SHARED VALUE CREATION RETURNS IN TRUMP TIMES
Trump’s first address to Congress left the stock market in a frenzy. For the first time in history the Dow Jones broke the $21,000 ceiling. President Trump promises incredible growth for the United States economy through mass deregulation. The President explained, “for every new regulation, two must be eliminated,” and Wall Street is naturally confident.
However, this boost in the stock market comes at a tremendous cost for many Americans. Trump’s plans to deregulate will eliminate funding for dozens of government agencies. Amidst the electrified economy, the National Endowment for the Arts is faced with the possibility of complete shutdown. The NEA manages a budget of $148 million that is distributed to art programs all over the nation. Without its support, some 2,000 annual grant recipients may not be able to stay afloat, leaving the art community at incredible risk.
Left to pick up the pieces will be support from the private sector. Individual contributions and corporate social responsibility (CSR) initiatives set the foundation for private sector support, but cannot stand alone. The silver lining of the growing U.S. economy is the development of innovative financial products that target social needs with new purpose and precision. These impact investing opportunities are the future vehicles of funding for social needs.
Traditionally, corporations are consumed with quarter reports and short-term financial gains, leaving long-term social investments up to the government. Michael Porter, of Harvard Business School, and Mark Kramer, the managing director of the the social impact advisory firm FSG, note this doesn’t have to be the standard. The economists theorize the following:
“Companies could bring business and society back together if they redefined their purpose as creating ‘shared value’ — generating economic value in a way that also produces value for society by addressing its challenges. A shared value approach reconnects company success with social progress. Shared value could reshape capitalism and its relationship to society. It could also drive the next wave of innovation and productivity growth in the global economy as it opens managers’ eyes to immense human needs that must be met, large new markets to be served, and the internal costs of social.”
This type of value creation is already well under way and just in time. According to BlackRock’s impact investing division, “More and more investors — from major global institutions to individual investors — are looking to achieve their financial goals and fulfill obligations in a way that delivers a long-term, positive impact on the world.” The influx of impact investing is the result of two major factors. First, more so than any other generation, millennials demand investing their money with purpose. Second, technological innovations and data analytics are leading the way for business models that profit from purpose.
Impact investing is the number one tool for captivating private support for the arts when federal funding gets cut. Art investment funds attract investors with above average returns and exposure to the benefits of the art market. To learn more about investing in art funds, email concierge@arthena.com.
