The following is a conversation between Ron Cordes, co-founder of the Cordes Foundation, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer in New York City.


Denver: When it comes to second acts that are dedicated to the greater good, it would be difficult to find anyone who has done it much better, or had more fun in the process, than my next guest. While many who venture into the world of philanthropy for the first time just go with the flow, he has pushed the envelope from the very start to find better and more creative ways to use capital for social good. He is Ron Cordes, the co-founder of the Cordes Foundation. Good evening, Ron, and welcome to The Business of Giving.

Ron Cordes

Ron: Thanks, Denver. It’s great to be here.

Denver: A successful second act usually rests upon a successful first one. So, tell us about that  and what you did before you started the foundation.

Ron: Sure. My first act story is frankly fairly simple. I was the first of my family to get a college degree. Typical. Graduated on a Friday, went to work on a Monday. Got into the investment business, which was the passion that I had in my 20s and 30s and was fortunate enough to meet two young peers who ultimately became my business partners. We formed an investment consulting firm called AssetMark in 1990s that caught a wave in the industry, became successful, and we ended up selling the company in 2006 to a global insurance company.  And that led to my wife and I creating our foundation.

Back story, the sale of the business was really driven by a conversation I had with my two partners in 2004. I turned 45, and I just felt like I was ready for something else. The terms first act and second act and encore weren’t really even in the lexicon yet, but I just felt like there was something else that I was meant to do, and I felt like I needed to move from what I was doing currently into a new space where I had the time and bandwidth to explore it.

Denver: So when you sold that company in 2006, and you decided you wanted to dedicate your time and resources to making a better world, you probably envisioned making grants from a foundation. But that’s not exactly what happened. How did you first get introduced to the world of social entrepreneurship and impact investing?

Ron: If you’d have asked me 12 years ago, I would have said exactly that. My wife and I were envisioning ourselves being traditional philanthropists because that’s the only model that we had known and seen. So, I became introduced to social entrepreneurship because I was part of starting a program in a university in California. A dear friend called me up and said, “I’ve got an opportunity to start a social entrepreneurship program at a university in California.” I said, “Hey, I want to help. I’m all in. I just have two questions: One, where is this university? I’ve never been there. Two, what is social entrepreneurship?”

Denver: Two good questions.

Ron: This friend has become a dear friend since….  Jerry Hildebrand connected me with a book written by David Bornstein, who I also came to know over the years, called How to Change the World. Something about social entrepreneurship just clicked with me. I think I’m hardwired to build things. So, the entrepreneur in me, that book, and beginning to meet a bunch of social entrepreneurs really started to have me thinking that I spent the first half of my career, my first act, building what I’d hope to be the best business in the world.  Could I focus my second act on helping to build the best businesses for the world? That’s how I got started down the social entrepreneurship track.

For me that ‘why’ was this crystallization that I’d spent 30 years in the investment world, and I really thought that I was leaving that world to go into the world of philanthropy. Now, I was finding that I could still apply a lot of the same skills and experience that I’d had from the investment world, but do it in a super productive and meaningful and powerful way, where I could use investment tools in a way to help not only Florence, but hopefully a million other women like her.

Denver: You have said, Ron, that one of the most important days of your life was November 1, 2008 when you were in Uganda. What happened that day?

Ron: With this University in California, I had taken a group of academics and business people to Africa. We were looking at a variety of different projects, some philanthropic and some like this project done in Buyobo, Uganda, an impact investment project. The microfinance program that we had helped create, and we made a small capital investment to fund the first 20 loans for the women in this village, and we went and visited them. They were excited to see us, and we walked down this street in the village, and each one of the women showed us the businesses that they created with their loan, and there was one woman. Her name is Florence Meduku; she has remained a friend over all these years… who pulled me aside and had something really important to say. What she said really crystalized for me. She said, “We appreciate when you people from the US come to Uganda to save our children. But we need to save our own children. Thank you for investing in us so we can do that.”

