Episode Transcript
COURTNEY: Welcome, everyone, to the Purposeful Planning Podcast. My name is Courtney Joyner-Gage. I'm a Partner at Sorenson Impact Advisory and a Dean of Value Space Investing here at Purposeful Planning Institute. Today, we're very excited to welcome Lauren Sercu, Co-Founder and Managing Partner at Sorenson Impact Advisory. Quick disclosure: We'll be talking about investments today. This is not investment advice; it is for educational purposes only. Okay, let's get started. Lauren, thank you so much for joining us. To kick us off, could you tell us a little bit about your journey and your background that brought you here?
LAUREN: Yes, thanks, Courtney, and thanks to the Purposeful Planning Institute for having me. It's a great day to be talking about impact investing, and I'm thrilled to share a little bit about my journey. I started my career at Cambridge Associates, which is a global investment consulting firm and about as traditional as institutional investing gets. It's focused on endowments, foundations, and families building diversified, endowment-style, multi-asset-class portfolios. I joined Cambridge for many reasons, but one of the main reasons was that they worked with mission-driven endowments, foundations, and families. I wanted to help grow the balance sheets of mission-driven organizations that were already contributing positively to the world in some way. I was lucky enough that Cambridge was pretty early in having an impact investing practice. It had many names over the years: values-based investing, mission-related investing. It's probably the investment approach that has had the most names. We can talk through some of those, but it was rare for a firm like Cambridge to have a mission-related investing practice at that time.
COURTNEY: And Lauren, remind me what time this was, because I think that is important as we frame the conversation, given that so much of this is relatively new.
LAUREN: Yeah, that's right, Courtney. I think Cambridge's practice was set up in the early 2000s, and I joined in the mid-2010s timeframe. So this was really, really early. For me, once I lived through this idea that you could align your investment portfolio with your mission, it was something I couldn't unsee. The idea that you could take it one step further, and that your portfolio could be an expression of mission—not just the engine that funded it—really resonated with me. At that moment, I wanted to dedicate my career to proving that this could work at scale. So I really set off on a journey from there. That brings me to the next chapter. I met a group that was spinning out of Bank of America Merrill Lynch to set up a boutique investment practice. One of the main reasons was that their largest client wanted to move 100% of their portfolio to mission-aligned investing. This was in 2017, so still early—just about 10 years ago. The client was working with the team at Bank of America, and to their credit, they joined the ESG practice and really put their best foot forward.
COURTNEY: They lead in, which is awesome.
LAUREN: They leaned in. They were doing everything they could, but at a big bank, the way it often works is that you can only recommend what is available on the bank's platform. There weren't many socially responsible, ESG—or, as we'll discuss, solutions-oriented impact—investments available to clients at the bank. So they ultimately made a big leap and decided to build an independent firm so they could have open-architecture research that would support an impact investing practice. Then they needed to find someone who could run that practice, and that's where I entered the picture. It was an incredible opportunity. The family was led by Jim Sorenson, who is based here in Salt Lake City, Utah, where I now reside. We set out on a three-year journey and transformed the entire foundation portfolio. We fired every investment manager—more than 30 of them—and replaced them with the best managers we could find who were incorporating mission in some way across every asset class. It was a big journey, but it remains the most rewarding part of my career to date.
COURTNEY: Absolutely. Thank you for sharing and tying your background into Jim's foundation. We're tying in perfectly. Talk to me a little bit about where Jim's foundation and the family were at the starting point of this journey, when you intersected with them and made this decision to go 100% impact. What did values alignment even mean to them at this stage? I think a lot of people listening may be working with families and advisors who are thinking about it but aren't sure where to go next.
LAUREN: Yeah, there's so much there, Courtney. I'll start with where their heads were at because, at the end of the day, that's probably the hardest thing: getting alignment on a strategy and wanting to move this vision forward. As is often the case, you need a champion who's willing to drive it forward, and we had that in Jim Sorenson. Jim, who is the president and principal of the Sorenson Impact Foundation—you can hear it in the name, Sorenson Impact Foundation—believed that the foundation's very existence was to prove that impact investing can work at scale. I think he had decided this a long, long time ago. He started his journey with a really innovative grant-making program centered around building the impact investing field as an ecosystem. He then became one of the first foundation leaders I'm aware of to pursue program-related investments, which can count toward your 5% distribution requirement while allowing you to invest in for-profit solutions that can scale. That was really innovative. He largely used that tool for equity investments, which is a conversation for another time, but he was a real pioneer in that space. The foundation started making program-related investments around 2012, right as the foundation itself was being established. Then, about five years into that journey, in 2017, he looked at his financial advisors and said, "Look, I'm doing such incredible work supporting the field with my 5%. What about the other 95%?" He really had this conversation with his family: "If we have 'impact' right there in the name—Sorenson Impact Foundation—how do we unlock our entire balance sheet to move the impact investing ecosystem forward?"
