Courageous Capital Stewards
Courageous Capital Stewards
Courageous Capital Stewards - Rich Hoops Redefines Success

Stephanie Gripne:
Welcome, my name is Dr. Steph and you’ve joined us for our podcast series Courageous Capital Stewards and today we are very fortunate to have with us somebody who’s very important to me personally and professionally, Rich Hoops. Welcome to the podcast. It’s a true honor to be sitting here with you, after the journey we’ve been on for the last decade.

Rich Hoops:
Thanks, Steph, I’m glad to be here.

Stephanie Gripne:
What’s super fun is that even though we are recording this from different places, we actually are practically neighbors.

Rich Hoops:
If we talked louder we could probably hear each other across the park.

Stephanie Gripne:
That’s absolutely the case. We’re here today to talk about your impact investing journey and I’m so proud of you, happy for you, and happy for the system that you have your current position with Impact Charitable. So before we jump into your personal story about how you became an impact investor, why don’t you tell us a little bit more about what Impact Charitable is just so the listeners know and understand what the possibility is with Impact Charitable.

Rich Hoops:
Impact Charitable was formed in 2015 and I was a founding board member. Primarily it’s a 501 c3 founded as a donor advised fund in kind of the traditional sense. What wasn’t traditional at the time, is that it was very much focused on impact investing and so if you think back to 2015, you know PSG funds were just kind of coming around etc, so we were differentiating ourselves by offering investment options for the advised funds in areas that align with their values while they kind of remain what I would say latent and advised funds and, more importantly, we were focused on helping people deploy those philanthropic funds in ways outside of traditional grantmaking, with an emphasis on impact investing so helping people use philanthropic capital to make direct investments into nonprofits for-profit social enterprises and impact-oriented funds.

I stepped off the board, about a year and a half ago to take over day to day management of the operations and in that time we’ve begun to kind of reposition ourselves away from at least being perceived as a donor-advised fund provider because that’s to us donor-advised funds are the means they’re not the end.

So we really see ourselves as an impact capital intermediary and service provider that can help funders and philanthropists move capital in unique ways for greater impact still very much focused on impact investing but using our ability, our infrastructure to create funds make direct investments and we’ve developed some kind of unique custom programs so we’re really excited about the future, we think that using philanthropic capital, leveraging you know C3s and our capability to do diligence and underwriting investments and do structures and help what transactions can really reduce the friction and get more impact capital moving, which is the whole reason we exist.

Stephanie Gripne:
Absolutely, and even though we are going to spend most of our time talking about your personal journey and why don’t you say a little bit about one of my favorite products that have Impact Charitable is the Left Behind Workers Fund.

Rich Hoops:
The Left Behind Workers Fund original idea came about in about January of 2019 we had a board member and then our executive director and previous executive director and founder at Briscoe we’re talking about the potential for impact charitable to pilot a direct cash transfer Program.

For those of you that know direct cash transfers of money have been around for a long time, particularly in international development.

The body of research around the efficacy of direct cash transfers actually substantial and it basically just says, if you give unconditional cash to individuals, particularly those living kind of in in in poverty, they tend to use it in ways that actually helped them get themselves out of poverty, and so there was a discussion about initially around targeting individuals as they came out of the justice system and giving them a leg up financially as they tried to find stability and employment and housing and all that sort of stuff but within about two or three weeks, the pandemic really kind of you know kind of came upon all of us in mid-march of 2020.

And the target beneficiary group immediately changed from individuals accessing the justice system to undocumented workers who were losing their jobs by the thousands but had no access to federal benefits. Very quickly about $100,000 was raised from some personal networks and some small foundations we partnered with one community-based organization in Aurora, Colorado which is east of Denver, and the goal was to get $1,000 emergency cash grants into the hands of 100 undocumented families. That ended up having some impact, it would gain some visibility one thing led to another and the last couple of years have been quite amazing, but we were getting ready to sunset the Left Behind Workers Fund, which has gone through several iterations.

