Impact Investing: Can We Pay Her Less?
Monday, June 2, 2014
I was in New York City meeting with an advisor who offered to help raise investor capital for our social enterprise. She was reviewing the business plan and numbers, then looked up and asked, “Can you pay the women less?”
My partners and I didn’t know what to say. I’m pretty sure our mouths were stuck open as an uncomfortable silence followed. Eventually I asked, “Have you read our mission statement?”
Prosperity Candle creates opportunities for women in regions of conflict to escape poverty. We invest in women entrepreneurs with the goal of helping them not just survive, but truly thrive. It’s the hand-up-not-hand-out approach, and we focus on some of the most difficult places where few are willing or able to go. Like widows in Iraq.
I pointed out that by paying the women less we would at best increase profits by 1%. But it would cut their incomes by 25%, a devastating cost reduction that would undermine our objective while hardly strengthening the bottom line.
The advisor, a financier with a good heart, told us that while our model promises significant impact, impact-minded investors would pass us by in favor of a higher financial return. We are inspiring, but not competitive in the impact investing world.