Rehana Nathoo is the Founder and CEO of Spectrum Impact, a strategy firm that supports organizations looking to expand their impact investing footprint. Her work has been shaped by a decade-long learning journey in impact investing. Rehana previously led the impact investing portfolio at the Case Foundation and worked with Bank of New York Mellon to create a pilot impact investment fund. She led grantmaking for the impact investing program at the Rockefeller Foundation and started her career in project finance in East Africa with the UN Capital Development Fund. Rehana currently serves as an adjunct professor at Georgetown’s School of Foreign Service on impact investing and global development.
“It’s easy to build impact investing strategies, it’s harder to institutionalize them long-term, usually for three reasons:
- Either you lack C-Suite-level buy-in, or
- Organizations focus on quarterly performance vs. a long-term commitment. The problem is that in impact investing, we are building solutions often untested or supported in the market – we need a longer time horizon.
- We forget to play to our strengths – we meet lots of organizations developing impact solutions in areas that they don’t have expertise, or resources. There’s an impact play almost everywhere.”
Now you have a sense for the level of conversation I found myself in with Rehana Nathoo in January 2019. When you bring up the topic of impact investing strategies, she takes you on a rollercoaster ride of financial terms and market volatilities that you better buckle up for!
“At Spectrum, we build impact investing strategies that are aligned with the clients overall strategic direction. Each client has a unique set of skills and capacities. More often than not, our work starts with an honest assessment of what the organization’s strengths and weaknesses are. In fact, this might be just about my favorite part in any engagement: asking questions to tease out what’s working and what’s not: assets, limitations and models (SWOT). It’s meaningful to me because I have been in their chairs. And because I spent several years at their side of the table, I see the value of having neutral observers and facilitators first-hand.
I teach part-time at Georgetown. I take the role of translation very seriously. I did not get an MBA or any formal-Wall Street training – I trained on the job or in my own time, so I know what it means not to feel like an expert – the translation is the best part of the work!
Our clients fall into two niche categories:
- Large or small for-profit companies that have a theory of change already, and want to create a business line around impact investing. That includes for-profit startups such as Ellevest, a digital financial advisor. I learned a lot working with Ellevest – for example, most savings-based products are very male-oriented – algorithms designed for the life expectancy, retirement age and lifestyles of one half of the global population! Ellevest is an example of an organization that inherently applies a gender lens to create service offerings that fit the bill for any non-white male investor.
- Helping on-balance-sheet fund managers – organizations using their own capital, or that of a parent/central entity – to figure out how to put their capital to work. A good example would be helping to build the investment strategy for the Equality Fund, a $300M CAD global gender-lens movement bringing together pioneering gender-inclusive grantmaking, investment, and philanthropy, all under a single structure and backed by the government of Canada.
What trends have you seen in the impact investing world over the last decade?
“It’s not only a new chapter but an entirely new book which is both exciting and frightening at the same time. What has changed the most are the size and types of organizations that are involved in impact investing – everyone is finding a role for themselves in impact investing. But I sometimes worry that everyone is chasing the same role – the returns-oriented private capital investor. There are a number of key roles and responsibilities that are still undefined and unmet – we still need philanthropy, patient capital and catalytic investments to make all of this work!
In the rush to declare that we are ready, we have lost sight of the fact that a lot of infrastructure is still missing.
On the upside, I am excited about the strides we have made in terms of transparency and measurement! The myth has historically been that we can’t measure impact, but development and philanthropy sectors have been measuring their outcomes for decades. It’s not like we’re starting from scratch! Yes, it remains challenging – in part because it is not standardized – but it’s doable! We can at least lean on frameworks such as the IMP, GIIRS or IRIS+.”
What about smaller-scale investors and investments?
“We now have a number of products available for unaccredited investors, like offerings from folks like RobinHood or CNote. The role the individual gets to play has never been bigger. As social consciousness is growing, customers and consumers have a voice too – we can use that voice across social media, in our grocery stores, or where our 401k is invested.”
My work is useless if there are no impact-driven entrepreneurs to invest in.”
On being self-employed…
“I am a very risk-averse person and a planner by nature. Deciding to go out on my own after spending ten years in big organizations meant unshackling myself, but also opening up to the risk of not making ends meet and not really having a plan.
- The first six months I was mostly fighting the notion that we wouldn’t have any business. But I am blessed with a network of cheerleaders that made sure I had work by day three.
- Then, when we were making some money I thought that I had to go at the same speed which meant taking on clients that weren’t always a perfect fit.
- Now in phase 3, I feel like we are learning to ride through the lumpiness.
Charge what you’re worth, delegate & network
I am very lucky to have mentors who have guided me through this process. The single best advice I got was to charge what I’m worth. Two freelance mentors intervened early on and chastised me for undervaluing my work.
If you’re not being paid fairly, it’s a lose-lose.
You are miserable because you feel like you’re doing much more than your client values, and the client is unhappy because your attitude is one of resentment. If they feel like they’ve overpaid you, then it’s unlikely your work will meet their expectations. The rate has to be a win-win.
Instead, I recommend basing your fees on the value it creates for your client (for more on this, I recommend the book Values-Based Fees by Alan Weiss).
The second piece of advice that I would pass on is to know exactly what you’re good at and what you’d rather outsource. You simply cannot do it all! You may start out doing everything in the beginning but as soon as you have revenue coming through the door, I recommend you focus on your expertise and offload any tasks outside of that to other team members or contractors.
Lastly, I recommend you leverage your network. My network was the reason that I could go out on my own and have some assurance that I would have clients. This sounds very tactical but the truth is that we are more comfortable doing business or entering any kind of relationship with people who we know or who are part of the same circles – and getting referred by someone you know is the ultimate vote of confidence.”
Rehana in action
- On Medium
- In this interview on IE TV, talking about Spectrum Impact
- At the Social Capital Markets Conference (SOCAP), talking about value of democratizing impact investing, particularly for advisors and everyday investors
- As a guest contributor on Impact Alpha, talking about a range of issues from training to myth busting
- With Tony Lloyd on the Social Entrepreneur podcast, Jamieson Webking on The Impact Investing Podcast, and Bethany McLean on Untold Returns
- At the Impact Investing World Forum, discussing the Case Foundation’s launch of the Impact Investing Network Map
New York City, NY, USA
Founder and impact investing strategist. Adjunct Professor and SOCAP Veteran. Lover of spreadsheets & books. Master of gratitude.