We just passed $38 million in cash grants given to over 25,000 families across the state of Colorado working through about 25 to 30 community-based organizations across the state so yeah it’s been amazing and kind of more importantly, more exciting is that the direct cash programs, in general, should be a means to an end and we started the Left Behind Workers Fund with three goals in mind: the first one was to provide immediate benefit to families in need; to use the benefit to learn more about this population, their needs, and underlying issues.

And lastly, to use all of that to try to create systems change through legislation policy and the Colorado legislature just wrapped up their session a week or so ago and in literally the remaining 48 hours, a bill was passed to create a permanent unemployment insurance fund for undocumented pay stub workers in the state of Colorado, which actually might be the first in the country of its kind. And that was the work of a particular Senator Hanson who was champing the effort along with several large advocacy groups, colorado’s people’s alliance among one of them, but none of that would have been possible, had it not been for the Left Behind Workers Fund, which really kind of shined a light on a problem of inequity that has existed for a long, long time and got the attention of policymakers.

So we’re super excited about that. And we really and now we’ve got two other direct cash programs underway, and we were going to try to run that same play we’re you know begin with the end in mind, as Stephen Covey says, and so the end is, how can we use these direct cash programs to ultimately try to influence policy and get real level systems change so it’s been an exciting journey and we’re really proud of the work.

Dr. Steph:
It’s completely inspiring. And to no surprise, your story wants me to go in lots of directions from, I’m just going to say the directions I want to go. Part of me wants to talk about how thoughtfully explained that program and the role, especially that white people have to do around anti-racist training and just the language we use and how thoughtfully you explain all of that and the work you were doing with deep integrity.

And so that’s an important line of inquiry. And I want to go back to your kind of the origin story for you about how you first came to be, quote, an investor, and then was that connected or disconnected to impact investor? Because the third line of inquiry is I think you and I both present we both share a shared value and love of our spirituality and faith, which I generally feel isn’t what we lead with.

And most people might even be surprised with that from both of us individually and collectively. So I’m, I’m kind of interested in you can talk about, you know, your historical journey with work and how you ended up where you did and how you were like, wait, I’m going to be a philanthropist or I’m going to be an investor.

I’m going to be an impact investor. But I’d love to hear about, you know, a lot of what we teach is the mindset shift. If I’m a donor now, I’m an investor. Impact investor in alignment. So you can go, you know, chronologically through your story or if you just want to riff for a second about when was that moment you’re like, wait, I’m an investor.

Rich Hoops:
Yeah, well, you know, it’s been, you know, so, you know, my corporate career I tell people I was more lucky than good. I was pretty good. But however good I was, I was a lot luckier in my corporate career, which provided me some financial resources. And, you know, after my private sector career, which mostly was in corporate America.

And then I you know, I had an entrepreneurial stint. I started a small company in Boulder when we moved here in 2000. But after transitioning out of that, I hadn’t really prior to that, I really hadn’t spent much time thinking even about investing. I had certainly had a reasonable amount of assets and you know, as you know, modern portfolio theory and all that, working with advisors to, to kind of allocate those resources.

But it wasn’t until I got out of my startup and I had gotten involved with the nonprofit community in Boulder County through a great organization called Social Venture Partners. That was really my first window into kind of the social sector or the third sector, whatever you want to call it. And it was the first time that I started to become kind of a donor.

Right? I always knew that we’d be in a position to start kind of giving back financially but it was social entrepreneurs was such a tremendous opportunity because at the point in time I was starting to become, I’ll use a fancy term, philanthropist. I was also rolling up my sleeves, working alongside executive directors and boards of you know, fairly small, early-stage nonprofits who had great programs, but they were having trouble scaling and that sort of thing.

And so I started to learn about, you know, nonprofits and grants and, you know, donations and how all that sort of come, you know, kind of comes together and it was also during that time where I had those, I tell people I kind of a little bit of a midlife crisis, which, you know, where it was, you know, I was around 40 and had achieved a lot of what, you know, when you get out when I got to college and I thought success would look like that, I had achieved a lot of that.

So that’s it was tremendous. It was awesome. Also somewhat scary because you’ve got a lot of, you’ve got a lot of just as much likes and after Wind Chill as you do in the rearview mirror. And yet you you don’t know where you’re going to go with all of that. And you know, you mentioned a little bit of spirituality and faith.

