Show Notes
On this episode of Nuance, Jeff and Jonathan Shafer join Case to discuss impact investing, the intentional placement of one’s investment capital in projects that both generate profit and positive social outcomes. The Shafer brothers share examples of their projects, such as investing in renewable energy and affordable housing in Africa. They highlight the need for electricity access and the positive ripple effects it has on education, healthcare, and the economy. They also emphasize the potential for investors to experience joy and freedom through impact investing.
Resources from the episode:
A New Lens Podcast with Jeff Shafer: https://commongoodcap.com/podcast/
Common Good Capital: https://commongoodcap.com/
Climate Smart Forestry: https://www.climatesmartforestry.org/
Faith Driven Investor: https://www.faithdriveninvestor.org/
17 Sustainable Investment Goals: https://www.mycnote.com/blog/impact-investing-and-the-united-nations-sustainable-development-goals/
Tom Nelson’s The Economics of Neighborly Love: https://www.ivpress.com/the-economics-of-neighborly-love
Fair Trade Practices: https://fairtrade-advocacy.org/definition-of-fair-trade/#:~:text=Fair%20Trade%20is%20a%20trading,workers%20–%20especially%20in%20the%20South
Nuance is a podcast of The Collaborative where we wrestle together about living our Christian faith in the public square. Nuance invites Christians to pursue the cultural and economic renewal by living out faith through work every facet of public life, including work, political engagement, the arts, philanthropy, and more.
Each episode, Dr. Case Thorp hosts conversations with Christian thinkers and leaders at the forefront of some of today’s most pressing issues around living a public faith.
Our hope is that Nuance will equip our viewers with knowledge and wisdom to engage our co-workers, neighbors, and the public square in a way that reflects the beauty and grace of the Gospel.
Learn more about The Collaborative:
Website: https://collaborativeorlando.com/
Get to know Case: https://collaborativeorlando.com/team/
Episode Transcript
Case Thorp
Welcome today, friends, to Nuance: being faithful in the public square. I’m Case Thorp, and I want to encourage you to like, subscribe, and share who might need to hear this word in this interview today that really helps us out. So as I’ve explained on the last couple of episodes, we are approaching our work at the Collaborative a bit differently today; we’ve expanded our focus from just faith and work more to the impact of culture. So this podcast Nuance, has been nuanced, if you will, a little bit by weekly guests on various topics that impact faith and public square. And then we’ve got our new Formed for Faithfulness, 10 minute episodes on spiritual formation. So check that out.
Well, I’m excited today to speak with what are known as impact investors. Impact investors. These are brothers, the Shafer brothers, who are working on both sides of the Atlantic for the benefit of others. Now the marketplace, as we know, is a key corner of the public square, if not my goodness, a huge fountain right in the middle of everything that we do in society. I’m fully convicted that capitalism is one of the greatest forces in the world that’s lifted people out of poverty. Now it’s got its shortcomings here and there, but if guided by Christian principles, it really can bring great flourishing to others. So joining us from Winter Park, Jeff Shafer, thanks for being with me.
Jeff Shafer
Great to be here.
Case Thorp
And then Jonathan, you are based in Kigali, Rwanda, but tell us where you are today.
Jonathan Shafer
Yep, based in Kigali but currently in Dar es Salaam, Tanzania. Easter holiday with my family heading to Zanzibar tomorrow, but it’s great to be here.
Case Thorp
Oh man, that’s really cool. Where did you spend your spring break? Ah, Zanzibar, you know. You know.
Jonathan Shafer
Yeah, a little different experience growing up with my kids.
Case Thorp
Yeah, really describe your view out the window right now.
Jonathan Shafer
Yeah, I wish I could show you. I’m about 12 stories up overlooking the harbor area of Dar es Salaam. It’s overlooking the Indian Ocean. It’s beautiful. It’s almost sunset here in Tanzania. It’s a beautiful place to be talking to you all.
Case Thorp
Oh, that’s cool. So it’s sunset for you. It’s 10:15 in the morning here in Eastern Time Zone. Jeff, what does your view out the window look like in Winter Park?
Jeff Shafer
Well, I live essentially on a little public nine-hole golf course. So I overlook, actually I overlook a church and then I overlook the third green of this golf course. And there are beautiful oak trees that are also before I see the golf course. So that’s what I’m doing. That’s what I see today.
Case Thorp
Okay, a lovely view, but certainly not near as exciting as Jonathan’s. Well, friends, I want you to know about these two fellows. So Jeff attended Wheaton college, got an MBA from Rollins, married for 20 years to the amazing Shelley. And let me tell you, I don’t know Jonathan’s wife, but I know Shelley Shafer and she is the bomb.
Jeff Shafer
By the way, Case, I gotta jump in here, Case, because it’s 26 going on 27 years.