COURTNEY: Yes. I just want to reiterate what you just said because I think it resonates with so many families I've worked with. When you're looking at philanthropic capital, so many families, rightfully so, focus on the 5%. The stated goal of the foundation is to distribute that 5%. I think it can be really powerful to ask that simple question, as an advisor or as a family member: What is the other 95% doing? Is it counteracting our mission? Is it supporting our mission? Where do we land on how the 95% and the 5% are working together? Even starting there can be such a powerful first step. Another thing—we can dispel a few myths as we navigate this conversation—is that I think it's so interesting that Jim was the catalyst. So many advisors and families assume that it is the rising-generation family member who's just starting to get involved, and that is not the case here. Jim is the patriarch of the family. He was the one driving this mission for his family. As advisors, that's something I've seen quite a lot. It doesn't have to look a certain way. It can be a lot of different people driving the effort in different ways. That's just something I wanted to highlight and keep in mind for advisors who are starting to work with families in this space.
LAUREN: That's right, Courtney. That's an awesome point because one of the things we saw was that there were lots of different opinions around the table. I think Jim's family is so impact-oriented, so you need a really strong champion, which is what I've found. But we also had a really honest conversation. He has family members with lots of different skill sets. For example, he has a son who is in private equity and was trying to understand whether this could be market-rate investing. That then turns us to implementation and how you start to develop a framework to move forward with a strategy like this. One of the interesting things—not to get too nerdy and technical too quickly—is that we kept a lot of things the same. I think there were some voices around the table saying, "So we're kind of doing charity here?" The answer from Jim was definitively no. We were proving that you can align your corpus and pursue market-rate returns at the same time. The punchline is that we've done that, so it can be done. We've got eight years of data to support that. From an implementation perspective, the foundation's mission was unchanged: to be a perpetual foundation that exists to serve the impact investing ecosystem. Because of that, a lot of things about our journey needed to stay the same. We maintained a very similar asset allocation, with only a couple of tweaks. The impact investing ecosystem is particularly robust in the private markets—think private equity, venture capital, private real assets, and private credit—great places to look for solutions-oriented impact strategies. So we increased the foundation's target allocation to private investments from a relatively low base. We were fortunate not to have a lot of capital tied up in long-dated investments, which allowed us to build a really interesting allocation. The only other tweak was that, at the time—and I think this is still largely true today—the public equity universe in the U.S. was often built with a U.S.-centric lens. Typically, you would have a U.S. equity allocation and then an ex-U.S. allocation with exposure to international developed and emerging markets. That framework becomes a little more challenging when mapped to the impact opportunity set. So we adjusted it and created a global equity allocation. Many impact investment strategies are based in Europe and invest with a global lens. In the end, we were talking about a very similar asset allocation with only minor tweaks to align with mission-aligned investing. That was key: keeping a lot of things the same. From there, it was basically a manager-by-manager replacement approach. We've never handpicked securities for clients' portfolios. Instead, we find experts across asset classes. We set out on a journey to identify the best investment strategies we could find across all asset classes and essentially did a like-for-like replacement, which was really easy for the family to understand.
COURTNEY: I really like that framework—keeping things the same, like for like. I think when people think about impact investing, it becomes overwhelming because it feels like such a big shift. But the way you're talking about it makes it feel more like an intentional tweak. We're focusing and moving our attention toward impact while keeping much of the framework and structure the same. I think that leads to an interesting conversation that I know you've thought a lot about: the continuum of capital. I hear you talking about the importance of market-rate investing, but I also know that many people who listen to this podcast work in the philanthropic space or are very familiar with it. I'd love to talk a little bit about that. When you're thinking about systems-level change, there are obviously problems that are best addressed through philanthropic dollars, catalytic investing, and market-rate investing. Could you walk us through an example? What does it actually mean to think about those different pieces of the continuum of capital?