That kind of hit me like a lightning bolt. For me, November 1, 2008; Mark Twain has this great quote, “The two most important days of your life are the day you were born and the day you find out why.” For me that ‘why’ was this crystallization that I’d spent 30 years in the investment world, and I really thought that I was leaving that world to go into the world of philanthropy. Now, I was finding that I could still apply a lot of the same skills and experience that I’d had from the investment world, but do it in this super productive and meaningful and powerful way, where I could use investment tools in a way to help not only Florence, but hopefully a million other women like her.

Denver: I don’t even recall whether impact investing as a term existed at that time. But you, very early on with your foundation, invested 20% of it in these purpose-driven, socially good businesses. How hard was that at that time to do something like that?

Ron: It was like the wild, wild West. There was no infrastructure that existed. We’d been part of this university program, so we hired a couple of young MBAs. It was actually  Lynn University today. It was originally, the University of the Pacific in California because I was based in San Francisco.

Denver: You made the commencement speech there I saw last year.

Ron: I did. So, we brought in a couple of young MBAs, and we said, “Get out and give us the universe of everything that’s available in this new field of impact investing.”  And the universe was small, but we did by August 2008, we were proud of the fact that we’d invested 20% of our endowment across about a dozen different funds and investments, mostly in the developing world. Of course, in September 2008, the world implodes, the financial crisis. One of the things I was concerned about was, I really felt strongly about the impact theme of these investments that we’d made. But how are they going to perform financially here in the worst financial crisis of my lifetime against everything else we had in our portfolio?

Wouldn’t you know that when everything was marked to market at the end of 2008, that 20%– not only wasn’t the worst performing, it was actually the best performing in our portfolio. So, I found from an investment world, this kind of uncorrelated investment category, and that really propelled my interest to say,  “There’s something here. How is it that I can get in front of this, become an evangelist for this, and maybe help build some infrastructure to help this field move forward?”

Denver: That’s absolutely fascinating. I guess Florence didn’t have any derivatives, right?

Ron: I joked at that time that it was as if Florence and a million other entrepreneurs around the world just hadn’t gotten the memo that there was this global financial crisis. They had borrowed some money, built businesses, paid the loans back, and were going on with their lives in a very productive way.

Denver: Are there any legal standards or thresholds, Ron, to be considered an impact investment?  Or can any old investment just slap that label on it if it so chooses?

Ron: That’s a great question. Today, it’s probably still more of the latter than the former. It’s by definition. But what’s happening is the industry, and I’m proud of the fact that I’ve been involved in a number of efforts over the last decade to help this process, the industry is building its own internal standards that investors and advisors are looking to.

So, there’s various organizations that have come about largely led by an organization called GIIN, Global Impact Investing Network. There’s a corollary organization called B Labs, which has come out with this B Corp certification. Between them and a few other initiatives, there are now ways for an impact investor to start, when they look at an investment, to start checking some boxes and saying, “Is this investment aligned with some of these standards, so that I know that the concept of impact is more than just a conversation?”

Denver:  So, they’re really trying to put a measurement to that social impact. Is there a danger that when you’re doing that, and you fall in love with your investment and all the good it is doing, that you forget about the financial return?

Ron: There is. One of my favorite quotes is that, “The longest journey in the world is the 12 inches between your head and your heart.” I think that impact investing is really investing along that spectrum. For me on the heart side, it was experiences like with Florence in Buyobo in November 2008. On the head side, it was clearly seeing the financial results that were meaningful in our portfolio. One of the dangers of impact investing is that you have to be rigorous financially. We have folks coming to us all the time with proposals for “investments” that really make more sense on the grant side of our portfolio, and we’re more than willing to provide some early-stage grant capital to help seed ideas that could end up being commercially viable down the road. But it’s a difficult conundrum sometimes to separate the two and to say to a social entrepreneur, I love your impact theme, and I love the good that you can do in the world with this, but you need to build this further before it’s ready for investment capital.

Denver:  A business model would be useful here.

When I think about impact investing, I unfortunately tend to look at it more in a transactional way. That’s an investment that’s going to have a positive social and environmental impact. But ideally, it’s also about the way investing is done and how we think about the purpose of capital. Do you see signs of that beginning to take bloom?