You know, I develop kind of a faith for the first time during that same season and all of that kind of came together in a way that just changed the way I thought about my role in the world and the role of our money in the world. And, you know, the big light switch was much more of a perspective around responsibility of using those resources to to give back and to make a difference, given how fortunate that we had been and so, you know, my first kind of after that kind of light bulb moment, you know, really started to lean more into philanthropy, understanding that giving more as we were and then starting to plant the seeds around, starting our own private family foundation.

And so, you know, meeting with attorneys and, you know, trying to think about what does this look like, what are we going to invest in kind of the typical stuff. I saw it steered towards a private foundation versus like a donor-advised fund or something like that because I just knew I wanted to have flexibility to to do things with our philanthropic dollars.

And so decided to go that route. And it was while we were about the time we were working on the family foundation. And I do not remember how I came upon it, but I came upon the concept of impact investing and, you know, kind of just started to, I don’t know if I read something, I read an article.

I don’t know if I got, you know, the PDF from the Rockefeller Foundation or whatever my been. But, you know, to me, the light bulb, another light bulb went off, you know, just opened up a whole new world for me because like most people, right? I’ve kind of grown up a capitalist. And I had this idea as Ross Baird, my good friend, would say, like two pocket mentality that I make money and I invest money in one pocket and then I take some of it and I put it in the other pocket.

That’s the pocket I used to give money away. And, you know, by this time this is 2009, probably something like that. And I had done plenty of the one pocket and I was starting to do more the other pocket, but I had already seen I’d already had enough experience both internationally, I’m quite involved in Africa, and domestically in the nonprofit and philanthropic space.

To know the tremendous impact that philanthropic and traditional grantmaking has, but also the inherent inefficiencies. And also this realization that if the two pocket mentality was so good, why were we still facing these tremendous issues that are just entrenched and decades long and, you know, maybe even longer. And again, seeing them both in an international development context as well as kind of locally.

And so and being a business guy, being an entrepreneur, I was like, I know that there are for-profit ventures out there. There are entrepreneurs out there that are working on different business models that have intentional impact. And so what I want to do is I want to use I want to look at basically my, you know, kind of our assets is one pocket, if you will.

Right? And I want to find opportunities to deploy capital across that entire spectrum from kind of market seeking returns to, as you eloquently say, -100% high impact money. And I was really interested in all the shades of gray in between where everybody else sees black and white. Right? And so we formed our family foundation and our first distribution from the foundation was an equity investment.

It was a convertible note investment into a clean cooking stove company in Kenya. And so the first check we wrote out of foundation was PRI. And I’ve been doing it ever since. And I’ve continued to try to look for opportunities where both our, you know, our markets and capital can have impact but I’m more interested because it’s just more fun in that kind of impact first for-profit for return types of investing into, as we said, about charitable nonprofits, for-profit ventures and funds. So as I become more and more active and in investing, you know, I’ve made a number I won’t say the number quite a few direct investments through both our kind of family office and our foundation into early-stage social ventures a good number of them in Africa and East Africa.

Some of them locally and continue to look for opportunities to use our philanthropic capital and kind of family office markets. You can capital to have an impact. And as you know we’ve partnered in trying to get on the stop as much as we can to to to advocate create awareness and interest in and get more and more family offices private foundations et cetera to consider looking at the world this way right from a two pocket mentality or a or a siloed mentality around the role of philanthropy and philanthropic capital must be grabs to there’s all kinds of ways guarantees, investments, loans, all that sort of stuff that can have tremendous impact and even more leverage in the system, both for the organizations and for you personally.

Dr. Steph:
Yeah, we are this close to getting foundations to instead of giving a grant, a loan or a program related investment, and let’s even say a dirty endowment dollar divesting out of Wall Street, combining that endowment dollar with a prize dollar and a grant dollar for a holistic investment. I think, you know, there’s the idea of and then structurally like watching people go, “wait a minute, why are we separating out these buckets of capital?” and that you can do it individually from a foundation or a corporate perspective.

