Inside Q&A: Serving the Neglected for Profit, Not Just the Good

Inside Q&A: Serving the Neglected for Profit, Not Just the Good

After partnering with basketball legend Earvin “Magic” Johnson around the turn of the millennium, Turner raised $300 million to build shops and affordable housing in Los Angeles and other urban areas. Since launching Turner Impact Capital in 2014, Turner has raised about $1.5 billion to build charter schools, medical centers and housing for low- and moderate-income households. Turner spoke recently with The Associated Press about his goal of marrying “profits with purpose” and why he continues to partner with big names, such as tennis’ Andre Agassi, Hollywood’s Eva Longoria and basketball’s Chris Paul. The conversation has been edited for clarity and length.

NEW YORK (AP) — Making money by helping underserved communities? It took Bobby Turner years to convince big investment funds such a thing was possible. But today, sustainable investing is so hot on Wall Street that investors are rushing into funds that consider the environment, social issues and corporate governance in their strategies. It’s been such a sea change that Turner now warns about charlatans in the business touting big promises but little expertise or rigor. Q: When did you start trying to marry profits with purpose in your investment career?

A: When I graduated from Wharton, I thought that with the creation of wealth would come happiness, and it didn’t happen for me. I became a philanthropist, but I really struggled there because the organizations that my wife and I were giving money to were just really putting Band-Aids on issues. In my mid 30s, I thought that if you want to create durable, sustainable changes, then you had to harness market forces. Doing good and doing well needn’t be exclusive. Using business as a force for good is not bad. I think a lot of people think it is.

Q: How did you get started? A: My first social impact initiative was in 1998, when I launched a series of urban real estate funds with Earvin “Magic” Johnson. I didn’t do this out of the goodness of the heart, I was doing it (after seeing a market opportunity) with strong population growth, huge mismatches in supply and demand and a dearth of institutional capital. Most investors misperceive the risks associated with investing in minority communities. I explained to Magic what I was thinking about doing (with investments in underserved communities). We agreed on everything except how long it would take to raise the fund. I was thinking six months, because the fundamentals were so compelling. He bet me it would take two years to raise $300 million, to which I was a little bewildered.

Q: How long did it take? A: The reality is that we were both right. It took two years and six months to raise that first fund. Back then, there was a belief that anytime you superimpose a social metric on financial investments, you will sacrifice yield. Most investors are trained and taught that profits and purpose don’t play nicely in the sand box. When I graduated in 1984, you had two choices: go into business or go into nonprofits. If you wanted to change the world, the intersection of the two didn’t exist

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