Neighborhood Economics: Redefining Wealth Distribution with Innovative Financial Models

From punk rock activist to finance guru, Delilah Rothenberg's life is nothing short of a radical transition. Their unique path has led them to champion sustainable and impact investing, particularly in regions like Sub-Saharan Africa. Throughout our conversation, we unravel the intricacies of shifting one's perspective on capitalism and discover how private capital is being utilized as a powerful catalyst for social equity and economic growth. We delve into the evolution of ESG standards and the pioneering work of the Pre-Distribution Initiative, which aims to guide investors toward a more fair distribution of wealth, challenging the status quo of governance in the process.

Imagine a world where the workers own the means of production. In this episode, we explore the promise of worker-owned models, economic pre-distribution, and their potential to forge long-term sustainability. Our guest illuminates the stark contrast between fleeting aid and substantial investment, advocating a cultural shift to uproot economic inequality. We also dissect the power of redefining risk, return, and value, democratizing the investment landscape, and ultimately reframing our approach to resource distribution. This extends to the importance of democratic governance in business and recognizing the collective threads that bind society together.

As we wrap up our thought-provoking exchange, we venture into the idea of democratizing the financial system itself. We ponder over the transformative prospects of giving workers and communities a managing stake in investment funds, the potential implications of a U.S. sovereign wealth fund, and the innovative roles of blockchain and DAOs in democratizing finance. Beyond the technicalities, we stress the imperative for individuals to proactively engage with the financial system, armed with the knowledge necessary to combat inequality and enact systemic change. Our collaboration with Oxfam America serves as a testament to the impactful synergy between finance and social justice, a partnership that we hope to see flourish in the hands of our informed and motivated listeners.

https://www.predistributioninitiative.org/

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Transcript

Joel: 0:33

What if investing in each other could change the world? I'm Joel Skeen with bizradious, and this is the Mindful Marketplace. Hey y'all, Thanks for watching. I just wanted to quickly inform you about my financial services agency, which operates in the life insurance space. So we help families with debt elimination plans and create tax-favored retirement solutions. We support small businesses, nonprofits, worker-owned co-ops, unions and social enterprises with employee and member benefits. We offer white-glove insuratec services to community banks, credit unions, financial co-ops and CDFIs, and we provide enduring acceleration and downside capture strategies for all kinds of investors. Check out the link in the video description and enjoy the show. Welcome to the Mindful Marketplace. I'm so glad to have you here today.

Delilah : 1:30

Thanks, joel, it's great to be here.

Joel: 1:32

I'm really excited to get to talk to you as part of this special series that we are doing for Neighborhood Economics and the upcoming conference that they're holding in San Antonio at the end of February. Yeah, there's so much that we could talk about with you. I know you have worked with the UN development. You run your own consulting business all about the Pre-Distribution Initiative that I'm really fascinated to get into but I'm a little curious about your background and how you found your way I guess maybe as a better way to put it into the sustainable investing and impact investing world here.

Delilah : 2:17

Yeah, thanks, joel. So I've been interested in issues around post-colonial politics neocolonialism since I was in high school. I was an activist as a teenager and I was really into punk rock music and the socioeconomic types of punk rock music, and there was a whole scene where I was growing up in Syracuse, new York, that was focused on inequality global inequality, local inequality. It was the 90s, so concerns rising around globalization, but also a recognition that there need to be economic opportunities for people in developing countries, or questions around are they the right economic opportunities? And so this is something that was all in my radar as a teenager. I ended up studying history, politics and African studies in university and also doing some volunteer work in Tanzania and studying with Bill Easterly, who is one of the first proponents of trade versus aid, and those two experiences together really helped me see some issues with the aid industry in recreating cycles of dependency, and so I, despite my skepticism of capitalism, became very interested in attracting finance and capacity building, skills training to small, medium-sized enterprises in places like Tanzania, where I was doing volunteer work and where I saw SMEs that could use those kinds of resources to grow, and so I went into finance without knowing anything about it.