Case Thorp
Oh man, I don’t want to get that wrong. We would upset the amazing Shelley. Wow. You got to update your bio, dude. They have two wonderful children, Ellie and Nick. Jeff’s background includes Morgan Stanley and TriLink. 18 and a half years at CNL. And for those of you who aren’t Orlando based, CNL is one of our major companies here. Jeff, isn’t CNL like the only Fortune 100 founded in Orlando?
Jeff Shafer
Yeah.
Case Thorp
Fortune 500.
Jeff Shafer
Man, you’re asking a question that I don’t know the answer to.
Case Thorp
Yeah, I heard that. I don’t know if it’s Fortune one or two or something like that, but it’s a big deal here in Orlando and he’s a leading alternative investment asset manager in a number of those places, and raised nearly $9 billion in capital. He’s co-founder with his brother, Jonathan, and CEO of Common Good Capital. And that’s what excites me and brings us to this conversation. He said strategic development and leads the day to day through common good.
Now, Jonathan, suffering in Dar es Salaam, Tanzania, is a co-founder with Jeff and the chief investment officer for Common Good Capital. Now, his background is quite interesting and creative. He went to Loyola, Chicago for his undergrad and then Yale Business School, involved with MCG Capital and also developing world markets.
I mean, Jonathan, you’ve co-founded a lot, dude, a lot. And I’m curious how many of these things are still going. So co-founded CFL Africa Group, a holding company based in Rwanda that acquires, creates and operates durable companies for the continent. Africa Felix juice. What is Felix juice?
Jonathan Shafer
So AfroFelix Juice was a, or is a fruit juice concentrate manufacturer in Freetown, Sierra Leone, where I was based. I lived for two years, two plus years, worked for about six years. It’s on the other side of the continent from where I’m sitting today. That is still operational by the skin of its teeth, but it’s still operational. And CF Lafrica, which is, it’s morphed into a company called Fortis Green. That is, that’s the main company that I run today here in Africa.
Case Thorp
Okay.
Case Thorp
So you co-founded First Step, a 50-acre special economic zone in Sierra Leone, co-founded and was CFO of Samaishi Africa Limited, where he secured more than 200 million in investment capital for a green field steel mill and a power plant. And Jonathan, you’ve got a family of four. What are the age ranges of your kids?
Jonathan Shafer
Yeah, so I’ve got two kids. Actually, tomorrow is my son’s birthday. He’ll be 12 years old. And then my daughter turns nine in about a month. I’ve been married to my wife, Ryan, for 20 years now.
Case Thorp
Oh, I see. I said family of four, but that means mom and dad too. Not four kids. Yeah.
Jonathan Shafer
Well, I didn’t want to directly correct you, so I wanted to do it a little more subtly.
Case Thorp
Well, getting two kids across Zanzibar is probably a whole lot easier than four. Okay, so what did I miss in those amazing bios? I mean, are there certain aspects that you want to emphasize?
Jonathan Shafer
Yeah, yeah. Jeff, you start.
Jeff Shafer
You know, I’ll throw in one thing for me, and I don’t normally put this in my bio, well it depends on which bio. When I was a freshman at Wheaton, so 31 years ago, God planted a seed and a passion for men and women behind bars. And so that’s a significant part of my life. It’s never been the main thing that I do. It’s always been more going into prisons, you know, supporting financially and other things, but I’m anxious to see, well, and in the last three years, my wife and I have been investing in some businesses that are either run by or, or hire formerly incarcerated. So we’ll see where that goes in the second half of my life as well.
Case Thorp
Very interesting. Another form of impact investing, I bet. Jonathan, anything to highlight?
Jeff Shafer
Correct. Yep.
Jonathan Shafer
I think the only thing I would just add is about a year ago I crossed the more than half of my career has actually been based in Africa. So investing in and living in Africa and if you had told me that was going to be the case when I was an undergraduate at Loyola in Chicago, I certainly wouldn’t believe you. It certainly wasn’t, and maybe we’ll get more into this, but it certainly wasn’t the plan. So excited, excited to be here on this comment.
Case Thorp
So when in your journey did you get there and did that become your focus?
Jonathan Shafer
Yeah, well, I mean, it’s a longer story, but the short version is I was working in private equity for MCG Capital, who you mentioned, in Washington, DC. My wife and I were two, three years into our marriage. We’d grown up believers, but I would say, we didn’t really meet Jesus really until this season of life. Things got really tough and we won’t go into all the details. But it was a very, very difficult phase of life. And on the back end of that, God changed the way that we viewed our lives. I wouldn’t say we were living completely closed-handed, but we weren’t living completely open-handed. He kind of forced our hands open and said, you’re going to live like this. And so it was right around that time that we got very involved with homeless ministry in Washington, D.C. Maybe that feels like a bit of a stretch to get to Africa, but it was effectively God showing us the poor.
And that it’s a longer story, but that culminated in us moving to Sierra Leone, West Africa, very, very poor, ninth, tenth poorest country in the world in the summer of 2008. So I left my job in private equity. We moved there in July, Lehman Brothers fell. You know, the great recession kind of kicks off in September of 2008. Thought we’d be there for a year, you know, and here we are in 2024, having spent the majority of those last years.
