What is your family’s moonshot?
In 1961, President John F. Kennedy told the US Congress that the country "should commit itself to achieving the goal, before this decade is out, of landing a man on the Moon and returning him safely to the Earth”1.
This bold and extraordinary mission triggered a surge in cross-sector collaboration and innovation by US companies over the following years in the race to the moon.
Inventions from memory foam mattresses2 to cordless vacuum cleaners3 can be traced back to the efforts required to achieve this mission – which was completed in 1969, when Neil Armstrong and Buzz Aldrin returned home after walking on the moon.
Arguably, the moon landing is one of the best and potentially grandest examples of a mission-orientated approach to innovation. It succeeded in achieving its primary aim, but also spawned a range of benefits that have been hugely beneficial to mankind.
Missions have been used in a range of fields, including business and family wealth management, to establish key priorities now and in the future. Famously, Google’s mission is simply “to organise the world’s information and make it universally accessible and useful”.
For many families, there is a growing desire to use their wealth to address some of today’s most critical grand missions, from climate change to gender inequality.
Historically, philanthropy was the primary approach for deploying family wealth to address social and environmental issues. However, another route they have started to follow is impact investing, which aims to generate financial returns and specific environmental or social outcomes. The Global Impact Investing Network estimates that the current size of the global impact investing market is around $500 billion4.
Damian Payiatakis, Head of Impact Investing at Barclays Private Bank, says: “Impact investing responds to the desire to invest purposefully. While it is becoming the way an increasing number of our clients invest their core portfolios, the option to invest to catalyse solutions has a particular attraction for family foundations with ambitious societal missions.”
The role for families in global challenges
The benefit of grand missions like putting a man on the moon is that it galvanises a wide range of companies and entrepreneurs, economists argue. “The space race might be a thing of the past, but the basic economic model still makes sense: massive, targeted investment in research & development remains the best way to make startling technical leaps forward and solve mankind’s greatest challenges”, wrote Christopher Grainger, an innovation economist and data scientist, in an article published in The Conversation for the COP 21 Paris climate summit in 20155.
Climate change is one of the biggest global challenges facing us today. A report from the UN’s Intergovernmental Panel on Climate Change (IPCC) estimates that $2.4 trillion of investment is needed each year in the energy system through 2035 to limit temperature rise to below 1.5 °C from pre-industrial levels6.
Other grand missions are reflected in the UN’s Sustainable Development Goals, which address a wide range of global challenges, including poverty, inequality, environmental degradation, peace and justice.
Supporting a mission
Wealthy families, particularly those with younger Millennial and Gen Z family members, increasingly see the importance of supporting these grand missions through impact investing as part of their wider mission for their wealth.
Plum Lomax, Impact Investing Principal at charity consultancy and think tank New Philanthropy Capital (NPC), says: “From our experience helping family foundations maximise their impact, we’ve seen growing interest in impact investing as a new way of doing good.”
Charly and Lisa Kleissner, who made their fortune in Silicon Valley, have been proponents of impact investing for over a decade, and 100% of their foundation is invested according to impact principles. The Kleissners have decided to focus their foundation on two key missions of climate change mitigation and social justice.
For example, the foundation has invested in a company that develops renewable energy equipment and appliances. The products aim to reduce the need for fuel, improve health and well-being and also increase off-grid energy access. There are now over 500,000 people benefitting from this company’s clean and efficient appliances compared to just over 20,000 in 2014
Plum Lomax says: “The Kleissners contribute more than just investment capital to help achieve their missions: they create additional financial leverage enabling enterprises and funds to attract other investors, provide mentoring and strategic advice, and are advocates for their investees, raising their profile.”
Embarking on a mission
Agreeing to a mission or purpose for a family’s wealth can be extremely challenging, according to Ken McCracken of McCracken Family Business Consulting. He says: “While some family members may be focused on generating and preserving wealth for the benefit of the family itself, others may be focused on grand missions such as climate change.”
Often, these two sides of the debate can pit one generation against another, but impact investing offers an opportunity to meet both objectives, argues Damian Payiatakis.
He says: “Impact investing offers an intersection between the aims to protect and grow your assets and to make a positive contribution to our world. We see families able to reach consensus by investing in the commercial companies or projects addressing global challenges which are meaningful to the family.”
For families embarking on impact investing for the first time, it’s important to decide how to assess the option available. NPC has developed a tool called the Impact Risk Classification, which enables comparison of impact practices against best practice, to measure the effectiveness of an organisation. This can help to demonstrate the benefits of impact investing to all family members.
“The tool also encourages organisations to learn and improve—by not only setting out standards of impact measurement and reporting but also encouraging impact reporting transparency.”
Once families have agreed to a mission, they should work with a wide network of philanthropists, investors, entrepreneurs, social enterprises and charities to increase the impact and effectiveness of their investments, suggests Lomax.
Focusing on publicly-stated missions can galvanise those inside and outside the family, even other companies and organisations working in similar fields, to collectively tackle a common set of goals.
Lomax says: “We think that it’s important that family foundations resist the temptation to stay quiet about their giving. No social problem exists in a vacuum, and by working together we can tackle systemic issues at every level.
“Platforms like 360Giving show you where others are making grants, which makes it easier for you to identify gaps that could be your mission to fill, or work with others in pursuit of a common mission.
“If your mission is shared by others, we recommend getting involved in a cause-related network to coordinate your giving with others. This then makes it easier to take a systems change or place-based approach.”
However, Emma Turner, Director of Barclays Private Bank Philanthropy Service, suggests you should research and scrutinise this network of charities and social enterprises in the same way that you would analyse any new business venture: “I always encourage everyone I work with to do the necessary due diligence on any charity or initiative before getting involved,” she says.
The benefit of a family mission
Agreeing and committing to a mission for your family can be challenging, and it’s likely that there will be other factors to consider as part of the plans for your wealth.
At Barclays Private Bank, we can guide your family or family foundation through this process - bringing the best thinking and customised solutions to build on your achievements, secure your legacy, and help your family to flourish.
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