Ron: I do. I think that there is much greater conversation happening today between investors or asset owners and their advisors about connecting their portfolios with their values. It comes from two sides.  One is the transactional nature of: ” I’ve got x amount to invest, and I care about this. How do I do it?” The other though, is the more strategic and important side of determining: “What are the things that I care about?  Or what are the things that we care about perhaps as a family? And how is that we can use all of our capital?” When I think about capital, I think about philanthropic capital, investment capital, and social capital. Social capital, the capital that I’m expending this morning in evangelizing the work that we’re doing. I’m finding that the best advisors out there, those that are the most enlightened in this area, are really starting to work with clients around that continuum of:  How do you create a legacy for yourself and your family by defining what your values are, and then trying to apply all of your capital toward those values.

Denver: That’s so interesting because that seemed to be the missing piece to the equation for a long time. They were waiting for their clients to say: “I’m interested,” as opposed to being proactive saying: “You might want to think about this because if you can get those intermediaries to be active in this process, it really is a game changer.”  So, when you started this 11, 12 years ago, impact investing, do you think the movement has gone faster than you thought it would be… going back then, or perhaps not as fast as you would have liked or expected to have seen?

Ron: I was asked a year ago to give a 10-year retrospective because, as you mentioned earlier, it was about 11 years ago that the term ”impact investing” was even coined. It was coined at one of the Rockefeller Foundation retreats. That helped the industry start to crystalize. My comment at that time which I still believe is that things happen more slowly than you would like them to. So, this is a major paradigm shift. I would have expected candidly when I got started in this that if I was being interviewed 10, 12 years later, that the industry would have perhaps moved forward more quickly. But at the same time as I look back, I am really proud of all of the work that’s been done to get us to this point.

You made a point that is really germane in the space, and that is that all of the surveys that are done today say that the asset owners, the investors are ahead of their advisors. A higher percentage of asset owners- 60% to 80 % in the recent survey including millennials and women investors at the top end of that, a much higher percentage of asset owners are interested in pursuing this than their advisors recognize.

So, having come out of the investment business and having some experience and cred with the advisor community, I do spend a lot of my time talking to investment advisors about the fact that if they’re not having this conversation with their clients, they’re missing something that their clients are interested in talking about. And if it’s not with them, it might ultimately be with someone else. So, I encourage them to get smart about this, to begin to have conversations because I think that they’ll find that their client base is more interested than they have given them credit for.

Denver: It just seems to me that this impact investing art, we have seen so many times before. What happens is, as it starts with a lot of hype, but it never lives up to the hype, and then is left for dead. And then actually it begins to reach that reality or that possibility that we had in the first place. A couple of other examples of that would we internet shopping. I remember people shopping online. It was going to change everything. Department stores are going to close. Nope. People still want to go to the store, touch the stuff, see the stuff. Now we see that everything is going to be online pretty soon.

The same thing is true for online education. I remember how online education was going to close colleges. Now, you see online education beginning. So, I think the same thing is happening in impact investing. What kind of role have family foundations played in this? A lot of people tend to look at the big money at foundations and think they’re going to be leaders in this, but family foundations have really been incredibly active in this impact investing space.

Ron: They have. It’s been a bit disappointing honestly that with about $800 billion of assets today in foundations, foundations in general have not been leaders in the space. Several of the largest foundations; Ford Foundation’s made a recent commitment, Gates. MacArthur, some others have started to commit single-digit percentages of their portfolio.

So, what I found is I spent a lot of time today talking with other families that have situations similar to ours where they may have been fortunate enough to create a foundation, and what I’m finding is that the leadership is coming from first generation family foundations where the wealth creators, in this case my wife Marty and I, are in charge of the foundation and are willing to take perhaps “more risk” or perhaps willing to be more innovative than a foundation that might be two, three, four, five generations removed from its founder.

Ron Cordes and Denver Frederick inside the studio

Denver:  How would you assess donor-advised funds in this regard?