Delilah : 4:02

I was right around the time I was graduating from university and I pulled my dread box back in a ponytail and I tried to look professional and I did not go to the business school. But I crashed the NYU Stern career fair and I got a job in finance and I ended up working for the first four years of my career in public equities on the sell side. I was actually at their sterns during the financial crisis and by that time I had realized that public equities were not the right place for me to be. If I was interested in economic development work, that private capital was really a better space. Private equity, venture capital, private debt, wasn't really a major asset class at the time, so that wasn't something that I was focused on. But I was able to make the switch during the financial crisis to work in private equity, focused on Africa, and then eventually stayed in the space, focusing on private equity infrastructure and project finance and project development for the rest of my career up until 2019 when I started the pre-distribution initiative, and during that time I focused not only on Sub-Saharan Africa but also ended up engaging in private capital financing and developed markets as well, and I learned a lot about the way capital is structured.

Delilah : 5:23

I was focused on at first just managing financial models, pitch decks, raising capital but very quickly became focused on ESG and impact investing, particularly because the development finance institutions at the time were some of the early investors focused on those types of investing, and so I became familiar with the IFC performance standards on environmental and social sustainability and the environmental, health and safety guidelines of the World Bank and other standards, and over time also got involved with SASB, the Sustainability Accounting Standards Board, and IRS, the Impact Investing Framework that the Global Impact Investing Network was developing, gri.

Delilah : 6:05

I started using GRI and the Global Reporting Initiative Standards in our portfolio companies and realized that they were all very important frameworks, that they primarily focus on portfolio company products and services and activities and there wasn't really a framework that evaluated the investors themselves and how much return they got versus the stakeholders, the workers or community members in our investments. If we're investing in an infrastructure project in Africa, how much return stays on the ground with workers and the community members who gave up their land versus how much goes to the investors Another issue that really became central on my radar was.

Delilah : 6:51

I would go to these ESG and impact investing conferences and see some of the mega fund managers and private equity present on their commitment to the sustainable development goals that at that point had come out and impact investing, and yet their executives are paid way more than most corporate executives, you know, hundreds of millions of dollars.

Delilah : 7:16

That's exacerbating inequality and economic disparity and power imbalances globally and I genuinely believe is contributing to a lot of the polarization that we see today in society between the haves and the have nots, and I think that populists have real, legitimate grievances in terms of the way systems are structured.

Delilah : 7:40

And so all of this became central areas of interest for me around 2017, 2018. And I decided to leave the private equity industry so that I could start a. It's a non-profit the pre-distribution initiative and I was fortunate to have a fellowship from the Open Society Foundations to lead the launch of this non-profit, which is focused on helping investors see their blind spots in terms of the way they structure investments. They govern themselves the distribution of risk, return and value, and we're very focused on institutional investors. A lot of the great innovations in investing are coming from the niche impact investing space for high net worth individuals and family offices and smaller funds. But we really want to socialize those concepts of the institutional investors, to change sort of these mega forces that are driving our economic system as well and not just keep some of these really innovative ideas in the niche space.

Joel: 8:42

It's 2008, 2009. I mean, bear Stearns was kind of the tip of the spear of the financial crisis. It was Lehman Brothers and Bear Stearns were the first two that really fell. I'm curious what was the biggest kind of aha moment for you as that was happening?

Delilah : 9:00

To be honest with you, there was so much going on at the time with me personally in terms of my interest in Africa and just figuring that out career-wise and I think that I wasn't surprised about the collapse of the financial system. Bear Stearns actually had an amazing division that would put together sort of news headlines from these areas of financial markets all over the country and world and you could start to see some headlines from different regions about default rates spiking up and non-performing loans, and so I was not so surprised about the financial crisis.

Joel: 9:58

Because it did seem like there was a bit of a bubble mentality around the whole thing. Obviously it was a bubble, but there was sort of a thinking that like, well, this is just going to go up forever and we can just kind of do whatever we want. I don't know if you experienced that personally, but yeah, I'm wondering if there was a lesson that you kind of pulled out of that that sent you in a new direction.