I really value listening to your story. And I want to talk a little bit about how Boulder and part of the reason I want to talk about how Boulder is your commitment to the backbone infrastructure, which impact charitable is a piece of that Colorado Impact Days is a piece of that. I’m going to share something coming up. But, you know, I was just invited by John Moore to go to impact PHL for their total capital impact.

And he said, you know, everyone talks about Philly and Denver as the two places and it’s really Philly, Denver, Boulder. And a big part of that is the work that you’ve helped support and lead and roll up your sleeves with and I think impact how Boulder was a really important part of that journey. Do you want to talk a little bit about how that came to be?

Rich Hoops:
Yeah, yeah. I mean, that’s also that’s also a really good story. So, you know, as I got into the impact investing world and I started to get involved much more in mentoring and advising and in some cases funding social entrepreneurs at relatively early stages. And again, this was both in Africa, but also locally. And, you know, having lived in Boulder and been around the extremely robust kind of startup venture ecosystem that exists in Boulder primarily around anything tech related, clean tech, you know, that sort of stuff.

And as I was meeting with social entrepreneurs or nonprofits were who were really working on some interesting revenue generating ideas and programs, et cetera, it just dawned on me that, you know, if you’re if you’re kind of a classic tech entrepreneur in Boulder, you have all of this resources. You had well-developed angel networks, you know, you knew who the venture capitalists were, the early stage funders were.

You knew the networks and the meetups to go to. And there was all these mentors and all that sort of stuff. But if you were a kind of a social entrepreneur, an impact first entrepreneur or, you know, heavens forbid, like a nonprofit who was working on a venture, there was no established ecosystem or support network. And so I had come to know that the founders of I think it was the first impact hub in the United States, which was actually Berkeley, I think.

But let’s go with San Francisco and so I had reached out to them and I said, you know, I just woke up one day and said, we need to bring an impact HUB boulder and provide support networks, connections capital to these entrepreneurs and initiatives that are trying to make the world a better place. And yeah, so it was that was a great journey.

You know, it was I was fortunate that while it was my idea, I quickly it didn’t take me two or three coffee meetings with other folks I thought might be interested in rolling up their sleeves with me to get a really good team on board quickly. And yeah, we just started kind of building up a little bit of a business plan and raising some capital.

And we raised money. We launched and this launched 12, 12, 12. So December 12 to 2012 and had a good six year run. You know, challenging business model co-working spaces have evolved a lot and when your business model is based on real estate and you’re in downtown Boulder presents a whole nother level of challenges. But you know, I still today get emails and stuff from individuals who, you know, we changed the trajectory of their venture by having the impact of you know, it was an inspiring place.

There were so many good companies that got started, collaborations that got formed inside the walls of that 10,000 square foot space on Walnut Broadway. So it was a lot of fun. And I met some amazing, amazing people. So, yeah, I wish it was still going today, but I think we all look back, even the investors look back and say, you know, that was it was a job well done, well worth it. So, yeah, that was a lot of fun.

Dr. Steph:
It was and just a very important, like, foundational piece of our ecosystem in Denver, Boulder. And so thank you for that. And I’m not sure I’ve ever read these to you. You and I would come to join forces. There’d been a 2015, a capital absorption workshop in Denver, Colorado, and the Kresge Foundation and Harvard came out and they did an assessment and they said locally we didn’t have investment ready transactions.

And that was my midlife crisis. Of which I called you in and 37 other folks to like hey can we have a meeting and 34 showed up and you were one of those 34 that not only showed up with your time, your talent and your treasure and guidance for that. And that would lead us for a three and a half year crazy journey.

Where your impact. Had Boulder several oh I mean 100. There were hundreds and hundreds of events that we did over the course of three and a half years. And the very I’m going to read you a couple of quotes people sent us after the first Impact Days. And this first one, given your corporate background, is, is from Neeraj Agrawal.

And he at the time was at the Michael and Susan Dell Foundation. And this is I’ll read it as they wrote it. But this is not about me or this was about us. Like, you know, it was crazy to travel Colorado afterwards and people be like, oh, Colorado Impact Days as if we just popped up a conference and people magically showed up and people had no clue how many organizations were in the trenches doing all of those capacity building events and technical assistance.

