In this issue of Criterion Connections, Tia Subramanian of the Criterion Institute speaks with Jasmine Rashid, Director of Advocacy and Strategic Partnerships at Candide Group, about investing for social change, from creative and collaborative approaches to structuring deals to her work disrupting the financing behind private prisons and detention centers.

Jasmine Rashid, Candide Group

‍You’re a longtime activist who brings that experience and set of values to your work. Can you tell me a bit about your activism and how you came to impact investing and Candide?
‍I was definitely a little kid who was mad about the failures of capitalism and the extractive global economy, before I had any language for it. As an undergraduate I had these amazing opportunities to research social movement strategy, take classes inside of a state prison with incarcerated classmates, study and travel to Palestine… and with this it became glaringly clear that finance played a role in every story of injustice.Currently I serve as the Director of Advocacy and Strategic Partnerships for Candide Group, an Oakland-based impact investing firm that helps families, foundations, athletes, and cultural influencers align their money with their values. My position is unusual for a Registered Investment Advisor, but we’re kind of an unusual business: we measure success in terms of social benefit alongside financial return, so being in partnership with affected communities, and advocating our vision of impact to the broader field, is paramount.I came to Candide and the broader impact investing world somewhat serendipitously. I was a Congressman John Lewis Humanity in Action fellow in Atlanta and had just read Candide Founding Partner Morgan Simon’s book Real Impact: The New Economics of Social Change. I reached out to her at a time when the news of family separation at our southern border had reached a fever pitch, and it turned out Morgan was conceptualizing a divest/invest campaign to address both immigrant detention and mass incarceration — to rally influencers and investors in solidarity with detained migrants, and in general against the idea of locking up people for profit under any circumstance. As an anti-incarceration advocate and economics geek, I was in.The campaign thesis begged this question: who finances family detention and private prisons? The answer advocates uncovered: often, we do. The vast majority of detained migrants were (and continue to be) held in profit-incentivized private facilities, whose operations are dependent on taxpayer money and massive credit lines and term loans from big-name banks. In other words, when we as everyday Americans put our money in our trusted bank accounts, there’s a good chance that money is being lended out to support industries we’re morally opposed to, like immigrant detention. Additionally, private prisons are cleverly structured as Real Estate Investment Trusts, which means they may have unknowingly ended up in some investors’ REIT portfolios. Under the name Real Money Moves, we began working with high-profile individuals like NFL players and Orange is the New Black cast members to spread this message, have them commit to making sure their investment portfolios stay prison-free, and explore meaningful investments aligned with their values instead.My unique first year in the impact investing field largely looked like working with grassroots organizers of the Families Belong Together Coalition to take this corporate accountability strategy to the next level — with the goal of getting all banks to end their relationships with immigrant detention and private prison giants GEO Group and CoreCivic. In the wake of a critical combination of immigrant women-led protests, media encouraging people to “break up with their banks,” behind the scenes dialogue with bank leaders, and carefully crafted shareholder proposals, we witnessed one after another — JPMorgan Chase, Wells Fargo, Bank of America, SunTrust, BNP Paribas, Barclays, Fifth Third Bank, and PNC — publicly commit to ending their financial ties to private prisons. Paired with the exciting and innovative portfolio growth Candide experienced that year, financial activism quickly became to me a creative art of exploring what’s possible.

‍A big part of Criterion’s mission is bridging the social and financial sectors and giving social sector actors the tools to engage finance in their work. What do you say to people who are skeptical about finance having a role in social change? How do you think about the role of finance in the broader project of progress?
‍At Candide Group, where capital is our primary organizing tool, we state the limitations of finance openly: “we believe that achieving social equity and sustainability requires political and cultural change right alongside economic change — which in turn take both time and money.” It’s why alongside investing we contribute to philanthropy, advocacy movements, and socializing the importance of non-financial capital like relationship-building.If we view money as a “neutral” tool, the system of finance is still marred by centuries of violent exploitation. Lack of access to capital continues to be the largest contributor of chronic inequality.  Therefore finance’s role in building the future we want — and the healthy skepticism that comes with that — is a conversation we should never stop having. One could argue the following logic: the vast majority of social ills are the outcome of intentional man-made investments, and therefore only intentional (wo/)man-made investments can reverse the course. Where this becomes tricky is when we “play” finance by the same old rules, by prioritizing immediate financial alpha over long term well-being for as many people as possible. It’s important for the field to recognize the often fine line between subversion and veiled reproduction in our work.As impact investors, philanthropists, and socially-minded finance professionals, are we contributing to new kinds of powerbuilding, or reinforcing existing power structures? Are we focused on changing not just who holds wealth, but what we mean when we say wealth? Is there such a thing as an anti-capitalist capital provider? How do we hold all these conversations while still getting $40M out the door each year? The fun part is getting to actually navigate the contradictions in service of a less-hypocritical world.

