A World Where My Investing Turmoil Disappears

Easy for Your Money to do Good.

I imagine walking my 6-year-old Teddy to our local bank to open his first account and being surprised at how easy it is to have his money held in a way that aligns with our family values.

I imagine when my daughter starts her first job and asks how to allocate her first retirement savings… it’s an easy answer because almost all the options are shared ownership and co-op funds.

I imagine a world where my angst and investing turmoil disappear because truly positive impact investing is made easy.

The vision is one where shared ownership enterprises are the dominant form of business. Firms where the non-capital providing stakeholders get the majority of the profits.

The idea is that 51% of profits from all companies, all banks, all funds are required to go to the employees, users/customers, or other stakeholders critical to the value the firm produces (i.e. a perpetual trust to expand and steward the environmental commons).

Because of the public good these employee-owned, customer-owned cooperatives offer, the government provides a backstop — a la “too important to fail”. Instead of backstopping the big banks, the government de-risks these shared ownership enterprises. As a result, these firms quickly emerge everywhere in every industry. When you invest your capital in these enterprises, they basically come with something similar to an FDIC guarantee. If they fail, they are backstopped by the Federal Reserve — the trusted entity that basically prints money in a way that refills the accounts of the smallest shareholder first. In other words in a crisis, there’s a massive re-distributive affect — as long as the firm was providing the intended social & environmental public goods.

Over a 5 to 10 year period, where this policy is rolled out massive capital is shifted to funds that invest in and help grow these care co-ops, health insurance co-ops, neighborhood housing and farm co-ops, local school co-ops. Companies of every sort become shared ownership enterprises. Current businesses convert to shared ownership and massive profits are distributed to stakeholders.

Household stability grows at an unprecedented rate.

While majority investor-owned enterprises still dominate for a while — and continue exploitative practices, creating harmful damage to people, communities, and nature — gradually shared ownership alternatives grow from marginal players in each industry to the dominant way things are structured. They grow stronger and more resilient because they figure out how to make inclusive, equitable, democratic management work. Their patience pays off. Over time, these entities revolutionize how we work, think, and organize every part of society and our economy.

How do we get there?

Here’s my letter:

Dear finance, tech, insurance, healthcare, utilities, real estate executives,

We all do better when we know what to expect. Growing uncertainty is making our lives increasingly difficult.

We also recognize the current rules of the game aren’t sustainable. We must make a shift to a new set of rules that builds inclusion, equity and a livable future into the fabric of our social compact.

The Proposal: 51% of all wealth (index funds, mutual funds, real estate, savings) must be held in Shared Ownership enterprises.

Shared Ownership enterprises have 51% of the profits (the long-term value from the business) accruing to non-capital participants. For example, the employees, customers, community, nature (air, water, land) , public commons.

In other words, these multi-stakeholder entities might often include a perpetual benefit trust where the majority of the value these enterprises creates goes to those who created the surplus value in the first place (i.e. the workers providing the labor or back to the forests in the case of a paper company).

The vision has massive opportunity for each of your leadership to reimagine a sustainable pathway to longevity for your sector, your business… and, most important… your legacy.

Your legacy is bound up in using this crisis to transform the US and Global economy.

We see where current trends are taking us. Destruction of the Amazon rainforest — the lungs of the world, a deterioration of democracy, the business climate of increasing uncertainty.

Pandemic-scale disruptions and death. Massive global uprisings. Polarization and lack of federal political leadership, super storms, raging fires, ravaging floods… all will continue to a world where even the elites are begging for a change.

Before trust in our government, our Federal Reserve, our market-making regulatory bodies, the rule of law as an institution get eroded — let’s make sweeping change that allows us all to learn the new rules of the game.

Our system has favored capital and put our focus too much on it, excluding land and labor.

Let’s remake our enterprises, all legal entities, as requiring that 51% of the profits must go to a non-capital input of production. Workers, intellectual property holders (nature, indigenous, plants), or customers, policy-holders, neighbors.

Everything becomes a shared ownership enterprise. Even your home mortgage must be 51% financed by a credit union, or other shared ownership fund or lender where the benefits all accrue to a divers set of stakeholders.

Let’s build household stability through shared ownership enterprises.

Let’s rebuild trust and confidence in our future by changing the rules so that all of humanity can flourish.