So Neeraj said, “just a quick note to congratulate you on CO Impact Days. You’ve started a movement here and I was absolutely blown away by the quality of social ventures I saw. You certainly know what the impact investing scene needs. And I hope that what you’ve started in Colorado can quickly replicate in other states and beyond.” And as far as I’m concerned, that core steering committee of 34 that’s here, this is written to another one of service social venture and this is Irene Aguilar.

And what was interesting is this social venture almost got booted because it was high risk and complicated and a friend of ours Andrew Curry said those are the types of investments I want to support and that kept it in and I think of that often that the buffet is really important because you and I live by a gorgeous farmer’s market.

And I’m sure every time you go and every time I go I think I’m going to buy three things and I come back with ten things. So Irene said, “Dear Stephanie, I want to thank you very very much for the extraordinary contributions you are making to social, economic, and environmental justice via your CO Impact Days. As I learned about your passionate journey and determination. I felt I was listening to my soul sister! Being a Latina from Puerto Rico and discovering the connecting vessels with someone like you north of the border just makes me so excited about what it all means when we all come together. It’s just one big family gone a little astray and in need of family reunions.”

Rich Hoops:
That’s sweet.

Dr. Steph:
It’s super sweet.

The last one I’m going to read to you is connected to kind of that double pocket thinking that came to us from let me pull it up really quickly. Was Karen Brown. And what’s great about Karen is she’s an angel investor and she works a lot on boards and nonprofits and has led foundations herself. And she said, “Thank you for organizing and hosting Colorado and practice event.

I could see the silos I placed on my own donations and investments in and my brain was working on opening the door of integration and collaboration between the investment and donation options. Sounds silly. The MBA or finance segment of my brain was talking to the donor segment of my brain saying, ‘Hey, let’s have coffee and talk about this.’”

Rich Hoops:
That’s awesome.

Dr. Steph:
“I thoroughly enjoyed the event. I would have enjoyed the opportunity to participate in both the Silver Nest and Emily Griffith Sessions, as well as other forums. I felt the whole event was a buffet and true to form. I wanted to go back for a second for every dish for an opportunity to learn.”

Rich Hoops:
Yeah, that’s. That’s fantastic. Now you know, you did a, you did a fantastic job and really, you know, I think we built something pretty special. And, you know, even though CO Impact Days wrapped up several years ago, we’re still seeing, you know, a lot of the stuff that we see today is, is a remnant of that, right? It’s still-

Dr. Steph:
Oh, absolutely.

Rich Hoops:
There’s still a waterfall that’s happening. We’d like it to fall faster, more of it and faster. But it’s it’s a lot of that can be attributed back to. Yeah. Just opening people’s hearts and minds to other possibilities.

Dr. Steph:
There’s that beautiful that fun little video of how to build it, build a movement in 5 minutes or less than the dancing guy video and how you have a lone nut. And then you create first followers around a lone nut so yeah, I just publicly want to thank you for being one of the lone nuts and just showing up the way you have throughout this whole time period.

And I, I think the, you know, the lane that we took was we need to just activate more investors. And I think Mark Newhouse you collaborate with his tease me or not tease me, but he said, Stephanie, do you realize like it took a lot to activate me? Like I was, I was a hard nut to crack, but I’ve gone on to be I’m cracked open and I, it’s a long tale.

And so we think of ourselves as kind of an investor accelerator of like, let’s activate that investor and then we kind of pass them on to impact charitable with you. I think most people are probably I mean, when the pandemic hit, we royal we just like we for how Boulder Impact Days rolled up our sleeves and raised 20 million just like that two weeks I don’t think any other state did that.

Rich Hoops:

Dr. Steph:
18 million for Kahrizak PPP just like that. The power of activating the resources building the trust and the networks and it’s fun because Santhos like to Garry Community Ventures is said when’s the next one? We’re ready. And so yeah like I’m going to get a sponsorship packet together and I’m like we will do the next one if we can fundraise ahead of time the cost.

