RSF Social Finance is bridging the gap between philanthropy and investing, according to CEO Jasper van Brakel.
The San Francisco-based investment firm aims to redefine impact investing for those who want their money to do more than just fund “sustainable” projects and companies.
“As we say it, we want to finance change and change finance at the same time,” van Brakel said in an interview. “It is a different way to think about money.”
Traditional investing focuses on returns. Philanthropy focuses on giving money away for good causes. RSF Social Finance focuses on companies and projects that are making real gains in impacting the community, while paying investors an average of 1% to 4% return on their investment, he said.
Van Brakel calls it regenerative finance, a term he hopes will replace “impact” and "sustainable” investing. It is an investment strategy that van Brakel admits is not for everyone. Instead it is for those investors who want to maximize their influence in bringing about change in the world, while receiving some return on their investment.
For instance the firm makes loans to businesses and entrepreneurs who are initiating positive changes in the community. One loan went to a company installing solar panels on affordable housing units. RSF Social Finance also has worked closely with companies like Lotus Foods, a California-based company that focuses on importing rice from small family farms to the U.S.
“The focus of the loans is on results, not necessarily on returns to the investors,” he said, adding that the firm has a 100% repayment rate.
Regenerative finance is purpose-driven finance “that we hope will replace ‘impact’ and sustainable’ investing. Just being sustainable isn’t enough. Maintaining the status quo, or making a few changes so that communities and the planet can sustain themselves is a low bar,” van Brakel said. RSF Social Finance wants investors to think of their money as a tool to actively promote change.
As another example, he said the firm also made a loan to a company that makes consumer products that use renewable resources. This part of the firm’s focus is in getting funding into the hands of entrepreneurs who are making innovative changes, he said.
Most of the interest RSF Social Finance has seen so far is from family offices, wealthy individuals and institutions.
The conversations advisors should be having with clients should center on where the clients want to fall on the philanthropy-to-investment spectrum, van Brakel said.
“We will see more initiatives [next year] that aim to provide systemic solutions to the many challenges we face,” van Brakel said. “With massive uncertainty driven by global conflict, elections in the U.S. and the EU, climate disasters, cyber-attacks and the unfolding of AI, there will be no shortage of challenges. Initiatives that are actively working to shift the paradigm, to provide real solutions as opposed to fringe improvements, require all the support we can collectively provide.”