Delilah : 10:19

Not really. I think it really was really unfortunate for a lot of people who are in the system who lost their life savings. That was tied up in the equity of, for instance, the managing directors at Bear Stearns and I think that for me, being young in my career, it gave me an opening to focus on what I really wanted to focus on. So it, for me, was just more of an opening to pursue other interests and I think, looking back, there's a lot to learn from the crisis that I'm still processing, but at the time, I was not really focused on the lessons learned from the crisis as much as I was. Just. This is an opportunity to focus on what I really want to focus on. And interestingly, I mean the crisis and macroeconomic dynamics at that time left a huge opportunity for sub-Saharan Africa to be focused on sub-Saharan Africa. There was a lot of activity there.

Joel: 11:36

Yeah, and when it comes to Africa.

Joel: 11:38

So you said something earlier about the difference between aid versus kind of investment and those two different mindsets.

Joel: 11:46

When we had Kevin Doyle-Jones on recently he was talking about sort of the pervasiveness of two-pocket thinking, where people feel like, okay, I've got to make money with one pocket as much as I can, no matter what at all expenses, and then on the other pocket I can give a little bit of that away in the form of aid.

Joel: 12:06

I remember taking an academic trip to Egypt for about three weeks and got to go to USAID. Got to go to USAID and to talk to the people there about what they were doing and I sort of had this kind of realization and sort of disenfranchisement a little bit with it, where I realized that the aid that we were giving it may have done some good, but it seemed like that wasn't really the purpose of it. It didn't really seem like the point of it was to try to do the most good with that impact with that money. Make the largest impact with that money was more kind of about serving the interest that we already had while putting kind of a nice face on the whole thing. Did you experience that? Is that what you mean by kind of the difference between investment and aid? What's your perspective on all that?

Delilah : 12:51

Yeah. So I think if we only focus on aid and not on investment, then we're not getting to the root of the problem. In many cases, I think aid and redistribution aid is different than redistribution. I mean, there's a Venn diagram, right, but let me focus on redistribution. So redistribution takes shape in many forms. It can be reparations to level the playing field, which we believe can be very important and meaningful. It can take shape in a form of taxes for emergency funds Aid is very important in emergency situations. It can take shape in taxes for social and physical infrastructure. That's really important for society. So we're in favor of a number of forms of redistribution.

Delilah : 13:49

However, when it comes to economic inequality, beyond leveling the playing field, you then have to fix the cycles through which wealth is created in the first place, so that you don't end up a few years later with a situation of inequality where multi-cumulated to very few individuals who might not have created, who might not have taken as much risk as other stakeholders and created as much value. I think we really underestimate the risk that workers and community members take, the value that they create, and so until we address those issues and also think about natural capital and the value that it creates and the risk that we impose on it and what it should be valued at. Until we address all of the dynamics related to our interpretations of risk, return and value, we're not going to have an economic system that distributes wealth evenly, and so we'll consistently run into the same problems. And that's why we're focused on redistribution, because that's the concept. Pre-distribution is adjusting the system so that we reinterpret risk, return and value and returns can be distributed more proportionally and evenly. We also to the spirit of much of what neighborhood economics that the community gets out.

Delilah : 15:11

We do also have strong interest in building more worker and community voice and investments as well. We're very interested in worker ownership models, community ownership models. We don't believe that that is, that those are necessarily silver bullets to changing the system. For instance, you, if you look at some of these hot buildings in Florida, they're pretty much governed by the community members who live in them and they're always fighting and picking on each other, and I'm sure there are a few that don't have those kinds of politics. But there are a few things that need to happen in parallel from our perspective in terms of changing the system toward pre-distribution, and that has to do with reinterpreting risk, return and value. And that's a cultural phenomenon. It's not just like the tools that investors use, it's all of us. And then, and recognizing that we're interdependent, we're dependent on one another, and then also, you know, thinking through how, how do we have more democratic governance of the investment space as well?