Ron: One of the first things we did in 2010 was we helped to create… we were involved in creating a donor-advised fund platform called Impact Assets, a nonprofit that we created with the Calvert Foundation and some other partners; designed to allow folks that didn’t have the resources to create their own family foundation to do this type of impact investing with a philanthropic vehicle. Today, donor-advised funds are a huge vehicle that we’re finding are being used more and more, not only for their traditional purpose, which is to allow people to organize their philanthropy in the same way you do in a foundation, but they’re also allowing folks to use the endowments of those donor-advised funds to invest for impact in the same way that foundations have been doing.

…we began to realize that the artisan sector– globally is second only to agriculture– is the largest employer of women globally. So, through the fashion industry, looking at this relatively new concept of ethical fashion, sustainable fashion, there were actually ways that we could apply our themes of social entrepreneurship and economic empowerment to women around the fashion industry.  And Steph has led that effort for us.

Denver:  Let’s turn our attention to the Cordes Family Foundation, and if I have this right, your wife Marty has a deep commitment to empowering girls and women. Your daughter, Stephanie, who is part of the foundation, is dedicated to ethical fashion, among other things, and you get excited by social entrepreneurs who want to change the world. So, let’s take that cocktail and mix it all together and tell us some of the investments and grants that the Cordes Foundation is making.

Ron: When Marty and I started the foundation in 2006, our daughter Steph was still in high school. We had long suspected that she would become engaged at some point in her adult life. It happened in quite an interesting way about five years ago, and she moved from what had been a career at Conde Nast over to the foundation.  And when she moved over, Marty and I created the foundation around two premises. One was, Marty’s deep commitment and a lot of philanthropy that we’ve been doing privately at that time around women and girls, and particularly the economic empowerment of women— really influenced by books like Half the Sky from Nick Kristof and Sheryl WuDunn that talked about the real importance in global economic development, of providing economic opportunities for women.

So apropos to my experience with Florence in 2008, I looked at my role there as trying to figure out how we could use investment vehicles as a way to provide that economic empowerment and social entrepreneurship. When Steph joined the foundation, she had had a long interest and started a career in fashion, and we began to realize that the artisan sector– globally is second only to agriculture– is the largest employer of women globally. So, through the fashion industry, looking at this relatively new concept of ethical fashion, sustainable fashion, there were actually ways that we could apply our themes of social entrepreneurship and economic empowerment to women around the fashion industry. And Steph has led that effort for us.

…you’ve got these artisans around the world that have over many generations kind of perfected this ability to create something. Yet, they don’t have a global marketplace in which to sell that. So, they are limited to how much that value creation can drive in their local communities, which often is not very much. So, the ability to connect them with the global marketplace– whether it’s Soko and Nordstrom, All Across Africa and Costco– gives them an ability to produce far more meaningful quantity than they could have before and to achieve a much higher price point on it. That combination really drives some economic empowerment.

Denver: Give us a couple of those examples.

Ron: We’re invested today for example in a jewelry company based in Kenya called Soko. Soko’s jewelry —  shopsoko.com, is available both online and in stores like Nordstrom and others, and they work with over a thousand artisans based in Kenya, many of whom are women who produce this jewelry. Soko provides them with the opportunity to connect to a global marketplace. So, it’s an example of a business that we really… we look for these types of businesses. We’ve got another one called All Across Africa that has home goods and baskets. They are in Costco. They have developed a really unique relationship with Costco. Particularly, they find in the holiday season…this is the big time for them right now.

But what we found… a consistency is that you’ve got these artisans around the world that have over many generations kind of perfected this ability to create something. Yet, they don’t have a global marketplace in which to sell that. So, they are limited to how much that value creation can drive in their local communities, which often is not very much. So, the ability to connect them with the global marketplace– whether it’s Soko and Nordstrom, All Across Africa and Costco, gives them an ability to produce far more meaningful quantity than they could have before and to achieve a much higher price point on it. That combination really drives some economic empowerment.

…”What if we created an event that was diametrically different from every other event that was in the philanthropic space? No plenaries. No Powerpoints. No darkened hotel rooms. Simply an opportunity to bring the right people together and to facilitate professionally the right dialogues between them.”