Rich Hoops:

Dr. Steph:
And doing it but it’s that infrastructure Rich, is so critical the role that you’re playing in that space.

Rich Hoops:
Yeah, I think it talks you know it speaks to the long tale the work this work and any kind of movement building it’s it takes a long time. You know you see Mark’s a really good example who admitted that it took a long time for him to crack and not only has Mark put his own money to work, but Mark has himself have moved other investors and brought in different investment opportunities.

Pay per- you know, he’s helped create a pay per performance fund for some nonprofits here locally. So that just the ripple effect there. And then you multiply that over hundreds and hundreds of people, whether they were, you know, just individuals or private foundations. You know, it’s still a long game. But the impact continues and I think it is it’s cascading.

I think I certainly get frustrated about the lack of speed at which this movement is moving. So it’s actually this has actually been helpful to remind myself and we should remind ourselves that, you know, those seeds that we worked so hard to plant are paying dividends. They may not be at again at the speed that we want, but they’re moving and they’re working.

We work- We now I feel like the state of Massachusetts and California have said, can we apply that infrastructure outside of Colorado? And actually, our biggest supporters is the U.S. Forest Service. So the federal government in the state of California. And I can tell you, working in these other geographies, which we are, if it’s a marathon we’re at mile eight and the rest of our friends are at mile two and mile three.

And so, yes, we have a long way to go and we should be extremely impatient about how we get there. And it’s night. And whenever I’m frustrated outside of Colorado, I come back home and I’m like, wow, it’s pretty impressive what the flow is and we’re in need of another 2.0 infrastructure piece. Forming those strategic alliances. Part of why Philly and Denver have done well is not only did we have Colorado Impact Days had Boulder, we also had we had an office for B Labs.

Both of us we had both investor circle chapters, right? We had the stacked infrastructure play. And I think, I’ll just say this. We’re actually, it’s semipublic, but we’re actually looking at launching the first independent trust company focused on impact investing. In part, we’re doing that to basically launch a corporate foundation so we can fund all of the work we’re collectively doing because this is hard dollars to get.

And it’s, it’s a difficult I mean, I’m sure you feel the same way, too. Somebody could give directly to somebody on the ground that needs the money directly and food, shelter, clothing, and housing versus saying, oh, invest in an organization that’s going to support a systemic change in those things. And it’s tough to compete against those dollars.

And so increasingly for me, my philosophy is like, OK, we in the movement are smart enough to grow some of our own money. So let’s collectively create a couple of social enterprises ourselves to create profit. So with that, with that said, what excites you right now? What do you looking around the corner about in terms of you’re like this, this could be the next exciting thing chapter ahead of you.

Rich Hoops:
Well, for me, I’m really enjoying the work at Impact Charitable, and I think we have an opportunity to help primarily through establishing nonprofit investment fund vehicles that impact charitable right? Because we all know the impact capital market is inherently efficient and affordable housing is a really good example. And we’re excited that we’re going to launch our own affordable housing nonprofit investment slash loan fund.

But affordable housing is a very good example insofar as affordable housing projects are often done by small developers. And dispersed throughout communities. And they need the appropriately cost and structured capital to make that happen. And they have a hard time finding that capital. And then you’ve got increasingly you’ve got individuals and private foundations who are interested in supporting affordable housing.

But the search cost, even if even just the search cost, let alone the transaction cost, because many of these foundations don’t have the capacity to actually do the transaction. But just the search cost alone is so high, the friction so high that a lot of these deals don’t get done. There’s a lot of housing inventory that never gets developed because of this inability to match supply and demand.

And, you know, we’ve been successful, as have some other organizations around the country, have been kind of match or a donor or a small group of donors to a particular project or venture, but that pipes are just not big enough to move as much capital as we need, fast enough to really start making change. And so by creating nonprofit investment funds, thematic funds, we can help reduce that friction between supply and demand of capital.