Case Thorp
But what was that draw? Was it adventure? Was it capital opportunities? What drew you there? Faith?
Jonathan Shafer
Yeah, look, there’s a few things I would say. Certainly adventure. Yeah, yeah, yeah. Certainly adventure. Certainly feeling like there was a calling. But if I’m totally honest, probably a little bit of trying to earn my salvation.
Jeff Shafer
I’m anxious to hear are you going to answer this by the way.
Jonathan Shafer
Right, a little bit of like, you know, let’s go do something really sacrificial to, you know, make up for maybe some shortcomings in the past. And I think the beautiful piece about that is God took that. And I mean, it wasn’t all, it wasn’t all for the wrong reasons at all, but God took what may have been done for partially, un-fully developed reasoning and just completely transformed our lives, blessed, and really lit our hearts on fire for this continent, for the people of this continent, and for the way that business and investment and capital can positively impact people on this continent. So yeah, again, it’s a much longer story, but I’d say that’s the high-level view of it.
Case Thorp
So Jeff, did he get it right or what’s the real story?
Jonathan Shafer
Ha ha.
Jeff Shafer
No, he got the real story. You know, it’s funny because I don’t really talk about this much, but I will say I just came up the other day and so full transparency Jonathan. One of the ways that I will characterize it and it’s not I could be wrong, but I said there’s almost I just said a different version. I say there’s almost like a little bit of a penance that I think that he was going to Africa for, which is essentially what you said. So.
Jonathan Shafer
Hmm.
Case Thorp
Mm.
Jonathan Shafer
Yeah, yeah, I think that’s right. And actually, I think that’s what is so beautiful for me looking back is God, you know what I mean, God is just, let me say this way, we feel so lucky to be able to live where we live and to do what we do.
At no point do I feel like, oh, I’m missing out. Or there’s some, I think other than being away from friends and family in the US, we feel like we’re exactly where God wants us. And that’s a really, really beautiful place to be.
Case Thorp
Yeah, for sure. Well, impact investing, that’s the phrase we’ve used. And I think I know what it means. I know perhaps some of our listeners do fully or have this is their first time hearing that phrase. So Jeff, tell us, what is impact investing?
Jeff Shafer
Yeah, so I don’t want to make this too drawn out, but it’s an interesting question because I think you’d get several answers, especially in the faith community. So the whole general idea I would say is it’s this idea of investing for financial returns, but it’s also intentionally investing for some type of outcome or impact, either socially, environmentally, or I’ll expand to the faith community spiritually. And it’s not just, hey, because to some degree, every investment does impact those other variables I just mentioned. But the question is, is how intentional are you about it in the investment process?
How much do you actually measure, not only a financial return, but the impact, and how much do you report on it? So high level, that’s what I would say impact investing is. I’ll go one step further. You can think about impact investing, and I don’t really call it impact investing, but you’ll hear it in the marketplace. You can buy public stocks and bonds or stuff that trades on the exchange and you can screen, either screen stuff out or screen things in based on values and that kind of stuff. Generally, impact investing we tend to think about and the industry generally would it’s investing in private entities. The only reason why I bring that up is when you invest in private entities, real estate, you know, private companies, infrastructure, I mean, loan, direct loans. Oftentimes the linkage is easier seen and understood versus, hey, I bought an ETF and they screen out Pepsi, but they add Coke because of some nuance.
And so I’m not disparaging that side, but generally impact is private stuff where you can go in and go, oh, I own 20 assisted living facilities who are trying to take care of the elderly at a reduced rate or something like that. So that’s what I would say.
Case Thorp
Yeah. Now, would one think that impact investing, you’re okay with a lower return? Or is it competitive with normal returns?
Jeff Shafer
Yeah, so it’s interesting. So I spent the first 20 years of my career in traditional finance and the whole goal there, yeah, the primary goal there is the financial return. That’s not to say that anything I was involved in or did was morally wrong or unethical or anything like that. So when you come from that environment, which is the way most of the world is, this question naturally comes up of, well, do you actually have to sack price return? And we won’t go through the whole debate on that, but I will tell you this. There is some impact investing that would be more impact first, meaning they’re trying to drive impact first, but you still are trying to get a return. In that example, you probably are giving up some return. The problem is that’s where people think everything resides, which is not the case. There are plenty of what we call market rate impact investments where you’re trying to drive equal, if not above market rates, competing with traditional finance people. And part of the thesis there is it unlocks creativity and innovation and new ways of thinking when you start adding these other impact variables. And so one of the thoughts is you actually serve your customer, your clients, all this better. And so you actually potentially could outperform traditional investment. But these are debates that could go on and on. But the short is, you do not necessarily have to give up return, which is the general pre-step position that most people come into this.
Case Thorp
Jonathan, what would you add to what he said about impact investing?