‍Impact investing tends to be pretty siloed in terms of issues—most investors are focused on one or a few issues or lenses. Candide tries to reflect the ways in which all social and environmental issues are connected by being an intersectional investor. Can you tell me how you define that and how you try to implement it? How might that look at the level of an investment thesis, for example?
‍We’re fortunate to be sector and geography “agnostic” and therefore able to go deep when it comes to impact. It’s interesting, for example, to direct investments into affordable energy, but it’s exciting to be able to direct investments into affordable energy like a solar panel installation enterprise that’s building wealth for low-income communities by retraining former coal miners and expanding employee ownership. Similarly, we’re more likely to be interested in a fund that demonstrates a commitment to racial and gender justice at all levels of decision-making and internal policies, over one that just boasts a racial diversity of employees. As our portfolio continues to grow across direct equity investments, loans and debt funds, private equity and venture funds, and real assets, we seek to not only find new investment opportunities but to also support entrepreneurs already in our portfolio with deepening their impact.One of the areas of our work that explicitly focuses on the intersections of economic and racial justice are the loans made out of our Olamina Fund. Candide launched Olamina Fund in 2019 to address the historic lack of access to capital in American communities — namely Black and Native communities, who have faced decades of disinvestment and intentional extraction. This portfolio includes innovative, impact-oriented loans to a variety of private debt providers, such as CDFIs, non-profit loan funds, and other institutions which invest in critical community staples, including small business development, worker cooperatives, and low-income housing. Olamina’s impact thesis — aligned with Candide Group’s overall philosophy — is premised on the idea that organizations which are led by people from the communities they serve are ultimately able to manage resources and mitigate risk more effectively. People know what they need, and we have a responsibility as fiduciaries to listen. For this reason, at least 80% of Olamina’s borrowers will always be led by people of color and women from the communities they serve.

‍Finance for social change often gets interpreted as moving money to good companies and taking money away from bad companies. But there are many ways we can change how money moves that can have an impact. In particular, we’ve talked about the potential for impact in shaping financial structures and terms. Can you tell me a bit about how you think about structures and terms, and give an example of a time where a change there made a big difference in terms of impact?
‍I’m learning this more and more: power often lays in the term sheets! So much of traditional investment deal structures undercut trust building, and ultimately reinforce the archaic power dynamic of “giver” and “taker.”Over the past year, we were diligencing and cultivating a relationship with Navajo Power, a Native-run Public Benefit Corp. developing clean energy projects on tribal land, and maximizing the economic benefits of clean energy for indigenous communities. When it came time to finally lead an investment into NP, we wondered what it would be like to bring in “collaborative counsel” — instead of “opposing counsel”— to help structure the investment deal and documents.  Because too often we found we’d insert a lot of extra time and money into processes for no good reason. We turned to our trusted partner at Blue Dot Advocates to play this mediator role, and equally represent both investor and entrepreneur in the investment process. Alignment came about by prioritizing mutually-beneficial goals, decisions by consensus, and making sure both partners always had the same amount of information.The result? As a spoiler alert to this article on the process: “We spent about half the money, took about a half the time, and all still like each other.” Now we’re on our way to helping Navajo Power do what they do best, which is bring power (both literal and economic) to affected communities.Additionally, Candide Founding Partner Aner Ben-Ami is an expert on helping identify and structure ownership models, so that investors are truly partners alongside critical stakeholders. In the case of our portfolio company Organically Grown Company, a wholesale distributor of organic produce out in Oregon, a creative “Perpetual Purpose Driven Trust” model was implemented: challenging the incumbent paradigm of shareholder returns over everything, and prioritizing equally shared governance and financial upside.

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COVID-19 has illuminated and exacerbated so many of the inequities that already existed, from massive racial health disparities to rising rates of gender-based violence. Where do you see opportunities for investors in rebuilding with an eye towards addressing some of those underlying issues? Do you have any thoughts about how finance can draw on the expertise of social change organizations without being extractive?
‍I’m continuously inspired by leaders who are able to hold both truths: that this is a moment of haunting loss and energetic opportunity. COVID-19 illuminates existing system failures and, to a degree, is socializing everyone to concepts of mass change and adaptation. For social investors who see their work as contributing to structural change, this means working with both entrepreneurs and affected communities to listen to their needs and help them thrive for the long run. Does the company or fund in your portfolio have a pandemic response plan in place? Are there possible pivots in their business model that you’ve witnessed be successful in other experiences? Are the companies structured to support all employees in the case of an emergency, or only those in the C-suite? What’s the risk to the broader community of not doing more? As we understand the fragility of our economy, we need to look to those who have historically survived against the odds and imagine a radically inclusive rebuilding process.When it comes to that learning journey, Candide is fortunate to also be able to leverage our voices in the media, particularly with Founding Partner Morgan Simon’s Forbes.com presence on the intersection of money and justice. There, we get to explore the contours of economic and social issues by interviewing the experts — often on-the-ground social change actors, instead of theorists — and we’re intentional about bringing visibility to their work. These experts look like Jacinta González, senior campaign organizer at Mijente, on the risk of investing in Palantir in the midst of the #NoTechForIce campaign; Alicia Garza, principal at the Black Futures Lab and co-founder of the Black Lives Matter movement, on economic findings of the Black Census Project; Palak Shah, of the National Domestic Workers Alliance, on investing in quality job creation for homecare workers; or Tiffany Rose Naputi Lacsado, Associate Director of Economic Development at The Unity Council, on helping readers understand why so many immigrant small business owners were left behind in the PPP loan application process. The pool of knowledge from our partners in communities is truly endless, and they deserve to be elevated in media for their expertise and experience.All too often we’ll see companies that want to expand their impact then also take the knowledge of grassroots partners for granted. Why is it, for example, that investors can expect to pay hefty consultant fees to a firm like McKinsey to learn best practices on diversity, but compensating activists who have lived their whole lives in diverse settings for their insights is seen as charitable? I’m personally glad that we’re able to work with core clients who recognize this value add and look to fairly compensate experts for their time and experience — such as those who will join Olamina’s Community Advisory Board.