Denver: Fantastic. One of the more interesting and distinctive gatherings in the world of social enterprise is the opportunity collaboration that you orchestrate each fall in Mexico. What makes this different from every other conference that is out there?

Ron: It was different by design in its basic construction. We just completed our 10th convening. So, it started in 2009, and our original founder brought together a group of people of which we were a couple, and basically said, “What if we created an event that was diametrically different from every other event that was in the philanthropic space? No plenaries. No Powerpoints. No darkened hotel rooms. Simply an opportunity to bring the right people together and to facilitate professionally the right dialogues between them.”

So, we started off on a whim in 2009, wondering if this would be a one-year event; brought together about 300 people from across philanthropy and impact investing.  And what we found was that there was an enormous appetite for convening in a different way than anyone had convened previously. It’s taken on a life of its own. Again, we just completed our 10th year. What we basically do is we rent a 500-room conference property in Cancun, Mexico for five days. We turn it into a college campus. We have the entire property, and we invite folks from across the world. We have about 50 countries represented, and the idea is to bring together the right people who can collectively really make things happen.

So, we’ve had investments made, funds started, companies, mergers, nonprofits that have come together. And we’re particularly proud of one thing that we did in the second year which we’ve continued is: we recognized that there were voices that weren’t at that table that should be. Indigenous folks from Africa, Latin America, Asia who just otherwise…   who were never on the radar screen of global conferences, couldn’t have afforded to have attended.

So, we created a program we called the Cordes Fellows where each year we scholarship 60 of them, so the fellowship provides them the opportunity to attend and participate in the event as full delegates. What’s interesting is, when we did that, we thought the biggest benefactors would be those 60 folks, and they are. We get these great reports back about how their organizations have been transformed.

We actually found the other 400 folks really appreciate the opportunity to meet these game-changing, often young, emerging social entrepreneurs who they never would have come across in their daily travels. That leads to grants and investments and board members, and advisors and mentorship that would never have happened otherwise.

Denver: Diamonds in the rough. It always works out that way.

Let me ask you a couple of other things. I have a lot of conversations on this show, both on the air and off the air, with founders of organizations, and they’re always discussing the decision they had to make as to whether they should become a for-profit social enterprise or a nonprofit organization, and these have been really difficult decisions. What do you believe are some of the factors and decision points that a founder or a startup team should consider?

Ron: It’s a great question. It’s one that often comes up when we bring our fellows and other emerging social entrepreneurs together. It’s funny that when you talk to founders of organizations, they often feel like the grass is always greener on the other side. Someone who started as a nonprofit says, “Gosh, I wish I was a for-profit because there’s all this impact investment capital out there that I’m missing out on.” While organizations that are for profit come back and say, “Gosh, it’s tough to raise capital, but if I had the ability to raise grant dollars that were non-dilutive, that would be terrific.” So my advice is first, “The grass is not greener on the other side.” We are big believers in the concept of social entrepreneurship, which is building a business model that has the ability to generate revenue to solve a problem, but that can be across a nonprofit or for-profit.

I think people often get too hung up on the structure. We’ve been engaged to both… All Across Africa and Soko, for example, are for-profit businesses that have done the typical seed and A-B rounds of financing, where another organization Fair Trade USA, the fair trade certifier for goods and services in the US. I just stepped off a great seven-year run as board chair. We’re a $20 million a year organization, $18 million of which is earned revenue, but we’re structured as a nonprofit. We’re a formidable business with about 110 full-time folks, but we’re structured, again– a nonprofit, for-profit– I think the real key, to me, is you have to have a business model that both has the potential to succeed financially and the potential to deliver impact. And if you’ve got that, then you can succeed in either arena.

Denver: A hybrid more or less. Let me ask you a little bit about corporate culture. We always think about that in the context of larger organizations, and I know that you’re a family organization, but culture exists everywhere. How would you describe your culture and what makes it special and distinct?