Jonathan Shafer
Yeah, I think it’s helpful to understand really where impact investing came from. And its genesis was really in foundations who were really thinking about how do we make business-driven, what’s called program-related investments. And so the reason why I think that’s an important point is because impact investing as nomenclature really came from the impact first side of the equation. And it’s evolved over the last 15, 20 years. And the idea of what an impact investment is, is changing and continues to change. I think there’s definitely been a shift more back towards, or I should say not back towards, at least equal weighting for impact and return, with an understanding that in order to attract the large amounts of capital that are required to solve some of the world’s greatest problems, the way that you mobilize large amounts of capital is you actually make money for it. Obviously charitable capital can be utilized in lots of ways, but there’s a limited pool of that capital relative to the amount of investment capital. So all that to say is there’s an evolving dialogue in this space.
Case Thorp
Hmm. So I think it’s fair to say on the US side, the capital comes about and then it’s applied on the African side. Does it is there ever a verse in that? Do you ever have African investors?
Jonathan Shafer
So in what we’re doing, no.
And that’s partly because the industries that we’re investing into are our capital starved from a, from a local investor perspective, meaning that there’s more capital required to serve the industries that we invest in, specifically renewable energy, specifically middle income and affordable housing that is available in the local context. That said, we really want to have local investors in with us. And so we’re actually, it’s interesting timing because we’re in active dialogues right now to figure out how we can get local investors to participate with us, our American investors. The rowdy is, and I think this is, I think if we kind of liken this to the global missions movement, right? Most capital for global missions comes from the West. And in the same way, most capital for impact investing is coming from the West. However, just like there isn’t in the missions movement, there’s a push to have more local involvement from an impact investment capital perspective.
Case Thorp
Sure. Can y’all give us an example of real projects and ways that you’re doing this?
Jeff Shafer
You want to go first, Jonathan?
Jonathan Shafer
Sure. Yeah, I can go first. You know, so for context, so we invest in two industry verticals across Africa. We have four-to-screen renewables, which invest in renewable energy across six countries today. And then we have four-to-screen housing that is developing middle-income affordable housing. So if we look at the energy side, just for this example, just to give you some context, we have 600 million people, half of the population of Africa that doesn’t have access to electricity.
Jonathan Shafer
You have another 250 million people that have access to electricity, but it’s insufficient. It’s poor quality, it’s off for multiple days at a time, etc. This as you can imagine has a fundamental impact on education outcomes, on health care, on the economy, a variety of different avenues. There’s actually interesting stat that…when a household that includes women are connected to electricity for school-aged girls their dropout rate reduces by 50% within the first year of being connected to electricity because they have more free time they have the ability to go do other things so just to give you that context so an example would be an investment that we made in a group of hydropower assets.
This is eight hydropower projects, these are hydropower projects, relatively small hydropower projects, about 2.4 megawatts of total power production. But we also own, built and own a grid, right? So the national grid, the Kenyan grid connects to this area, and this area happens to be a very rich economic area, very crucial in the tea industry for Kenya. Lots of tea grown there, lots of tea processed there, factories, etc. is very low quality.
Most households aren’t connected to any power whatsoever. Most businesses, even if they are connected, they lose power three, four, five days a week. And so this particular investment that we made, we invested about $1.5 million along with our partner. And so ultimately, once all eight projects are fully built, there’s four operational today, you’ll have about 2,500 households connected. You’ll have three tea factories connected. Three tea factories employing upwards of 75 to 100 people buying tea from 500 to 1,000 tea farmers, will be connected to hospitals, to schools, et cetera. So I think this is a great example in our portfolio of a very direct need that’s being met through investment capital, but also…
I mean, the reality is, and some people maybe feel bad about this, but it also has the potential to create a really great return for our investors, which then gets them excited to do more of this type of thing. But that doesn’t negate, I think it actually amplifies the impact that we’re able to make through these types of investments.
Case Thorp
Sure. Hmm. Wow. That’s I can just see the multiplier of impact when you target electricity. Now, would your investor though have to have a higher risk tolerance just because of unstable governments and the other social issues that plague the continent? How do you overcome that?
Jeff Shafer
Thank you.
Jonathan Shafer
Hmm. Yeah, so that’s a great question. It’s a great question. So is there risk? 100% there’s risk. Is the risk, the actual risk, relative to the perceived risk the same? No. And that’s coming from somebody who’s been on the continent, you know, the majority of my time since 2008.
So does the investor have to have a higher risk tolerance? Generally speaking, yes, because they’re investing outside of their home jurisdiction, outside the United States. So really for us, the challenge is not, what’s the risk of this particular investment, Central Kenya? Really what we’re trying to overcome is, what’s the risk of investing in Africa more broadly?
