“What is your philosophy on ‘Impact Investing’? Do you believe your Firm provides impact outside of financial gain?”
A capital group just asked Gratūs this question, and the stakes are high. The answer to this question can mean managing millions of dollars–or not. Impact investing is a trendy and sometimes politically-loaded topic. Today, most RFPs from endowments and capital groups include a question along these lines.
Let me be clear; we are not a firm that primarily seeks ESG status. However, Gratūs Funds is a purpose-driven business–it’s in the DNA of our company and all over our marketing. So, without changing who we are, can I argue that how we conduct our day-to-day business and how we invest capital can be something that would make impact investors proud?
As asset managers, our first responsibility is delivering returns to our investors, which is a noble goal. However, there are plentiful opportunities to do well while doing good. And so, in response to that question, I illustrated three ways we deliver impact while delivering returns.
Delivering impact by meeting needs in the following areas is part of what has made us successful:
- Impact for investors: We democratize access to investment opportunities historically limited to the ultra-wealthy. At Gratūs, we are deeply passionate about our investors. Each investor is not simply a number on a balance sheet or accretive to our AUM; they are people with hopes, dreams, goals, and fears. Succeeding in delivering returns through providing quality investments is at the core of the impact we measure. Guests who attended our year-end investor meeting were treated to a “by the numbers” report, including the total number of investors and the number of investors who would otherwise not have access to these types of investments.
- Asset Class Impact: There is a housing shortage in the United States. We partner with developers to create new housing stock at best-in-class relative value. At the base of ‘Maslow’s Hierarchy of Needs’ is food, shelter, and security. Only after meeting the baser needs can an individual be freed to pursue “self-actualization” or, in our parlance, “take their mountain.” The national housing shortage is limiting the formation of millions of households. Gratūs Funds’ impact allows households and families to grow roots and have the opportunity to “Take their mountain.”
- Local Impact: Gratūs Funds invests capital in overlooked secondary and tertiary markets, providing new housing projects to underdeveloped geographies. Tens of millions of dollars from developing new housing enter the communities where we invest. These dollars support high-paying jobs during construction and create homes in communities that need them. A virtuous cycle of investment dollars impacts and stays in the community as we grow our business. Cities will often incentivize our investment into their community through TIF (tax increment financing) or grants toward equity—as they recognize the impact on the community. Collaborating with the community helps our projects’ economics and makes the impact a win-win.
In conclusion, Gratūs Funds is a purpose-driven business that delivers impact while delivering returns to its investors. We democratize access to historically limited investment opportunities, partner with developers to create new housing at best-in-class relative value, and invest capital to provide new housing projects in overlooked markets. These efforts not only benefit Gratūs Funds’ investors but also provide much-needed support to communities and help address the housing shortage in the United States. Overall, Gratūs Funds is a company that takes a holistic approach to impact investing, balancing its commitment to financial returns with a deep understanding of the social and economic needs of the communities in which it operates.