Joel: 16:21

Yeah, you know, I love what you're saying about the worker-owned stuff. I think that a lot of times when we try to think about and imagine solutions and it's funny because it does seem like we're living in a moment where it's sometimes even difficult to imagine how things could be different you know, I've started to say it's we there's this weird thing going on right now where it almost seems like in a certain part of our country and culture that it's easier to imagine terraforming Mars than, you know, having a different economic model, Right and so. But I think worker-owned is really one of those kind of key ways. And obviously, you know, this isn't about utopia, this isn't about trying to create a situation where no one has any problems, there's never any competing interests, there's never any fighting, there's never anything along those lines. But it does seem like there's a fundamental shift in what you said the democratization of business, of profits, of those things. Could you elaborate a little bit more from your perspective on how worker-owned models actually accomplish that?

Delilah : 17:27

Sure, there are a variety of different kinds of worker ownership models, and some include more engagement from workers, or democratic governance even, and some don't, and there's a spectrum, really. I mean there's. There's not even, I think, certain models that do or don't allow for that. I mean, it just depends on how you structure your investment. But data does show that worker-owned companies that have stronger worker engagement, those companies perform better, and so we believe that there's actually a strong incentive for investors, even those that are seeking, as they call it, risk-adjusted rates of return, to invest in companies that have elements of worker ownership or to provide private debt for these conversions.

Delilah : 18:25

And there are all different ways that these deals can be structured. I mean there needs to be worker voice, I should mention, in structuring the deal as well, especially if you're talking about, for instance, a conversion where the company takes on significant debt and it has a valuation, and then you wanna make sure that workers get a good deal there. And then there's also worker voice and participation in the actual company itself, and that can be workers having a representative or representatives on the boards of directors. I mean, if the company is fully worker-owned, then there's lots of space potentially for workers to participate in government. So I'm sort of rambling across different models here. But if workers are going to be compensated in equity, that it's not. And I'm saying compensated in equity, that's not the governance piece, that's the financial piece, right, but regardless they're not giving up the opportunity for freedom of association and collective bargaining, because that can be coming handy for them when they need it.

Joel: 19:41

No, absolutely. And I mean it's kind of like even I saw that when the private equity firm KKR, when they were chosen by, I think, simon and Schuster were being sold off, the ability to have a worker-owned model was actually a kind of a competitive advantage for them, that that was something that they wanted to have. And it makes sense, I think, if you think more long-term about things. This is one example. There's other examples of how things could be done differently and I think that it's just about thinking more long-term. I had on a values-based investment advisor, max Minns, last year and he was talking about how, if you're investing in a company and that company he was talking about sustainability and so he's like, if you're investing in this company, I don't really want to be investing in a company that's going to use up all of its resources in the next few years and then it doesn't have like, if it pollutes its own water source, like that's not really a good investment to make in the long run. And I think that there's an element to here for worker-owned, because no one business owner is going to live forever.

Joel: 20:49

Usually when those businesses get passed on to the next generation, they start to decline. Usually by the third generation. They're out of business and so actually selling those businesses off to the workers who actually are going to continue doing the work of keeping the business alive, keeping it profitable and keeping it growing, it just seems to me to be like a more of a long-term way to look about things. And that to me seems like what a lot of your workers really about is about just actually looking at how can we do these investments. Where it's, it may maybe it won't give us the highest rate of return possible this year, but if we look at it actually over the long-term and we look at not just us but our children and then their children and these seven generations out from now, that this is the kind of world that we want to create.

Joel: 21:37

In that kind of thinking and that kind of gets to me, to what you're talking about the difference between redistributive, which when I was in social work I was a case manager for chronically homeless folks and ran a food bank, and part of me loved getting to do that work, but another part of me, if it was painful to know just what a tiny band-aid it was, we were putting on a gaping gushing wound, and so it seems like your work with pre-distributive. Pre-distribution is a way to say, well, let's not just put a band-aid on this, let's not just kind of solve this in the short term, but let's actually look at how to change the way it works so that we're not running into that same problem again down the road.

Delilah : 22:18

Yeah, absolutely, and you just reminded me of something that I had intended to say earlier, but there was so much else to say that I mentioned this.

Joel: 22:29

There's always more left to say yeah.

Delilah : 22:32

Yeah, going back to that piece of our conversation on aid, the other issue with the aid that I think many of us in the impact investing industry are realizing is that it comes with power dynamics and so those who have wealth get to choose what impact issue they're gonna focus on and what the solution is gonna be.