Ron: We’re a small organization. We have Marty, Steph, and I, and our portfolio director and soon to be son-on-law, Eric Stevenson. So, there are four of us, and we are very much led by the millennial ethos that Steph and Eric bring us. It’s funny, in my prior career, I had a business that was very traditional. We didn’t have people that worked remotely. We had three or four offices around the country. So when we set up the foundation, we set up an office.  And what he began to realize is that the millennial community doesn’t necessarily need a place to go in a traditional office. So Steph and Eric have really opened us up to this new arena of working remotely, working on their own timeframes when things need to be done, as opposed to a particular prescribed timeframe.

I think the culture that we’ve had has really been always focused on our why. How do we have the most impact with our dollars? How do we have the most impact with our social capital? We’ve created an ethos in the foundation we call the 3Cs which we call it Connect, Convene, Catalyze. The idea behind that is that our balance sheet has limitations. We have resource limitations like any foundation. So how do we go beyond just our ability to make grants and investments and use our convening power, connecting power, our social capital in ways that can help the space and give us a larger footprint maybe than just our dollars could do alone?

Denver: Do you ever find it to be a challenge to separate the family from the family business?

Ron: Marty, my wife, talks about this a lot. We have to make sure that the danger… I think this is in any family business, but particularly the foundation because we’re all so passionate about the work that we do… the danger is that any family dinner becomes an offshoot of a foundation meeting. We’ve really tried to define when we’re off the clock from the foundation and when that conversation can just go into personal topics and having fun and doing the things that one otherwise would do in a family event.

Denver: Let me close with this, Ron. As we mentioned, this world of philanthropy and using capital creatively for social impact has been your second act. What advice would you have for those contemplating or already in the process of their own second act?

Ron: I have a great friend, Marc Freedman, who wrote the book on this concept of encore. This idea that you can divide your life between a first act and a second act, that that second act can be informed by the work that you did in your first one. For me, that transition happened at about 45; the age brackets I’ve seen folks do their second act in their 40s, 50s, 60s, 70s, I think the concept is that for me what worked was I did a lot of low-cost trials when I was in my first act. I made some friends like the fellow, Jerry Hildebrand, that I  mentioned, who was a great influence in helping get me into social entrepreneurship. We actually got into a few microfinance investments before we even started the foundation just to understand what the field was.

The idea is you don’t necessarily have to jump in all at once. You can start to do what I call  low-cost trials in your first act to decide where you want to be. The second final thing is when I thought I was leaving the world of investing to get into the world of philanthropy, there was a scary prospect of going from one thing to something completely new. What I found now in talking to dozens of folks that have gone through successful encores is it can often be more of a pivot than a reinvention. For me that pivot was taking everything that I learned in the world of investing and converting that to this concept of impact investing and investing with purpose.  And I’ve had friends do the same things in the field of technology and healthcare and management and infrastructure and logistics.

So, if you’ve developed a career in something that you really enjoy doing, that you’re highly capable at, have lots of experience and connections, give some thought to how you can pivot and apply what you’re uniquely good at to a problem in the world that you care about that needs your help and attention.

Denver: Some very good advice. Ron Cordes, the co-founder of the Cordes Foundation, I want to thank you so much for being here this evening. What is your website, and what’s there that you think listeners might find interesting?

Ron: Our website is cordesfoundation.org. I’d encourage you to check it out. We’ve got profiles on all of our grantee and investee partners to learn more about some of the organizations we support. We’ve got profiles of our fellows, 530 of them now, to get a feeling for who are the brightest, young social entrepreneurs in the world. We’ve got some media up there just talking about impact investing in the space. We’d love to have you check us out just to learn more about what it is that we’re doing and how you might be able to participate.

Denver: Thanks Ron. It was a real pleasure to have you on the program.

Ron: My pleasure as well.

Denver: I’ll be back with more of The Business of Giving right after this.

Ron Cordes and Denver Frederick


The Business of Giving can be heard every Sunday evening between 6:00 p.m. and 7:00 p.m. Eastern on AM 970 The Answer in New York and on iHeartRadio. You can follow us @bizofgive on Twitter, @bizofgive on Instagram and at www.facebook.com/BusinessOfGiving

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