Published by Felipe Witchger

Felipe facilitates collaboration between investors and entrepreneurs. By developing leaders and allies, Felipe believes marginalized communities can build the power they need to change institutions, systems, and our culture. Felipe also loves building sandcastles.

3 thoughts on “A World Where My Investing Turmoil Disappears

  1. Felipe, you know I have shared your angst regarding investments all my working life. I love your passion and persistence and creative solutions! In the letter you appeal to “the legacy” as being the most important thing to these titans of business, hoping that will be what can finally move them to significant change toward the common good rather than self-interest or family-and-friends interest. I am guessing you have thought a lot about what gets people to change their minds and actions. Is it legacy? Does legacy mean family? Names on buildings? Biographies? Philanthropic family foundations? I ask sincerely. I have thoughts about what changes minds and actions, but I have certainly not figured it out. If we can figure that out, what the compelling appeal would be to convince those with power and wealth and who make the rules to change, we will build that world we want. I guess it goes back to Week 1 and parts of Week 2. I am grateful that you are pulling together all these great and creative people to figure that out together!


  2. I feel your pain! The main challenge is the liquidity requirement of mutual funds. Only a max of 20% of mutual funds with daily NAV can be in illiquid assets. Most of the publicly traded companies are structured as C-corporations. I am not even sure whether a coop could float a class of shares in the public market – a good question for the folks at Cutting Edge Capital (I could provide you with an introduction if you are interested in pursuing this line). Interface (symbol TILE), the carper manufacturing started by Ray Andersen floated the preferred non-voting shares of its company ensuring Wall Street would never mount a shareholder action to get Interface off mission. Besides, the legal cost of going through an IPO and get a company public runs in the 7 digits – beyond the cash flow of most cooperatives. The problem I see with public markets is the absent and diffused ownership of publicly traded companies. Here is a great TED talk about the issue. https://www.youtube.com/watch?v=Z2Uy_ODDiZo
    The Boards and top managers of a C-corp could get sued by shareholders if they adopt policies that do not maximize shareholder value. Another avenue worth exploring is how to save for retirement without relying on public markets.
    There is an interesting network organized by SELC called NextEgg exploring that very topic as a network of peers.
    https://www.thenextegg.org/ Here are some additional resources put out by SELC https://www.theselc.org/grassroots-finance. My line of work is about creating a sort of civil disobedience on the part of investors and get them to boycott Wall Street. Hence my course in September https://bit.ly/TANHIpdf


  3. Felipe–I love this vision! When I’ve had conversations with values-oriented friends and family about investment options for retirement and the like, I’ve sighed and said it’s impossible to avoid some unintended harmful consequences of some part of our portolio, in deference to Modern Portolio Theory and other tools of the financial planning profession. Like Ken, I think it would be helpful to explore outrospection on the current dominant players. For example, I think they would agree that uncertainty is never good for business–“acts of God”, supply or demand shocks are “bad.” On the other hand, I’m not sure they would agree that “We must make a shift to a new set of rules that builds inclusion, equity and a livable future into the fabric of our social compact.” ? What might they perceive they would have to give up by “inclusion” or “livable future”? I would guess in much the same way that corporations view being sued for a certain number of injuries or deaths to be a “reasonable” risk, I wonder if they feel that havin to offset environmental damage with a carbon tax might be an acceptable reason to pollute.

    I would encourage asking questions like, “What political capital have they accrued that would be at risk? What are they afraid of? What gets great companies to change? what trade-offs might they be willing to try?” For example, while I would love to see all ICE detention centers shut down or fossil fuels eliminated, there must be an incremental path, short of revolution or market failure, to help them get from here to there.

    I do think legacy is one of the motivators. Here’s what Interface CEO Ray Anderson said that led to the flooring manufacturer’s commitment to be a zero carbon company by 2020:
    Everyone likes to think their life has purpose. Was mine to destroy a supportive environment? What was my justification for being? When I came down to a basic answer, it was, of course, my family, children, and grandchildren. So in response to that responsibility I go and mess up their future by stealing resources from them and polluting their environment? Nice job!
    See the full article https://consciouscompanymedia.com/sustainable-business/measuring-impact/how-to-start-a-corporate-revolution/
    for more ideas.


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