Delilah : 22:52

And maybe they're saying, okay, well, we're gonna engage stakeholders and helping us figure out what the solution should be, but they choose the stakeholders to engage, they structure the intervention in many cases, and there are some, again, niche solutions to this that are emerging in terms of community-led funds and investment models. But that's I mean funds and investment models is really investing, and I would say in the aid industry you still have these and in much of the impact investing industry you still have these dynamics where it's the person who's accumulated so much wealth who gets to decide what the solution is gonna be and how it's gonna be executed and structured and so forth. So I think pre-distribution really puts resources in the hands of people who took risk and created value and they get the compensation that they worked for or that they gave something up for in the case of communities with giving up land in a real assets project, for instance, and then they can use the resources to solve their problems the way they want to without depending on other people.

Delilah : 24:13

And there are all kinds of ways that wealth shows up in decision-making and society, whether it's in politics and the wealth is influenced over politics, or large companies influence over politics. So pre-distribution also gets resources to small companies, small fund managers as well.

Joel: 24:32

And you said you guys do that by consulting with institutional investors on how they're going about. That is that right.

Delilah : 24:42

So so we don't do paid consulting at this point. We do provide advice and we work to produce research and raise awareness and engage with investors on helping them understand their blind spots. And why should they share more wealth and influence with workers and communities? How does that improve their long-term performance? You mentioned before that you know you might not get the best return in the near term. You might not be maximizing your financial return in the near term to do a particular deal that shares more wealth and influence with workers and communities. There are certainly some deals where you could actually say the return is better in the near term, but it might not be. But if our investments today are creating a system that is fostering instability through externalities, then if you're a pension fund or an insurance company or a self-regulated fund, those externalities are eventually going to catch up with you in your diversified portfolio and it's going to have negative impacts. This is the concept of universal ownership. But some of these investors these institutional investors are so large and so diversified they're exposed to every industry and geography and asset class and they can't diversify away system level risks relating to inequality or climate change or biodiversity loss, and so they really need to think about. How are we investing, what are the externalities that are coming from these investments positive and negative and how do we avoid longer term risks? The problem that we've seen in this space investors are starting to realize that they need to act as universal owners and manage system level risks, but their governance structures aren't set up to allow them to do that. They're not bad people, it's just the way the system has evolved.

Delilah : 26:38

These institutions typically evaluate performance based on performance of a portfolio or an investment relative to a historical or financial benchmark. But if you think about the financial benchmarks that the system has been using, they don't account for externalities, positive or negative. So if you want to invest sustainably moving forward, in your comparing financial performance of those sustainable investments to a financial benchmark that doesn't account for externalities and sustainability, then you're comparing apples and oranges. And particularly when we think about negative externalities that have not been priced in and how social and natural capital have been so undervalued throughout our understanding of the financial system, then if you really want to actually more adequately value social and natural capital moving forward, the financial benchmarks that we're using right now might be inflated and it could be hard for sustainable investing to compete on a level playing field moving forward. Now, if you also account for positive externalities, that might not be true, but I'm getting into some complicated stuff A few values, positive externalities and negative externalities then you might have a wash.

Joel: 28:01

Well, it sounds like what you're saying is and kind of the heart of it is going back to what you said earlier when you were talking about workers. It sounds like it's the same sort of thing where you said workers are underappreciated for the amount of risk that they take and also underappreciated for the amount of value that they create. And I think this idea of risk return value is it just that the way that we've thought about these things is too narrow?

Delilah : 28:30

Yeah, yeah, absolutely, and we don't have the financial analysis tools to think about these concepts differently. So risk Risk is often interpreted as just how far away are you from your benchmark. It doesn't account for externalities like real physical externalities in the system, right?

Joel: 29:03

And when you say externalities like what's an example of an externality for an investor or for a business?