LAUREN: Yeah, ;I love this question, and this is kind of the crux of the work that we do. So I think before we jump into the capital continuum, I'll zoom out. I think most families think about traditional philanthropy and traditional investing as two very different buckets. I hear people say a lot, "I make a lot of money on this side so I can give away a lot of money on this side," sort of two different pockets. We hear that a lot. And I think the mission-aligned investing spectrum, that capital continuum you're talking about, Courtney, is really about anytime you start thinking about those two things as not separate activities, you're somewhere on that spectrum. Philanthropy is something that all of these listeners know really well: pure grants, no expectation of return, maximum risk tolerance for maximum impact. It's a tool that we really need. At the other end of the spectrum, you've got market-rate impact investing, which is full expectation of return alongside measurable strong impact. In the middle, you've got this catalytic bucket we talk about, often called impact-first investing. I think this might be going a little too far, but one reason we have a catalytic bucket is that, in the U.S. tax code, foundations can use a tool called program-related investments. I referenced this earlier in Jim and the Sorenson Foundation's journey. These allow investing in deep-impact solutions as part of your 5% mandated spend to maintain 501(c)(3) status. It's really powerful. One of the things we do with families and institutions is step back. At the same time that we're setting the tone of a relationship from a financial perspective—understanding risk tolerance, return targets, liquidity, time horizon, taxes, all of the things we need to understand financially—we also do the same on the impact side. We ask: What matters to you? What is the legacy your family wants to leave? What does success look like in terms of values alignment and achievement? The really powerful thing is that today you can weave both of those together. You can align your financial goals with your mission. When you see everything together, you stop asking, "How much should we give away?" and you start asking, "How do we deploy every dollar we have with intention?" That is where the true power lies.
COURTNEY: Absolutely. I love "deploying every dollar with intention," and I think that really resonates with philanthropic families. You had talked about facilitating conversations among family members. I think these can be the most interesting, illuminating, and also challenging conversations for both family members and advisors to step into, especially because values can mean different things to different people across generations. There are also differing religious and political views, and it can all get mixed into this conversation. I'd love to hear more about how you help a family find a shared framework without forcing consensus where it doesn't exist. You've mentioned there are differing views, but maybe as you think about the Sorenson family and other families you've worked with, how have you navigated those differences?
LAUREN: Yeah, this is the crux of it, Courtney. This is probably the multimillion-dollar question. I would say. Look, this is something wealth can be tricky for families. We see that as advisors, and I really think this can, if you let it, be the ties that bind. I think the really important thing is to create a conversation and a space and a dynamic where people feel comfortable listening to each other. In the beginning, it can feel like, if you have 15 family members, you'll get 15 different answers of what impact means to each of them. But that's our job: to find commonality and synthesize 15 different unique viewpoints into a single family mission statement that is multi-pronged and can be implemented across that entire capital continuum we see. This is generally the hardest work, and this is where you have the most wood to chop for any family. Our suggestion is to give it the time and space that it deserves. Where we've seen this go really well—and disclaimer, this is not generally a quick process, not a couple of days or …
COURTNEY: Not one meeting, is what you're saying...
LAUREN: No, I do think if you want it to happen in as close to a single meeting as possible, what we've seen work well is for the family to take time together away, maybe plan a retreat where you can have really intentional time to unplug and focus on making forward progress on a family mission statement. So I think half the battle is putting in the time upfront to get a solid foundation and to get everyone rallying around what your family mission is. It can be a really healing and important process for the family. And as advisors, I will just say, once you've gone through this process with a family, it creates a bond from a relationship standpoint that makes you an even more trusted advisor. And not to get too effusive about thinking around impact, but the last piece I'll say is when a family's capital is doing more for them than just earning a return, it creates a patience and stickiness that lends a much more resilient mindset, which is a much better way to run an investment portfolio than in the absence of mission. So I think for many reasons, going through this process is excellent for both families and their advisors.
COURTNEY: I couldn't agree more, and I work in the South, so I find this to be the most fun conversation because there's a lot of strong opinions about impact investing. In many of my prior roles, I have said, "Let's talk about impact investing," and someone just says, “No, I am not interested.” Then you start digging a little deeper because you know they're so philanthropic, they have strong values, they may have strong faith, and if you start peeling away a little more and a little more, I have found that with families it's really about the words you're using. If you get down to the root of what people are saying, there is an interest in doing more with your money. There is a lot more commonality with families than may appear at first glance. Two or three different family members may be saying very different things, but when you start asking deeper and deeper questions and staying curious—saying, "What do you mean by that? Tell me more. What might that look like for you?"—you actually find that everyone is talking about poverty alleviation, for example, but in very different ways. Without facilitation and curiosity, it feels like they're different, but they really are the same. I have found that, like you said, is such meaningful work for families, and it's such a value add as an advisor. It's my favorite part of the whole process.
LAUREN: Yeah, so well said. And so maybe going back to the investment piece, could you give an example of what it could look like to have different investments in those different buckets that we talked about earlier, the continuum of capital. I think sometimes that's a barrier for people and understanding what it could actually look like.
