Thursday, July 10, 2014

Dream: Color-coded Portfolios

In this post I wanted to daydream a bit, about what it would be like to have a color-coded portfolio of investments. In this case, it would be investing to have impact, to change the world, with an expectation of ongoing feedback, knowing what happens, how things unfold.

One of the influences on starting to think about color-coding investments was volunteering for One Laptop Per Child during my PhD research, a project that developed laptops for children around the world, to help with education. And though there was a great deal of support for the project, I was struck by the question that was sometimes raised, about going into an area of the developing world, and helping with education, when there wasn't necessarily even all the other "basics", such as drinking water, sanitation, etc.

And it felt to me at the time that the answer was "Yes". Not only to education, but also to health, also the environment. Not one exclusively - but seeking a balanced approach. And when I started thinking more in terms of color, particularly the "green" of environment, it felt like there could be more colors, and that colors could be a way to simplify things, a way to suggest to people that they could support the world holistically, in a balanced way, by thinking about having a set of causes to support.

This grew into thinking about how people will invest in a portfolio of companies, when they are investing in the stock market. Most people spread their investments out over a number of different companies, or invest in a mutual fund, which spreads the investment out for you.

So that's the for-profit stock market, in a nutshell. Invest, hope for the best, celebrate success.


So why not invite people to have a portfolio of non-profit investments?

Some people already do this - they respond to individual appeals on television, or email, or the Internet. Maybe they regularly send a check or digital donation to more than one organization. But chances are that in the modern world of being buried in a flood of information, the messages from non-profits can get buried too. Or there might be a good feeling of knowing you're supporting an organization, in spirit or financially, when you see the magnet on the refrigerator - but the relationship is about as far as that goes. There might be positive intent, but not a very deep relationship.

It would be fair to say that one thing that drives people to be actively engaged in their stock portfolios, or retirement portfolios, is the natural, avid interest in how much it is worth, especially the more you rely on the portfolio for future income or survival. And there's nothing wrong with that.

With donating in a cause, it does seem like there's enough people out there who already are open to supporting causes, but who might find it satisfying to have a simpler way of supporting those causes, and an integrated way of keeping track of the ongoing impact. And the hope, the daydream, the prayer, the aspiration is, that the same dynamics that fuel the stock market could help fuel a non-profit one. That people would gain a clear, focused sense of the impact their donation is having, through the paradigm of a portfolio.

Even the for-profit stock market can be overwhelming to many - witness the success and assistance that financial providers provide. There's so many options out there, it can be overwhelming. And seasoned veterans will tell you that it's hard to "beat the market" -- meaning you can be more successful than others some of the time, but there's always surprises. So a lot of effort can come to naught, you can lose your wealth, significant amounts of it.

And that might be one bright distinction of a  non-profit stock exchange - there may be risk, but there's much less risk of total loss. That is, if you invest wisely, most likely there will be a cumulative impact, and cumulative gain over time. And when you invest in an organization, that sends a signal to other investors -- and that could end up drawing more resources confidently into areas where they're needed, where they are being effectively used.

And maybe, just maybe, the same dynamic of the portfolio could help simplify things, and make them less overwhelming. And maybe, just maybe, color coding could help simplify the issue.

Imagine having a set of cards that represented the causes you're supporting, color-coded for organizations that impact health, the environment, community.


It could be a means of self-expression, and it could be beautiful.

"I'm going to go for a mix of green, red and blue".

"I'm going to go for a mix of red and pink".

The beauty comes from responding to that question about supporting one cause while neglecting others. A color coded portfolio could help people develop a balanced approach towards changing the world, to help holistically - in health, in education, in the environment, not just for the present world, but for future generations. And that's what the idea is really about - investing for the future.

Thanks for reading through this blog post. 

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-Todd

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