Over the past 50 years, the United States has experienced a sharp rise in economic inequality accompanied by an equally steep decline in social mobility. Today, the richest 5% of Americans own roughly two-thirds of the country’s wealth. The lack of economic opportunity has led to many Americans feeling disenfranchised and has increased polarization in the political system. Addressing systemic issues, such as inequality, requires a combination of public policy changes and private sector innovation. Specifically, private institutions can contribute to the well-being of society, whether they operate as a for-profit business or a nonprofit organization. In this regard, impact investing can play a unique role in addressing the inequality issue in the United States by providing resources to reveal untapped potential.
Goldman Sachs engaged with the Capstone team to investigate market-rate investment opportunities that address socio-economic inequality and environmental injustice with a related set of metrics to quantify impact and progress. The Capstone team first identified three drivers to be the top contributors to economic inequality in the United States: (1) Barriers to entrepreneurship, (2) Housing and (3) Education. Over 88 entities were then gathered as potential investment opportunities. The entities were researched and analyzed utilizing the Transformative Impact Grid developed by Gary Community Investment. Outreach was performed to gain a deeper understanding of the impact, financial and operational performance of the 22 entities that highly ranked in the Grid. Five actionable investment opportunities were identified based on the research and due diligence described above.