Welcome to another episode of the Bonfires of Social Enterprise. This is Romy and today we head over to the Impact Investing Inglenook to chat with Douglas Bitonti Stewart about his recent article titled ‘Impact Investing and the Development Professional: Learning to Ride the Wave’. You can find this published article in the Fall 2017 Issue of Advancing Philanthropy Magazine. By the way, we have a lot of links in our show notes for this episode if you want to learn more, which, I am certain, you will after hearing from our guest. Doug shares his very unique perspective on fundraising in the philanthropic space and how that relates to impact investing. Stay tuned until the very end for a special song from a Detroit artist.

Let’s jump right in to the conversation with Doug.

Romy: Well, welcome to the podcast. We're going to talk today about the article you wrote, Impact Investing and the Development Professional. I love that we're going to talk about this from the framing of a development professional because it's rarely discussed, and you have a lot of experience with it. So we'll give links at the end of where this article can be found, and so let's dive right in and talk about the overview of the article first.

Douglas Stewart: Sure. So thank you for thinking enough of the article to have a podcast about it. I love your podcast, and I think everybody should be listening to this, and I'm also really hopeful that development officers will start listening to your podcast because this is really important stuff.

To start with the why that I felt this article was even necessary. For me, having spent 20 years as a development guy, working for mostly children's hospitals, I loved that work. And after doing that for 20 years, I was just lucky enough to be asked by a family to help run their family foundation.

I never thought I was going to do that. Didn't design my career for that but was found myself ... When you've done development long enough, you start to see your role not as raising money, but you see yourself as helping people change the world. And some people do that by contributing money. Other people do that by contributing their careers.

And so I had a chance to work up alongside a family, and so, I ended up becoming a foundation person, but not because that was my goal. So in my role as a foundation person, I was seeing donors, foundation staff all learning about impact investing. And it was really exciting, and then when I looked back at my peers in the fundraising field, I looked at their training sessions, and I didn't see anything there.

And there was one article in this publication of the Association of Fundraising Professionals a couple of summers ago. It was a cover article, and it talked about impact investing, but there hasn't been anything in there since or before. And I felt like, "Okay, I'm going to pull the curtain back about what foundations are learning and put it in the context of a development officer so that they can start learning about this because there's opportunities here."

Romy: And, Doug, just for our listeners in case they don't know the terminology, how do you define a development officer?

Douglas Stewart: Sure, so for me, and when I think about that, I think of someone who is engaged in raising money for a for-impact organization, and I'll tell you why I use the for-impact and not non-profit. But for-impact organizations that are 501(c)(3)s, and their job is to help raise money for that.

Now look, that could be the executive director, that they don't have a development officer or a development person. It could be a volunteer that does that but doesn't get paid and so forth, and so it's really anybody engaged in the fundraising enterprise. And just to harken back to what I said a minute ago, so it's anybody who helps people change the world through investing or giving their resources away, whether that's time, talent or treasure.

But the classic definition is a full-time fundraising; this is what I do, this is what I get paid for. That's what this article was really, who that was written for. It was a full-time fundraiser, a profession fundraiser.

Romy: And where would normally a full-time professional fundraiser or a development officer go to learn about things like this?

Douglas Stewart: So there are national conferences like for the Association of Fundraising Professional, there's local chapters, and so they have monthly meetings. There's even another organization called the Association of Healthcare Philanthropy, which is another sort of subset of development officers that come together.

Where universities play a role, we have a university that's not too far from here that actually has 450 full-time development professionals. So for them, instead of buying their training, they make it. So they'll have a training department, and that team and different components would meet every month, and they would go deep on some kind of topic.

But I'm hopeful that a couple of things happen because of this article and because of this podcast and your attention to it, that development officers will start reading the things donors are reading. Start reading the things the foundations are reading. There's a publication called the Foundation ... Oh, my friend's going to kill me for not knowing this. It's called the Foundation Review, the Foundation Review by Grand Valley and the Johnson Center for Philanthropy at Grand Valley, Foundation Review.

It's a peer-reviewed journal. All the foundation folks are reading it, and I think all the development officers should read it. GrantCraft is an online system that the Ford Foundation created, and foundation folks read it. But I don't think develop ... I didn't. I should just own it. I didn't know when I was a development officer. I didn't read these things. So they need to start reading the things that donors are reading.

Douglas Stewart: You and I have talked about that before and the for-impact. When the development professionals grab hold of this, the good news is, is that there are a lot of resources for them to find that will already talk about all these tools. The Mission Investors Exchange, it's a great example. There's a number of, and we can talk about those other resources in a bit, and they're in the article too.

Thankfully, they won't need to see another article from me because there's so much out there that's being written for individual investors and the program folks in foundations and so on. So what I'm hoping is that the development professional will look at this and, as they did, to planned giving way back when.

That they'll grab hold of this tool, and all of a sudden, it will be one of the tools that they utilize. Program-related investments were born the year I was born. Well, I should say, they were codified in the tax code the year I was born, 1969. But they were actually created before that. The tax code was just mirroring what people were doing, and I'd be happy to give you an example of one that was even before the tax code hit if you want it.

Romy: Yeah, let's do it.

Douglas Stewart: You want it?

Romy: Yeah.

Douglas Stewart: This is a little bit self-serving. It obviously wasn't me because I wasn't born before 1969, but in 1965, Max Fisher, the namesake of the foundation that I'm very, very lucky to serve, he and a group of leaders in the Jewish Community organized a $55 million, actually it was $50 million, $50-million loan to the Jewish Agency for Israel. Now, think about this. 1965, a really important time for the state of Israel.

Romy: Oh, yeah.

Douglas Stewart: So lots of immigrants coming in, all sorts of things going on. The state of Israel is just getting its legs under it and starting to move and so forth. So they didn't have as much as certainly what we have right now in terms of health and human services departments and all of that. So the Jewish Agency is, even today, is a quasi-governmental agency-

Romy: [cross-talk 00:08:10 ].

Douglas Stewart: ... but it's a for-impact or what they would have called then an NGO, a non-governmental, but it was almost quasi. So that money came from 11 U.S.-based insurance companies. They collectively lent the Jewish Agency for Israel $50 million for 15 years at 5 1/2%.

The collateral was the good faith and credit of the American Jewish people, which means they didn't have physical collateral that they could just seize. And so, that 5 1/2%, I looked this up, and I'll tell you where you can see this story too. But 5 1/2%, at that time, was the mortgage rate in 1965.

Romy: Oh, yeah.

Douglas Stewart: And the only reason I know that is because I looked it up, and I wanted to see, was this a concessionary loan, right? And it turns out it was because you can't get a mortgage with no collateral, r