and family money and are investing in these brick-and-mortar businesses in their towns on discretionary terms, because they want to build a community where their kids want to move back to.

Joel: 15:26

Yeah, we've. I've mentioned a lot on my monologue called the Balance Sheet about community investing into different models for which people can do that, and if you are interested in that and how you as a retail investor just a regular person saving for retirement can invest your money locally, I would definitely check out the Main Street Journal that you mentioned, kevin. I think Michael Schumann is doing some excellent work over there on creating compiling lists that people can actually engage in so that it's not just reserved for the accredited investors, for the people who already have a lot of money, but the people who are looking to build generational wealth, not through an extractive way, but through a way that actually invests into their local economies and local communities. You know you wrote a blog post not too long ago about these new conferences that you're doing with neighborhood economics and about how it's not just entrepreneurs showing up looking for money, it's not just retail investors, but that actually you're getting a lot of attention from foundations. I'm wondering why do you think those foundations are so interested in our showing up?

Kevin: 16:36

Yeah, you know that's an interesting thing. The foundations are showing up. It's this movement called catalytic investing and, as impact investing, which I helped, you know, kind of get off the ground Back in 2008 however many years ago that was, it's gone mainstream and so there's been a big movement. This was a movement and now it's an asset class, unfortunately, and so the folks there are wanting to do just as well and do just as good rather than put Doing good first. There was a the global group that tracks that is called the gym global Alliance for impact investing, and they had a meeting recently and they asked their 40 investors around the table professional institutional funds how many of you have pulled the plug on a deal when it wasn't working and almost everybody had?

Kevin: 17:38

The folks who didn't raise their hand were like not really telling the truth. And then they said how many of you have pulled the plug because it wasn't hitting your impact goals? And nobody. I think there was one, one person that raised his hand. And so you know, in, in, in the impact, investing world impact is no longer first and it's not it's close to not being second.

Kevin: 18:01

They want to do. You know, they want market rate deals and they want to show that deals are market rate or they can do impact washing, and so Foundations. There's been a way that foundations can can address this with a thing called program related investing and that means they will invest Below market rate concessionary. The understanding is a cost of doing good and it used to not be very big. You know you would find just a few foundations doing it and then, with impact investing going mainstream, they realize there's a real role for us, these foundations, to Invest in the gaps where the impact investors used to be, because impact investing used to be Focused on the impact. Now it's mostly focused on Doing just as well and doing just as good. That's not a fair representation, but it's good enough for a podcast.

Joel: 18:59

Well, is it okay if I so? Because to me you you've come back to this question of you know you Of market rate versus doing good. You're basically saying you may have to if you want to do good with your money. You may have to take a lower rate of return to do that, but you still can get a rate of return.

Joel: 19:17

But I guess, but I guess you know. I think an important question that we should all be asking here Obviously is you know, what is the cost of doing good, but also what's the cost of not doing good because to me when we're looking at, looking at trying to make sure that, if market rate is the higher priority, to me that's a short term way of thinking about it.

Joel: 19:39

But yeah, doing good is the higher priority, that's a longer term way of thinking about it. I often bring up the indigenous saying that we should not just Act as act for ourselves or just the next generation, but for seven generations from now. It does seem that you know, if we make a little bit money more this year but we polluted the land that we lived on and the water that we use, that's a bad investment for seven generations from now for sure. Yeah, I'm wondering if there's anything that's that's coming to you for that that you want to speak to.

Kevin: 20:09

Yeah, no, it's a good point. Um, and, and you know there are market rate impact deals I'll just talk about when I was involved in. Come, strive for your position. I bet I'm not a big fan of with the fellow who led Better World Books that we invested in with Good Capital. And so it's off-grid solar sub-Saharan Africa and they're removing kerosene from the rural huts and they're reducing the cost of energy by 40%. So it's market rate and it should be scalable, and it is because it acts like a vaccine. It should be spread For the rest of the time. Yeah, you have to look at the multi-dimensional impact. You know. Let's imagine that climate change is real. Let's imagine that we have to invest in a way that helps us do collective climate change impact in a time when shipping food from California and Arizona doesn't make sense.

Kevin: 21:07

Let's plan for our near-term, this generation, future layering in that we all need to realize we're in it together if we're going to survive climate change and we need to invest in a way that makes our local economies more resilient. But there are things that scale across those Innovations that you can do, like the innovation around immigrant saving circles doing down payments came from Colorado, so the innovators can swap and change the innovation that works locally. And that's really what we bring together Things that work locally in your community, that create justice but also make your community thrive.

Joel: 21:50

And that's what I love about what you guys are doing at Neighborhood Economics. What you've done with SoCAP, what you've done really throughout your whole career, is look at economics in a way where you say you know what? Like you said, we are in it together. Or, as I always say on this show, we are each other, and investing in each other is really the only way that we can truly change the world. Kevin, I wish we could have you. I wish we could keep talking for hours, honestly, but I know you are busy. I know we've got to end here. Thank you so much for your time this morning, for being on the show here today. For those of you listening, please subscribe and give a rating review on iTunes, Spotify, Stitcher, Amazon Music, Buzzsprout, all the rest and please check out Neighborhood Economics, check out SoCAP, check out also the Swannanoa Water Action Network if you're in Western North Carolina. We didn't even get a chance to dig into that here with Kevin, and thank you so much, Kevin, for being on the show here today.

Kevin: 22:47

This has been a real pleasure, joel, thanks again.

Joel: 22:49

Yeah, absolutely, and for everyone out there until next time. Take care of someone else and take care of yourself.