‍What is an example of a recent partnership or collaboration Candide has undertaken in California that brought together people from different sectors to impact how investment capital moves?
‍Right now, investors need to help small businesses and loan funds build up their balance sheets rather than adding more liabilities. Keep in mind that debt can be scary even in the best of times, so we’ve been advocating for partners in the field to convert loans to grants, reduce interest rates, and offer multi-month deferments on a rolling basis as critical in helping businesses survive.Recently I’ve been excited about a collaboration with other capital providers in the Bay Area who are thinking about support structures beyond just the hypercritical investment and grant capital needed. I represent Candide Group as a part of a working group originally convened by Kaiser Permanente before the pandemic, as they were exploring how to concretely invest in healthy jobs for healthy communities. Once coronavirus changed our day to day lives, we decided to survey small business and non-profit employers about their needs — sharing the data with respondents so they can also understand the changes in their ecosystem. One of the biggest takeaways from that survey was local small business employers clearly calling for support in not just finding, but actually navigating, the myriad of disaster relief resources. Insert the idea for a Bay Area “Resilience Compass.”With the help of Kaiser, ICA, Conveners.org, Ecomap, Miller Center for Social Enterprise, Pacific Community Ventures, Jumpscale, and Initiative for a Competitive Inner City, we’ll be officially launching the BARC website next month as a free digital public asset. The “resources” section will begin with 210+ relief funds, volunteer business advisor offerings, public benefit applications, and other aggregated resources that can be filtered by who you are, what kind of support you're looking for, subject area (HR, financial, legal, etc), and location. Kaiser’s team is in charge of consistently testing and making sure all the resources are up to date, and partners (like Candide Group) can submit new resources at any time. The “Blog” section will be a content management system for anything that further helps entrepreneurs navigate (hence "compass") and make sense of the changing business landscape — webinars, articles, and, hopefully one day soon, in person events. As diverse capital providers, we really want this resource to help take the burden off the time-scare small business owners, who are struggling to figure out which support options are worth applying for.

‍Thanks to movements like #MeToo and #TimesUp, we’ve seen a lot of attention recently on violence in the workplace and the business and financial consequences of that. And COVID-19 is shining a light on ways in which other types of violence impact workers, businesses, and communities. Where do you hear conversations about violence happening in finance? What do you think are some opportunities for us to continue to demonstrate that this issue is material to investment outcomes, and engage investors in addressing it?
‍I think Criterion Institute’s work around the issue of violence — bringing together stakeholders like direct service providers, domestic violence survivors, institutional investors, donors, policy experts — is a great example of the types of cross-sector co-learning we need to be prioritizing. As both finance professionals and social change advocates, there’s a gap in deeply interrogating the intersections of mass incarceration, domestic violence, and money.Financial abuse is said to occur in 99% of domestic violence cases, and money is cited as the number one reason why survivors stay with or return to abusive partners. Women of color are 19% of the US population yet women of color entrepreneurs account for close to 90% of all new businesses, adding $1.9 trillion to our economy each year… and women of color are disproportionately incarcerated in the US. At least 60% of women and non-binary individuals currently experiencing incarceration have themselves been the victims of physical or sexual abuse. While we encourage holding perpetrators accountable, we also advocate for divestment from systems of carceral punishment. The missing link seems to be serious investment into violence prevention, expanded access to capital, and systems of restorative justice.Investors, whether they brand themselves as impact-oriented or otherwise, are irresponsible to not consider these links. To put it in familiar terms: violence (of any kind) in the workplace of a portfolio company, for example, clearly poses reputational risk, operational risk, and regulatory risk to your bottom line. This is the kind of framing that capital providers respond to, and a type of translation that is underutilized in our social change strategies. Impact investors can support progress by highlighting whenever capital can be influenced in alignment with our vision of justice, and documenting those wins to share across the field. Action, and money, speaks louder than words.