Aligning Public Equity with Social Impact: The XX Factor

When I founded the Tara Health Foundation three years ago, I was committed to using all the assets of the foundation towards a mission of improving the lives of women and girls. This meant that in addition to traditional grantmaking, I also directed 100% of the foundation’s endowment to mission-related investments.

As I got deeper into the work, I found it relatively easy to see the connection between my grantmaking and social impact. As I gained experience with private investment deals, I could also clearly see the social impact of the companies in which I was investing. However, when selecting a public equity portfolio, I found it very difficult to know if my investment decisions were creating a social impact. Is divesting an effective strategy? Can an impact investor do more to influence the public markets? What about shareholder activism? What screens and filters should be used to select public companies that are doing the least damage and, ideally, actually doing some good in the world?

Initially, I was delighted to see the number of gender lens investment options that are currently available in public equities. However, my excitement all too quickly faded when I investigated deeper into the evidence base of these investment options. Most fund managers had strong intentions, but little proof to determine how to link the filters they used to make investment decisions with actual social impact. In most cases, the sole filter being used to select companies for gender lens investing was the number of women in leadership positions (either board members or senior executives). 

While there is a good reason to believe that having diverse leadership at public companies is good for the companies, there isn’t any evidence to date that links this to actual social change in the communities in which these companies operate.

This problem is what led me to the University of Pennsylvania’s Center for High Impact Philanthropy (CHIP) to fund a project that would help philanthropists and social impact investors looking to improve the lives of women and girls. Founded a decade ago as a collaboration between the School of Social Policy & Practice and alumni of the Wharton School, CHIP seeks out tested and evidence-based solutions that help philanthropists achieve greater social impact.

For this project, CHIP set out to identify markers and measurements that most reliably link to social impact for women and girls. CHIP then partnered with the Wharton Social Impact Initiative (WSII) to investigate the evidence base of some existing gender lens investment products. WSII has worked in the gender lens investing space since 2014 and has collaborated with Bank of America/U.S. Trust, Criterion, Women Effect and others to define and capture trends.

The work by CHIP and WSII resulted in two substantive reports: one by CHIP that establishes a comprehensive playbook for philanthropists interested in improving the lives of women and girls (the XX Factor) and another by WSII that examines public equities that are actively being marketed with a gender lens focus (manuscript in progress).

I’m thrilled to say that Tara Health Foundation is actively using the XX Factor to evaluate impact-investing decisions in grantmaking, public and private investments. I hope you will too.

Ruth Shaber (TPW 2015–2016) is the founder and president of the Tara Health Foundation, which promotes health, well-being and opportunity for women and girls through innovative evidence-informed programs. Her philanthropic goals include advancing the field of gender lens impact investing. She started her career as an Obstetrician and Gynecology at the Kaiser Permanente South San Francisco Medical Center in 1990. From 1997 to 2003, she served as chief of Obstetrics and Gynecology and from 2001 to 2007 she served as the director of Women’s Health for the Northern California division of Kaiser Permanente. She is also the founder of the Women’s Health Research Institute in Kaiser Permanente’s Northern California Region. Ruth was the Medical Director at the Kaiser Permanente Care Management Institute (CMI) from 2007 to 2012. She is a member of the board of directors at Jacaranda Health and on the National Medical Committee for Planned Parenthood Federation of America.