And I know nothing about Africa other than war, famine, disease, poverty, all these things that I see on the news. And so really what we do is we’re really telling a different side of Africa, which I would say is actually the real story of Africa, which is demographic growth, population expansion, very young population, rapid GDP or economic growth, and really a pretty stable environment to invest into. Now, is there a risk, of course, but really we’re addressing some more macro questions around Africa as a whole. And so, yes, I would imagine that most of our investors have a higher risk tolerance for this type of investment, but a lot of them are investing really for diversification. So it’s not a standard answer, I guess, is the way that I would answer that shortly.
Case Thorp
Yeah, no, that’s great. And that makes a lot of sense and they’ve got to trust you and get a greater sense of the data and the statistics and push past the perception. Well, Jeff, a minute ago, you mentioned the outcomes, socially, environmentally and spiritually. Now ESG has been so controversial as of late in the US business context. And those are the environmental, social and governance measurements that are being attempted to put on different corporations. How would you say this is similar or not ESG?
Jeff Shafer
Yeah, so go back to my earlier definition. Generally, on the public side of investing, exclusion or inclusion, generally what people are talking about are ESG. And so at one level, and it’d be very simplistic, and I know some people will disagree with me on this, but this is, actually this discussion is a worthy discussion because…
I don’t agree with everything on the ES&G side, but at one level, let’s just say it simply is collecting data to better inform people of what’s happening in a company across these three metrics. I think the real question becomes, how does one use that information to make an investment decision or investment policy? And I think that’s where you start getting into worldviews that can have differential views and you get clashing of the worldview. So let me give you where I think. Let me give the narrative of what I think is happening today. So and it’s what Jonathan alluded to, some of this. So I don’t know if people can see me, but like nonprofits have this much capital in the world, very little capital. It’s a very, very little bit. Governments have more, but governments don’t make any money. They just take money and redistribute it however they need.
Case Thorp
Yeah. And that’s a little bit, yep.
Jeff Shafer
All the money in the world is sitting in or majority of the money in the world is sitting in business and investments. So guess what- the world now is waking up that that’s the reality. So there is this battle going on that says based on one’s definition of good I want to allocate my capital in line with that definition of good.
So really what you’re seeing played out is, and it’s very simple is, what’s your definition of good? And so the problem is, if I go both extremes, whatever the both extremes are, they just assume their definition is good and everybody else is bad. And the truth is there’s probably more commonality there. There’s probably a different why behind it, but there’s commonality. So…
Case Thorp
Mm, totally. Yeah.
Jeff Shafer
That’s what’s happening in the world right now. And I think that will only continue, especially when you start dealing with, you know, where economies and governments are just in its life cycle with interest rates, with debt levels, with problems in the world. So everybody’s trying to figure out how do you maximize and use capital. And so you’re going to continue to see this battle. So what I would hope is, but you just look at our political environment that one could get in a room and start to have a definition or have a discussion around what is how should we be allocating capital to what things and what yeah so that’s what I would paraphrase this for you.
Case Thorp
Well, and I know somebody may not like me saying this, but give me a second people. Like I’ve thought ESG in a way does sort of reflect our biblical principles of, hey, in capitalistic environments, care about the literal environment, care about the social impact and how you’re doing governance. I’ve always found the struggle though has been, like you say, whose definition of the good in each of those. And when some places have chosen to make that definition quite progressive, well, then you get the pushback more from the conservatives. And I don’t know, do you think over time, a communal understanding or standard for those ESG categories will happen?
Jeff Shafer
Well, so first of all, I was on a call yesterday and I won’t say with who, but they were talking about a big asset manager that you would know and they’ve dropped even using ESG as an example. I personally believe that more of this will go to the impact discussion, meaning let’s have transparency of what you’re trying to influence and how you’re measuring that. And let’s report on that because it becomes more transparent and it’s harder to assume there’s some hidden agenda when you go, these are the things we’re trying to impact. Now you may not agree or you may not align, okay, but we’re not playing games, this is what we’re doing. So I think that it will move more towards, let’s talk about the outcomes.
Case Thorp
Yeah.
Jeff Shafer
And then you make a decision, are those outcomes that you want to support or not support? That’d be my take of where I think this goes.
Case Thorp
Yeah. In the past, we’ve sort of done ESG being against child labor and minimum wage and environmental expectations for particularly like petroleum companies and such.
Jeff Shafer
Okay, so I want to add one other thing. I think it’s easy for the faith community to disparage the ESG movement. And all I would say is, I think there is some truth in there and I think there is some goodness. And I think understanding why that’s out there and why people, why ESG, like, I think you got to understand that there’s truth in that. Now, everything, you know, we don’t have to agree on every little thing, but I think just dismissing it, because at least what it’s acknowledging is, oh, our capital has power and impact. And we need to be thoughtful about how we are using that towards environment, people, faith, all that kind of stuff.
Case Thorp
Yeah, yeah. Well, and as Christians, we know we’re sinful and so too are our companies. They’re broken and they will prioritize that profit at the expense of others. Jonathan, your reflections on this and maybe how have you seen this on the ground in Rwanda?
