How does money shape the world? Don Shaffer has been thinking about that for a long time, ever since his very first job carrying golf bags for Wall Street traders.
Shaffer was 14 years old, working as a caddy in New Jersey, and he would ask the men what exactly they did for a living. “It was a really jarring experience for me,” Shaffer says. “I would ask these guys what they did and there would always be a pause, like, ‘What am I going to say to this 14-year-old kid about what I do in terms of derivatives and leverage buyouts?’ That was confusing to me because these were the people who were making all the money and had most of the power in society, and yet they couldn’t even explain to me in layman’s terms what they actually did for a living.”
It was a “catalytic event” for the young Shaffer, who resolved to learn how the financial system worked and who it really served. Today, he’s actively working toward an era that frees itself from what he calls “Wall Street domination.”
Since 2007, Shaffer has been president and CEO of RSF Social Finance, a San Francisco-based nonprofit that is building a financial platform to empower social enterprises, effectively functioning like a bank and a foundation combined. RSF is taking the long view in terms of ventures that benefit not only the bottom line but the Earth and society as a whole. For example, in July, RSF purchased $9 million in solar bonds from SolarCity.
“The solar bonds provide an opportunity for RSF and like-minded individuals and organizations to earn an attractive financial return while helping SolarCity expand its use of the sun’s clean energy to reduce our society’s dependence on fossil fuels for power generation,” Joe Avenatti, RSF’s senior director of investments, said in a press release.
When speaking with Shaffer, it is obvious that he is ebullient about the deal. “They’re clearly a leader in the field,” he says of SolarCity. “We feel they’re at the absolute leading edge of how to think about solar financing, and not just how to think about it but how to execute it.”
The fact that the solar giant is allowing individual investors to participate in their solar bond program — for a minimum $1,000 investment — is a big plus for Shaffer and RSF. “We’re trying to democratize impact investing for everybody,” Shaffer explains. “Usually it’s the foundations or pension funds or high net worth individuals who get to have all the fun and participate in things like SolarCity bonds. It’s inspiring for us because smaller investors can invest alongside us.”
Shaffer believes the real advantage of renewable energy — solar in particular — is how it will force the evolution of power distribution among consumers. “Instead of everything funneling into the grid, into the existing gigantic centralized energy system, it will be possible for people to capture energy and use that energy much closer together without it having to go through these elaborate supply lines and storage facilities,” he says.
When electricity is generated closer to its users, it requires no water in its production and emits no greenhouse gases; it also promotes less waste and all but eliminates a polluting footprint. The solar industry is also enjoying a significant boom — growing 21.8% in 2014, 10 times faster than job growth for the entire U.S. economy, and accounting for 32% of all new electrical capacity in the nation — beating out coal for the second year in a row.
Changing the Way the World Works
RSF’s motto, “Changing the way the world works with money,” is way of saying capitalism and altruism are not mutually exclusive. The idea that money can be used to enact positive change, while turning a profit, is one that Shaffer has seen growing over the decades. It’s a fortuitous byproduct of the world becoming more connected.
“Certainly a lot of the problems that we’ve created with the environment have accelerated since World War II, and the consciousness level of the people who are looking to lead a responsible life has also increased,” he says. “Now we’re in such a more interconnected world that news and stories can travel faster and lots of things can be more direct in terms of how people experience change.”
If Shaffer were on a golf course in New Jersey today, he knows exactly what he’d tell his young caddy.
“I would tell that kid that money is fundamentally a bridging tool that connects people who have initiative in the world — who are creating new businesses or new things — to people who have money and who would like to support those entrepreneurs. I help investors see opportunities and then I help entrepreneurs get the money that they need to do new things.”
One such opportunity is RecycleForce. The Indianapolis-based company specializes in electronic waste disposal, among other kinds of junk. The organization safely disposes of ewaste and sells scrap metal and reusable material to help pay for job training programs and employment opportunities for former incarcerated men and women. All 65 of its full-time employees are formerly incarcerated individuals.
“They do amazing training for people who have spent quite a bit of time in prison, [whose] opportunities are very limited,” Shaffer says. “The ewaste recycling business is not glamorous, it’s very, very hard work, and our colleagues Gregg Keesling (president of RecycleForce) and his team have done a great job.”
A study from the Sagamore Institute puts the rate at which former inmates return to prison in Indiana’s Marion County at 70%. By comparison, says Shaffer, “The rate of people who go back to jail who go through Gregg’s program at RecycleForce is about 20%.” And that, he says, “is the kind of thing we want to be a part of. That’s what money can do.”
Looking to the Future
Many of today’s young entrepreneurs, says Shaffer, are not interested in just making as much money as they can in the shortest possible time. “What they’re interested in doing is having a very positive, beneficial effect on life as we know it through their business activities.” At the same time, he says, “We’re seeing a new kind of investor emerge, who instead of just saying what they don’t want to invest in — tobacco or firearms or what have you — wants to find things to invest in that are doing good, not just doing less bad. This new profile of investor ideally wants their money to be working as directly as possible. They want to be able to see and touch and feel the results of what their investments are doing.”
One example is the local food movement, in which people want to know that their food is not only organic but also biodynamic, GMO-free and produced in an ethical, resource-conscious way. “It’s the same thing with their money,” said Shaffer. “They want to know, ‘Where is my money going? I don’t want it to just sit in an account in Bank of America and have no idea how it’s being used. I want to know where my money is being used.’”
Add it all together and the world looks a little bit wealthier and a whole lot healthier.