And as I say, on the supply side, what I mean by that is that kind of get more impact capital, philanthropic impact first get off the sidelines and into unique ventures I think we can open the aperture of that by creating these funds and making things like affordable housing, other types of infrastructure, more accessible for impact oriented adventures, because we’ll house the fund, we’ll do the transaction, we’ll be the LP in an investment fund, but we’ll be able to do that by kind of, you know, consolidating 50 disparate individuals, small private foundations, and pooling their capital together.

And so excited about what we can do there. Because you and I, we’ve been on some of the same calls around here in the local Colorado community, whether it’s providing appropriate financing to help small businesses convert to employee ownership or cooperative work models. A lot of these things that we know can really make the change that we want to see require flexible, appropriately cost of capital which often isn’t market rate.

And yet again, kind of matching the demand the sources of capital, the supply and the demand where it’s just hard because the markets are inefficient. So I’m hopeful that impact charitable. We can play an increasing role in creating fund vehicles investment vehicles that yeah. That make it more efficient, the capital markets more efficient and getting more capital to move.

Dr. Steph:
I think what’s great exciting the work we’ve been doing with similar what we call moving capital stewards versus asset owners. And so I appreciate that subtle language you used mid-life of like responsibility and stewardship and like do we own the money or are we stewards of the money and some of the basically the mindset shift or we’re just flipping the script for some of a lot of the training we’re doing we’re probably training $10 billion of capital right now.

And that doesn’t include our corporate alerting circle. We’re getting ready to launch with companies like VF and J.R. Simplot and Capital One. And what we’re trying to do is say, you know, let’s think about this like a pantry. And right now, if you’re a nonprofit, or affordable housing project, you have really three tools. You have grants, loans and equities.

You also have guarantees. But there’s literally you’re trying to make a gourmet meal out of four tools. And so that’s where we’re like, what about this full spectrum of capital? Why don’t we have -100%, 99, and 98? 97? And the piece I know it’s subtle for people to catch this, but if you go to a non low income housing credit, non-life tech, affordable housing transaction, say the Denver Metro, which is one of the worst, most or fastest growing and affordable housing markets in the country, what our what we’re doing increasingly is saying, OK, let’s, let’s figure out what rate of subordinated debt we need to have in order to lead to not only affordable housing but a pathway where there’s partial equity.

Where there’s community wealth building and or household wealth building along that way. And I’m OK if that numbers 7%, 0%, -10%. And what’s interesting is when people hear -10%, they immediately think, oh, that’s below market rate, but not really a typical individual or foundation has two to three or a corporation, four or five or six buckets of capital.

And so if you think about it, you can I can still take 50 bucks I want a 10% return on and 50 bucks I would donate at -100%. That gives me $100. And if I have the combined interest rate of that, that’s -100 minus 10 is -90 divided by two -45% capital. And so and I still get an above market rate return on the money I was going to invest.

I can take that money out of the stock market which I was hoping for six to eight get ten. And so I think the hope I have and I know it’s complex, but it’s like it’s blended finance, internal to the investor, internal to the donor advised fund or the individual, which is sounds like that’s the pathway you were already on at the beginning.

The average individual and foundation doesn’t take all their money and combine and look at the combined financial return, including their durations.

Rich Hoops:

Dr. Steph:
And if you do that, it’s oftentimes a negative number.

Rich Hoops:

Dr. Steph:
And so if we can like let go of that normative term in language and just say, OK, these are buckets with different objectives let’s mix and match them together. I’m super hopeful we can get we can crack that next nut.

Rich Hoops:
Yeah. Well, that’s, that’s the work to be done. For sure.

Dr. Steph:
That is the work to be done. Thank you for spending time with us today. I hope it’s, I hope it’s the first of many conversations and I’m just I’m full of gratitude for you being again, for you being in my life personally and professionally. Thank you for all you do and thank you for your friendship and excited about our next chapter.

Rich Hoops:
You know, it’s just it’s been a fun journey and it’s been as they say, it’s been good to be in the boat with you along the way. And so thanks for the opportunity to come on the podcast.

Dr. Steph:
Yeah. And here’s to kind of alignment you know, I often think of when I’m having the most fun, I’m talking about love, light and money in the same conversation. I appreciate being in that conversation with you. Yeah, thank you.

Rich Hoops:
Thank you, Steph.