LAUREN: Yeah, happy to. I love getting practical, because I think the manager-by-manager replacement approach is something that I think was a really warm blanket for anyone in the family who might have been thinking, "I'm not so sure about this." So maybe I'll just share the first move we made, because I think this is actually a really easy step forward for families. We had—I'm sure very common for folks—a pretty healthy S&P 500 equity allocation that was passive. That just means it was trying to track the benchmark; no one is trying to beat it, we're trying to replicate it. We were in an exchange-traded fund, or ETF, which trades like a stock but is a basket of all 500 stocks tracking the S&P 500 index. We started working with a group called Ethic in New York City. The technical term is that they're direct indexers. Instead of lumping you into a vehicle like an ETF with a bunch of other investors, they build a portfolio where you own the stocks directly. You do need a minimum amount of capital to do this, but it's actually only $250,000, so a pretty reasonable minimum. What they do is this: you don't need to own all 500 stocks in the S&P 500 to replicate, within a certain degree of confidence, the return of that index. So you can own a subset of the stocks and still get very, very similar performance. What Ethic specializes in—it's right there in the name—is identifying roughly 200 stocks in the S&P 500 that are better aligned from an environmental, social, and governance perspective. Even more interesting is that their model allows them to sit down with your family and ask, "What are the five things you care most about?" Then they build a custom portfolio that further refines those 200 stocks against those five themes you identified. So that's a way where you're locking in very similar returns to the S&P 500, while also getting additional advantages beyond a mission-aligned portfolio. For example, if you have taxable pools of assets, you can do tax-loss harvesting much more effectively when you own a basket of stocks directly. So that was what we called one of our low-hanging fruit moves—something that people could really easily understand.
COURTNEY: Great first step. Everyone can understand it. You probably already have similar exposure in your portfolio, and it's just that like-for-like approach you were talking about earlier.
LAUREN: That's right. That's right. So that was easy peasy, as we like to say.
COURTNEY: So for our philanthropic friends out there, where does traditional grant-making still do things that even the best impact investing cannot? What is the irreplaceable role of the grant dollar, and how do you think about those things working together?
LAUREN: Yeah, I love this question. Grant dollars are still wildly important because they go anywhere the market won't go. And the market won't go a lot of places. There are community solutions and early-stage interventions that will never generate a financial return, and these are often the most important where the impact is most critical. Whether it's advocacy, policy change, grassroots organizing, or community development, these are areas that require risks that commercial, market-rate investors just aren't suited to take. So we will always need the grant dollar. They are incredibly important. But I think the most mission-aligned families are starting to understand that philanthropy and impact investing aren't competing—they're complementary. The grant dollar prepares the ground, and the investment dollar scales what grows.
COURTNEY: I love that philosophy. So one last question for you. As you look back at the work with the Sorenson family, what are you most proud of? And if you could leave every family and advisor with one idea about what their capital is truly for—and maybe how to take a step forward—what would it be? I think a lot of people think they need to make this huge leap all at once into impact, but let's think about just steps at a time. What would it be?
LAUREN: Yeah, oh I love this. Perfect way to end. I think what we're most proud of—and I'll say we, because without the family that started this, and Jim and his belief, this journey has just been incredible—I think the first thing I'm proud of is the proof of concept we set out to do. We have built an endowment-style portfolio. It is generating market-rate returns. So we kind of went from "we believe this is possible" to "we know this is possible." We can tell your listeners that. And that's just a different kind of permission. The second thing is building the firm itself. Sorenson Impact Advisory is a first-of-its-kind, fully independent, 100% dedicated impact investment advisory firm. That was a real risk when we started it. But Jim and I, and everyone else, believed the industry needed a dedicated mission-aligned player. So that's the other piece I'm super proud of. Where I'd love to end, Courtney, is with your question about what to leave families with. I would just say: your capital is already making a statement about what you value. I'll say that again—your capital is making a statement today about what you value. The only question is whether that statement is intentional. So the invitation is to get together as a family, look at the philanthropic mission you've so carefully crafted, and examine what the rest of your capital is working toward. When you close that gap—when every dollar is working in the same direction—something shifts: for your capital, for your family, for our world. That's what I'd love to leave everyone with. It's been an incredibly rewarding journey for all the families we've brought along.
COURTNEY: That's a great final note. I think you could replace the word intentional with purposeful, tying it back to PPI. Everyone in this community really values purpose and intent, and thinking about the bigger picture—how philanthropy, legacy, the rising gen, your estate, and your investments can all work together with purpose and intent. I think that's what success looks like for families and advisors, or at least advisors listening to this podcast. So thank you so much, Lauren, for joining us, and thank you all for listening to the Purposeful Planning Podcast.
LAUREN: Thanks for having me, Courtney and PPI. We appreciate you all. Take good care.
COURTNEY: Thank you.