Delilah : 29:10

We often think about externalities in the context of planetary boundaries and social norms like think donut economics, kate Rayworth. Okay, so if you're exceeding a threshold, right then. Or if you're contributing to overshooting on a threshold related to planetary boundaries let's say climate change or if you're contributing to vast inequalities, then you're contributing to externalities. We have science-based targets for climate and it could be helpful to develop some sort of similar framework, to the extent that it's practical and feasible, for social issues and other environmental issues as well.

Delilah : 30:01

They can understand how much they're contributing to climate change and then investors can say, okay, well, this company in my portfolio is contributing to climate change by this amount. Now there's still extra steps that need to occur in terms of the investor understanding how climate change negatively affects its portfolio when is that risk going to hit its portfolio and by how much? And we believe that there needs to be much more work done in collaboration between economists and scientists and financial services professionals to be able to come up with those methodologies so that investors can interpret risk differently in their assessments.

Joel: 30:45

And then what about, on the more like the value side, you mentioned workers and other pieces of the economic picture being what do you feel like it's overvalued and what do you feel like it's undervalued?

Delilah : 31:00

So financial capital, we believe, is very much overvalued. That's where this return gets attributed to. However, there's human or social capital that's very much undervalued. There's national capital that's undervalued I think, a popular topic when we talk about undervaluing a dynamic in the economy. There's a lot that's been done around care, work, right, so that's a typical example of something that's very undervalued.

Joel: 31:35

Yeah, I mean, I even think about. I was recently listening to a talk by David Graber after I read his book debt the first 5,000 years, love that book, highly recommend it and he was talking about the way that we value work and how you know when we think we always value production and creation of a new good more so than care and maintenance. And you know the thing. And he said and this kind of summed it up really nicely he said you know, a glass or a cup or a bowl only needs to be made once, but it needs to be washed thousands of times. But we don't really think of the washing as important work. We think more of the making of it as the important work.

Delilah : 32:18

Yeah, well, the first thing that comes to mind hearing you say that is the subway system in New York City. I lived in New York City 19 years and I have to say, you know, I've been traveling a lot recently and looking at the subway systems in other countries whether they're developed countries or developing countries compared to New York, it's just unbelievable the way we're allowing our infrastructure to decay. It's really scary, and I think you're absolutely right on that.

Joel: 32:50

Yeah, you mentioned earlier a topic that I think would be worth spending some time on here. You mentioned the idea of democratizing not just workplaces, but also democratizing investing. What do you mean by that?

Delilah : 33:04

I think that there are a lot of different aspects of the financial services sector and the economy, the market, to democratize. There can be democratization of companies, as you mentioned and as we talked about before. There can be democratization of infrastructure and there are great examples of different infrastructure projects all over the world that are structuring in community ownership, particularly in indigenous communities, like with the first nations major projects, coalition community in Canada. They have a number of infrastructure projects where communities are getting equity and potential governance rights in various projects and many of well, maybe not many, but you know you're seeing a handful of these projects emerge that also have institutional capital in the capital stack. So that's really interesting, I think.

Delilah : 34:10

When it comes to democratizing, investing, the first step I mean what comes to mind is workers and communities running funds or governing funds, and I think that we're very far away at this point in time, given the way the financial system is structured and the complexities of it and people's lack of interest in finance, from that, from that space. There are conversations about maybe having, like, a sovereign wealth fund of the United States or DFI in the United States that supports community investing or holds assets for for communities or individuals, citizens, and that's interesting, but it's very large and I don't think that democratic ownership will be very easy and this doubt concept, for instance in the in the blockchain space gets worked out, which I'm watching with interest, but I don't know much about it.

Delilah : 35:23

But generally, I think citizens eyes glaze over when they think about finance and oh yeah yeah, and mine used to, and sometimes still do, when I'm, you know, sitting in a conversation, but but I see people's eyes glaze over all the time when I talk to them about what we do and and you know, my friends and family who aren't in this space and but this, this work, is for them, but it's just not interesting, right?