Jonathan Shafer
Yeah, I mean, I’ve thought about this a lot. So I think just to add on to what Jeff said, there’s been some pushback, and I think some valid pushback against the ESG phrase slash mindset.
However, I think we as a church, we as a faith community have to be really careful to not do that at the expense of basically leaving the playing field. Right. And I think if we just look at the way that the secular world, the secular world is extremely good at putting their capital behind the values that they want to see moved forward, both their charitable capital and their investment capital. I would argue that we are not as good at that. We’re good at that with our charitable capital, with our ties and our offerings and our donations, but with our investment capital, in the impact world, we don’t have as frankly, we just don’t have much of a voice in the broader discussion. It’s coming, but it’s slow. And so I really long for the faith community to be more proactive, to be more seen and heard in the impact investing space. Because we have great values, obviously. I mean, I’m from this community. This is core to who I am. These are things that need to be backed and supported. But I think in some ways, we’re not playing the role that we could be playing.
Case Thorp
Mm-mm. I can imagine a little.
Jonathan Shafer
You know, so then how do I see that playing out here in Africa? Most of the players are non-believers, right? The vast majority of the players are non-believers. Or at very least, they’re not investing or operating with any type of intentionality from a faith perspective. And there’s a lot of people playing in Africa from an impact perspective for obvious reasons. There’s lots of problems that need to be solved here. But we don’t see, and we see the church act in lots of ways, and I don’t need to minimize the church’s activity whatsoever. We see the church active here in lots and lots of ways. But on the impact investing side, at least in Africa, it’s certainly not as robust as it could be.
Case Thorp
Okay, speak to me as your average Joe where I’ve got stocks and bonds and my retirement plan and even some investors that may have property or even investing like y’all did at CNL here locally or in the States. This might be a new idea to them. How would they go about looking at their current portfolios to think about the impact they’re making good or bad?
Jonathan Shafer
Go ahead, Jeff, you can start.
Jeff Shafer
Yeah, by the way, I think there’s a number of ways you can get into this. So let me just explain one way. Well, I think let me let me go here. I think the first thing that has to be determined is A) recognition in some form or fashion that a we’re stewards of our investments. And then B), we have a responsibility to think about how it’s invested apart from return. If you don’t start with those two things, I think you kind of naturally stay the course of probably what you’re doing. So there’s a process there. And then I think there’s also a process of saying, all right, so what things am I passionate about? What things would I love to invest in? And so part of the reason why we started Common Good is there isn’t a great way because it’s still too new down to the individual investor. Like there’s no great way to even know like all the different impact themes that are out there.
So, for example, we’ve done stuff in what’s called climate smart forestry where you’re dealing with timber land in a specific way. There’s affordable housing, there’s lending to groups who historically maybe it’s hard for them to get capital. So one place I would go and there is a movement out there called FDI, Faith Driven Investors. So you could go to kind of their website, check them out. On the secular side, there are what are called the 17 Sustainable Development Goals. And you could go see that. And those are those are 17 goals that 200 countries have decided they want to try to make a difference in. Not all of them are necessarily investable, but some are. But I think it’s defining some of the things that you care about.
For me, formerly incarcerated. Now that’s not an easy thing to find, but because I do what I do, I’m able to find some of that. And then probably it’s a matter of talking with their financial advisor and even just saying, hey, can you look at my portfolio and which you could quickly look at it and see if there’s any overlay where you’ve thought about values or how it’s impacting others. And really how the change I think happens in a big way is when financial advisors who control. Trillions of dollars of capital the more they help their multiple clients figure it out. That’s where this space will get larger very quick.
Case Thorp
Yeah. Sure
Jeff Shafer
So those are high-level generic things and Jonathan, you could probably add to that.
Case Thorp
Well, let me throw in though, like for the listener, I mean, y’all are not crazy liberals. You are, I would imagine, politically conservative and you’re certainly evangelicals. These are to me, ways of being responsible, ways of, as a disciple of Christ, thinking two and three and four steps beyond my invested dollar that is not just about the financial return, but these other things matter.
This morning I was teaching our Gotham Fellowship on cultural renewal when it comes to economics and Tom Nelson in his book. Oh, what’s it called?
Jeff Shafer
Mm-hmm. Yeah, I’ve read it.
Case Thorp
The Economics of Neighborly Love. That’s right. Economics of Neighborly Love. He mentions just what you mentioned, Jeff, that you got to start with stewardship and love neighbors. And are you going to be a steward as scripture calls? And are you going to love your neighbor? And that means more than just your individual hands and presence. It means the expressions of your life in and through your investments to corporations and such that are impacting others.
Jeff Shafer
Yes. Case, let me give you one other little snippet that was helpful for my own transition from just traditional to now thinking about impact. So I’ll make this really quick. So at 20 years, at a major institution, talking to thousands of financial advisors around the country and I had a back surgery, it woke me up, I saw the world differently. And most people talk about impact investing in this angle is that ultimately what drew me into it was there were some affordable housing opportunities that were in the Southeast. And I heard two residents talk about what it was like living in these communities prior to a group coming in, buying them, putting capital into them, but equally important, putting new management who loved on these residents.