Delilah : 35:52

So? So we're very interested in how do you engage the public and not just like the, the lefts and liberals. But I mean, as I, as I mentioned earlier on the call, there are very legitimate concerns among conservative populace about inequality, and redistribution could be a great tool for them to address their, their economic security concerns, and it could be a great way to to overcome polarization and to work on something together that's not divisive. So we're very, very interested in finding ways to reach everyday people to help them understand the power of redistribution, the roles that they can play, maybe suggesting worker ownership in the company that they work for or, you know, community ownership of a real-assets project around them. But that would be steps toward democratization of investment.

Joel: 36:53

Yeah, and obviously like the idea of democratization of things, you know it kind of can sound a little high-minded and, you know, empty-gesture-ish I guess in some ways, but it really would require, and I think you know there's collective issues but there's also individual issues and it really would require individuals to take greater ownership of the financial system. Right, and it's not just about kind of being handed the keys to something and say, hey, here, run it. But there's a responsibility, I think, on all of us to actually learn about finances. And obviously you know we've kind of been set up to not learn about it. We've been. You know our schools don't really do a good job of educating us about either personal finance or more macro finance. You know, with the financial services industry, which I'm a part of, there's a role to play in this where there's been a bit of a hey, you guys, don't worry about it. Only we can understand this, only we can handle this. And you know this is only for the experts, so to say. But realizing that it just like is like anything else, that it can be learned, it can be understood, it can be deconstructed and it can be reconstructed, and you know it just would require democratization of anything. You know it's not something that's just given. It is something that does require something of us to be kind of putting back into.

Joel: 38:16

That and I think part of it is what we were talking about before is kind of that cost of doing good. You know, when you are thinking about making an investment and you've got one investment over here that you know is, let's say, with your right hand you've got an investment that looks like it can get you a really high rate of return and you can make, you know, an extra 10, 15, 20% or something on it. And you've got another one over here that looks like, well, it's maybe only a 4%, 5%, 6%, 7% return, but it looks like it's going to be into something that is more sustainable which adds to the benefit of our kind of more collective society, which, in the long run, really helps all of us out. I don't know, there's like messaging that needs to happen, there's education, that there's so many things I think that need to happen around that and I don't know. I'm curious what you feel like is either, the most important thing that resonates with you on that, like what you know, what fires you up in that space.

Delilah : 39:13

So I can't say that this gets me fired up, but it's something that I've been thinking about a lot and I feel like it's something to grapple with, which is, I'm not sure that the argument that if you take a lower return, you know, if I take a lower return, I and everybody else is going to be better off in the long run.

Delilah : 39:35

I don't. I think that resonates with a certain set of people, but perhaps not all the decision makers in the system or all the many good decision makers. Just, you know, if we're going to be democratically governed, right, I don't even think that individuals in society necessarily it's in their, it's intuitive to them, especially when you have a society like the United States that's so focused on individualism. That sort of cultural dynamic I don't think is as motivating for people as saying if you continue to engage in activities that create these negative impacts, then those negative impacts will eventually boomerang back to you and your loved ones and affect your life in negative ways. And so it's a darker message and I don't love it. But really I mean there are ways to approach it.

Joel: 40:28

But it's a reality that you have to look at, you know.

Delilah : 40:31

Yeah, I think risk is, unfortunately, a more motivating factor for a lot of people than just like what's my potential additional upside if I take less right now, and so that's something that we're very focused on in terms of being able to put some definition around what's the magnitude of that risk? What's the shape of it? How is it going to affect you, whether it's for investors or individuals? I think we're going to have to think about those dynamics if we're going to have sustainable investing, regardless of whether it's democratic, sustainable investing or with concentrated power.

Joel: 41:15

Yeah, it's like it's because it's like there's two questions there. One question is what's the cost of doing good? What's the cost of you know doing things better? But if we ignore the question, what's the cost of not doing good? That is at our own peril.

Delilah : 41:30

Yeah, yeah, and I also just want to caveat what I just said. I mean, I don't really think sustainable, inclusive investing is possible with concentrated top-down dynamics. But I just clarify that previous piece of what I said.

Joel: 41:44

Yeah, yeah, that's the thing is. If it's going to be, you know, collective, it has to actually be collective, right? And so, yeah, absolutely. So. Tell me a little bit about what it is about neighborhood economics that you're excited about and why you are, you know, spending some of your time and energy on the project here with neighborhood economics.