And one of the residents said, they’ve given me my dignity back. And another one said, and now I’m so excited to have people come to my house. And so that’s when the light bulb went on to me of how powerful when you use your intellectual investment brain, and I’m going to get touchy feely and bring your heart into it, you serve and love these people in a different way. And I could take you on all different types of investments and talk to people like on the ground in Africa and here in the United States. Here’s what it did. And you will be connected and you will actually experience joy and freedom on the investing side.
So one of the things that drew my wife and I to this is. The impact that it had on us and Jonathan mentioned open-handedness. So when you take not your charitable capital, because that’s kind of discipline. When you take your own capital, your corpus that you’re going to use for yourself for retirement and you say, now, how do I use this for the kingdom and you risk for the sake of others?
The normal emotions of fear and greed that you’re gripping onto can melt away and you can actually experience joy and freedom. For the first time, my wife, you know, this is now 10 years ago, she wanted to know how these investments were doing, not only because of return, frankly for her, what, how we impact in the lives of these residents. So it’s not even just for others. There is a change of heart for the investor.
And that’s really what excites me about this. And specifically like the stuff that Jonathan’s doing, man, to engage thousands of investors, hearts towards Africa is huge, but it’s also different than just engaging their philanthropic side. You need both, but we know that where your capital, where your treasures are, your hearts will follow. And so on the impact investing side, huge opportunity to move people’s hearts towards people.
Case Thorp
Jonathan, what would you say to somebody that hears this and goes, okay, come on. This is just a marketing scheme for y’all to make a buck. If you really want to do this, just give over your donations, make it philanthropic capital. Is it dirty to profit on the vulnerable?
Jonathan Shafer
Yeah. So let me, let me say it this way. In order. So if we just focus on the issue of electrification in Africa, and let’s all agree that everyone should have access to electricity. You think that’s a public good that everyone should have just to connect the 600 million people that are not connected. Um, we’re talking around a trillion dollars, right? 750 billion to a trillion dollars. There’s not enough charitable capital available to do that. Right? So we could do some of it and there’s certainly some of it that needs to be done with that and I use that as the example to say we have to find ways to make what could be investable to make it investable, or at least partially investable, to be able to tap into the total pools of capital that Jeff was alluding to earlier, that’s available to us. If we only rely on charitable capital, we’re going to fall short on a lot of these big, it’s called country-wide, continent-wide, global-wide goals or global-wide problems that we’re trying to solve.
At the same time, this question about should I feel bad about this? I think the answer to that is no, 100% no. Because that capital, yes, you are making money on it, but it’s for the risk that you’re taking and you’re providing a real essential good or service to that population. Now, if you’re being exploitative, if you’re being unfair in your business practices, of course, that’s a totally different context. Let me just give you an example that investment example that I gave you in central Kenya. The power that we’re selling, usually about 20% less than the national utility is selling their power for. Right? So it’s actually a cost savings and it produces, or it has potential to, there’s no guarantees of course, has the potential to create a really interesting return for our investors. So there’s, and I mean, I’m focused on energy cause that’s what we’re primarily focused on ourselves, in agriculture, in real estate, in infrastructure, in all kinds of different things, where when we use our God-given analytical and kind of brains, just to be blunt, we can find these opportunities where the investment capital can come, create impact, and also create sustainable returns for our investors so that money can keep coming back and keep doing good.
Case Thorp
Yeah, so good. And it, it disappoints me. Like you say, the media perception of Africa, I think it’s also, um, it plays in our minds, all the poor examples of corporations and the poor examples of exploitation that keep us from embracing that, yeah, money and capital investment can be a work for good, Jonathan, would you just close us with another example of impact investing that you’ve experienced and particularly to individuals lives.
Jonathan Shafer
Yeah. So this is an old example. This is from my time in Sierra Leone. This is Africa Felix juice that you that you mentioned. But for those of you who don’t have the context, Sierra Leone, the movie Blood Diamond is about Sierra Leone. And so we moved there in 2008. And this was about six years after their civil war and brutal civil war. Just massive atrocities and it really just crippled the country. We came in about six years later through a Christian family office who really got these concepts. And we’ve started a variety of things, but one of the things that we started was African Felix juice. This is a fruit juice concentrate manufacturer. It’s about a $5 million investment. We employed about 100 people directly. But the really cool piece was we took fruit fruits from Sierra Leone, processed them into fruit juice concentrate, put them in big barrels, shipped them out to Europe, shipped them out to the Middle East. First value-add exporter from Sierra Leone post-war. But the cool piece was we were able to take produce that had no value. So for example, mangoes.