Delilah : 42:08

Yeah. So I'm very grateful to Neighborhood Economics for hosting this convening and for the opportunity to participate. I'm excited about learning what different innovations are in this space and seeing how different forms of community ownership and governance are emerging. What are the models? What are the? What are the governance structures? What are the financial structures? What are the risk return profiles? What are small investments? What are larger investments? What can be taken to the institutional investment space and how do we position those kinds of opportunities or help those opportunities get to a size where institutional investors can be interested and start to shift their some of their Legacy ways of investing to these more regenerative ways of investing? So that's what I'm really excited about at the conference.

Delilah : 43:07

I Mean I don't think that I don't think I'm gonna go to the conference and walk away with like a handful of deals to pitch to investors, and that's not the way we work. So I don't want to diminish any expectations. We're I think we're real Big believers and just seeing you know, sort of conceptually, what's out there and what kinds of emerging asset classes we could help shepherd along and so forth. So that's the kind of role we see ourselves playing.

Joel: 43:35

Well, and as someone who's been to a fair amount, it seems like, of you know whether it's impact investing, sustainable investing or local investing type Conferences in the past, is there anything about economics? You see? That sort of sets it apart from the others you've encountered.

Delilah : 43:53

Yeah, well, I go to a lot of mainstream investing conferences, Focus on ESG and impact investing by. I would say that that there's not really a strong focus on democratic Governance yet there's. There's starting to be an interest mission KKR earlier. They're starting to be an interest in Worker ownership. I think community ownership Is more nascent, but there's that interest as well. But when it comes to to governance, I I it's not a major topic at the conferences I typically go to. So Looking forward to being part of that changing over time.

Joel: 44:34

Yeah, yeah, absolutely I. I love that. It's bringing together all types of people, people you would not expect to necessarily be at the same conference together, but who all can see a unified mission and not kind of put away the litmus tests, put away the divisions, put away the other disagreements for a while and just focus on the fact that we are neighbors to each other. We all are each other. That's kind of how it works and that when we invest in each other, we are investing in ourselves. And to actually get on boots on the ground and like put some real Understanding around how that can actually happen and what it actually looks like Across the board from all of these different great organizations, whether it's purpose-built communities, you know, whether it's the work you're doing, whether it's the work that Michael Schuman is doing with his local investment I'm in the kind of this the sea, the desif's, the diversified community investment funds and all that kind of stuff.

Joel: 45:26

So I'm I know I'm personally very excited to get to be there. I'm excited to get to meet you in person and spend some time with you and the rest of the cohort there. Yeah, any, any, any last words that you would give to the listeners out there who are interested in these topics but, you know, maybe aren't sure what to do next, or kind of how to, how to how to move their money or how to be just more, how to run their business more Democratically, or whatever the case might be, what, what would you, what's your perspective and where would you leave things there?

Delilah : 46:03

Well, I'll have answered this question and have just filled on the last piece of what we talked about, because I I Realized that in saying that democratic governance is not really on the agenda of some of these institutional Investor conferences.

Delilah : 46:19

It's not just that it's not on the agenda, but I think that a lot of institutional investors are just used, particularly in the private capital spaces, but also in public equities are used to having some degree of control and influence and I guess with that financing it's different. But but with equity investing I think it can be a little scary for these investors to to share control or to give up control. And so, thinking about you know what's the what's the value ad here of democratic governance and why does it help investors to share influence with workers and communities? That that, I think, really needs to be built out more, whether it's through research. We were writing a Paper that's coming out in a month or two with Oxfam America on this. It's very high level, but we perhaps we will find some partners at the conference or or work on some sort of initiative Together to to build this kind of content out.

Joel: 47:33

Yeah, absolutely. Thank you so much for your time here today, thank you for all the work that you've done. It's so neat to meet someone who also kind of started in the you know, social justice world and then went finance and then is figuring out how to blend those two things. So I am really grateful for your time here today, yeah, and for all of you listening out there. We'll be continuing this, this special series that we're doing here and, as we always end the show with, remember until next time we are each other, oh.