When mangoes are harvested in Sierra Leone, there’s so many that they’re actually worthless. You walk into a village, they just give you literally a massive bag of mangoes, because otherwise they just rot on the ground. So they’re actually worthless. We pumped $3 million into local communities over the course of four years that I was actually involved with it by creating just a supply chain. We just created basically bus stops where we would send trucks, farmers, these were wild mangoes, so there was no input on their side. We trained them when and how to pick, we trained them how to pack, we collected them, we gave them cash that day for the work that they had done, and we got the inputs that we needed. The impact of those three million dollars going into that community, you talk about multiplier before, had a huge multiplier impact. Kids going to school, you know, increased in nutritional outcomes in these communities, we’re able to track this. And again, there’s nothing magical about this. We just took business principles, applied it to the context that we’re in, and saw some amazing things happen. Unfortunately, Ebola hit that country in 2014, 2015 and that derailed a lot of the progress. But it’s back online, it’s still operational, but that’s something that sticks out in my mind of really a very simple thing. Basically just putting a supply chain together to collect these mangoes. I don’t want to go so far as to say that it changed the lives of these people, but it had a deep impact on these particular communities over that period of time.
Case Thorp
Okay, fantastic story. But it does make me think of one last question that a listener might have in terms of that’s great. You’re teaching them agricultural principles, you bring the cash and give it to them. Well, I would assume you’re giving you’re mindful of a fair wage. You’re not trying to shortchange them on that part of that equation, though, is impact and does impact investing say, okay, a company’s profits should look like X, Y, and Z. At what point is the investor getting too much return as opposed to the resources down the supply chain?
Jonathan Shafer
Correct.
Jeff Shafer
Yeah.
Jonathan Shafer
That’s not a problem most impact investors have to deal with, unfortunately. I mean, I wish that were the problem. The harder problem is how do you actually, you know, make a sustainable profit in these types of situations. But that said, I’ll just give you the example in this, I’ll give you what we did in that, in that particular example. So we operated under fair trade principles, right? So we are fair trade certified. We brought in a third party, kind of certification firm to look at our supply chain, to look at what we are paying for these particular inputs relative to global standards. There’s other groups called the ILS, International Labor Organization, does the same type of thing. So look, you can be as exploitative as you want to be, but if you want to do good, there are ways to do these, to make these types of investments in a way that are good for all stakeholders. It’s not easy, it’s actually quite difficult, but it’s possible. And there’s lots of examples out there that if people are interested, we can get in contact with us and we can share other things beyond just what we’re doing. There’s lots of people who are doing this across the world.
Case Thorp
Yeah. Well, that’s helpful. There’s a third-party auditing group that is confirming that. Jeff closing words. Please.
Jeff Shafer
Case, can I add something to that? Because I have a real life example. So I was sitting at a conference and there was a panel and they were talking about impact investing. And one of the guys next to me asked the question about the same thing you ask, you know, how do you make sure you’re not exploitative, exploiting these individuals? Great question. Well, five minutes later, I’m talking to him and he’s a portfolio manager.
And we started talking and I said, okay, the question you asked is a great question to ask, but go, let me ask you a question in the world that you live in. I said, you own, I think it was Apple stock, it doesn’t really matter. You own Apple stock, okay. Earnings come out and they say that profit margins are now 60%, you cheer and the stock goes up. And my question to you is,
Should it be 60% profit margin? Are they charging too much? I don’t know the answer and I don’t really care for a second, but the same thing you’re asking about an impact investor is the same thing that we on Wall Street need to ask Wall Street. But I can tell you the rules are different. It’s you make every bit of money as you can and you don’t really care about the other stuff. And that, and I’m being a bit black and white, but it’s not too far away. And so that’s why this discussion is so important.
It’s the same questions you want to ask that you just asked is the same questions we want to ask Wall Street and to say it’s not even just ethics. It’s even asking one step above or below. How you say that you’re being ethical, but are you being redemptive or are you being and that’s where this discussion has to go above and beyond just morals and ethics.
Case Thorp
Wow, Fellas. Thank you so much. I really appreciate your time and your expertise. Many blessings on your work. I’ve advocated what you do for years through our programming and just think it’s wonderful. Jonathan, send us a picture from Zanzibar. That’ll be a lot of fun. Be safe.
Jonathan Shafer
Will do.
Case Thorp
Well, friends, thank you for joining us today. I want to let you know about Jeff Shafer’s podcast called A New Lens by Common Good Capital. So go check out his podcast, A New Lens. And then you can learn more about their work at commongoodcap.com. Well, thank you for joining us. Please be sure to like and share, send this to some investors, you know, to get them thinking and start the conversation.
Leave your view wherever you can on your podcast. It helps us out. You can get all sorts of content and you can find us across the social media platforms. Don’t forget our Nuance Formed for Faithfulness, a weekly 10 minute devotional for the working Christian that follows the liturgical calendar. Want to thank our sponsor for today, the Magruder Foundation. I’m Case Thorp, and God’s blessing on you.
