How can philanthropic capital be used to drive investments in for-profit companies, particularly those led by underrepresented founders? In the latest episode of The Angel Next Door Podcast, hosts Marcia Dawood are joined by Patrice and Leah Brickman, founders of Inspire Access, a 501(c)(3) organization aiming to mobilize philanthropic capital to support underrepresented founders in the entrepreneurial space. The episode dives into the experiences and insights of Patrice and Leah, who discuss the impact of investment capital on businesses, particularly those led by women and people of color, and how Inspire Access is pioneering a new approach to redirecting donor-advised funds toward mission-aligned investments, ultimately bridging the investment gap for underrepresented entrepreneurs. As Patrice and Leah share their expertise and experiences, they offer a compelling case for why redirecting philanthropic capital to support for-profit companies led by underrepresented founders is a crucial step in empowering and uplifting these entrepreneurs. This episode is a must-listen for anyone interested in impact investing, philanthropy, and promoting diversity and inclusion in entrepreneurship, as it offers a roadmap for driving positive change through strategic and purpose-driven investments.
How can philanthropic capital be used to drive investments in for-profit companies, particularly those led by underrepresented founders?
In the latest episode of The Angel Next Door Podcast, hosts Marcia Dawood are joined by Patrice and Leah Brickman, founders of Inspire Access, a 501(c)(3) organization aiming to mobilize philanthropic capital to support underrepresented founders in the entrepreneurial space. The episode dives into the experiences and insights of Patrice and Leah, who discuss the impact of investment capital on businesses, particularly those led by women and people of color, and how Inspire Access is pioneering a new approach to redirecting donor-advised funds toward mission-aligned investments, ultimately bridging the investment gap for underrepresented entrepreneurs.
As Patrice and Leah share their expertise and experiences, they offer a compelling case for why redirecting philanthropic capital to support for-profit companies led by underrepresented founders is a crucial step in empowering and uplifting these entrepreneurs. This episode is a must-listen for anyone interested in impact investing, philanthropy, and promoting diversity and inclusion in entrepreneurship, as it offers a roadmap for driving positive change through strategic and purpose-driven investments.
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Marcia Dawood
Well, Patrice and Leah, welcome to the show.
Leah Brickman
Thank you.
Patrice Brickman
Thank you, Marcia. It's great to be here.
Marcia Dawood
I am really excited for this because I am a huge fan of investing with a donor advised fund, and people know that because I've talked about it on the show a bunch of times before. So we're going to get to hear all about inspire, access and what the two of you are doing. So I'm just going to jump right into it with you. And Patrice, why don't you start off, tell us a little bit about your background and how you got here and what's going on with investing through donor advised funds.
Patrice Brickman
Sure. Let's see. My background in this work probably goes back as far as 1998, when our family business took on our first private equity partners, and I witnessed for the first time how fundamental investment capital is to helping any business grow and scale. And then fast forward a few years when I was working with some of our philanthropic capital and sort of in that world, I was actually making a grant to a nonprofit where there was an obvious profit model that could be established in the nonprofit to help sustain it. So I made an investment into the nonprofit to start the for profit model, and it ended up working out really well for them. And it kind of was another example of how the power of investing in an entity and how it can change the organization and change people's lives. I started inspire capital at that point with that situation, and I knew I needed to learn a lot more about the space despite my own lived experience. So I ran off to executive programs at Stanford and Harvard, where I was one of nine women at Stanford out of a section of 100, and then one of twelve at Harvard of a section of about 100.
Patrice Brickman
And that wasn't glaring. That if women weren't sitting in the investor seat, go figure, we probably weren't going to be invested in. So it was clear to me that inspire capital should invest with a gender lens and then later a racial lens if we were going to change the way investment capital flowed in this country. And even then, the Marshall this. But less than 3% of all investment capital was going to women and people of color. And if you happen to be a black woman, that number fell to under 1%. And black women start companies at six times our national average.
Marcia Dawood
Amazing.
Patrice Brickman
Anyway, fast forward to 2019. Statistics haven't changed. In fact, they're going in the wrong direction. And I met a company that had a donor advised fund on the cap sheet. And for anyone who doesn't know what a donor advised fund is, it's like a foundation, but it's a place where people can keep their philanthropic capital. They've taken a tax write off, and now the money has been set aside to be given away. So my understanding was that a donor advice fund could only be given to charities, in fact, a 501. But I kept sort of curious about that.
Patrice Brickman
At the same time, I learned there were hundreds of billions of dollars sitting in donor advised funds. And that's when I started to think, if we could mobilize that money, that could move the needle on how investment money flowed in this country.
Marcia Dawood
And most of the hundreds of billions, hundreds billions of dollars that's sitting in donor advised funds isn't even necessarily sitting in money market account and mutual fund or stock earning anything. It's just simply sitting there.
Patrice Brickman
Much of it is like it's probably invested somewhere, but in nothing of any. Certainly not like a mission valued investing. And who knows, depending on the different kinds of daft, some of it is really sitting complacently.
Leah Brickman
And as we know, with the DAF structure and model, there also isn't any requirement to be distributing and giving it out. So it really can sit for years.
Patrice Brickman
And years and years, generations.
Leah Brickman
With that inspire access was born, and it was really built to address two critical issues, obviously. First, the most importantly, that less than 3% of investment capital goes to women and people of color, while we know they are building companies at equal, if not higher rates than their counterparts. And the other issue, that $234,000,000,000 is sitting in donor advised funds. And we really kind of saw this as an opportunity to mobilize that capital that is sitting there and direct it towards mission aligned investments in for profits, led by underrepresented founders who have historically lacked access to this investment capital. And so that is what we built with the 501 C three, inspire access. And we know that not only will this help bridge and narrow the investment gap, but it also is unlocking immense potential and new ideas, solutions, successful companies that us, as a global community, can really benefit from.
Marcia Dawood
Amazing. So somebody can take money and put it into a donor advised fund, or in this case, they could give it to you because you are a 501 charity. And then instead of that money going directly to a charity, it can kind of be diverted for a little while on its own little path to make some more money that will eventually go to the charity, but in the meantime, it's going to go to a for profit company and help them to be able to build up their business so that then they can turn around and give that back to the donor advised fund, or in this case, you, so that then it can be given back to a 501. So the person who's the donor gets the tax write off. They will never see the money themselves again, but they can put their money to work in order to do good in the world.
Leah Brickman
Yes, exactly.
Patrice Brickman
Marsha just said that. I wrote that down because that's just another way to let people understand, like, your money is just going to actually go out and do some good in.
Marcia Dawood
The world and then little diversion. Diversion over here.
Leah Brickman
Exactly. So it's really an alternative to putting your money in a donor advised fund, letting it sit and be invested in traditional mutual funds and eTfs, and instead invest it in kind of aligned with actual purpose of those funds to begin with and do some good, be put in the world, do some good, grow, and then be returned to continue to make grants and the same charitable purpose that you set it aside for.
Marcia Dawood
Amazing.
Leah Brickman
Yeah.
Marcia Dawood
So then how does it work then? Because we did talk to Daintree Capital before, and I know you're very familiar with them, and they also work with donor advised funds, but inspire access seems a little bit different because you yourself are a charity. So maybe help us understand that a little bit.
Patrice Brickman
Sure. When Daintree was working with Das, that was the original inspire access model. So our original model was a donor advised fund. At SDG, there are some community foundations that have dafts that allow that money to be invested in for profit companies. Unfortunately, they're few and far between. For us, we found that it was a bit of a cumbersome model. The money wasn't tracked and as fluently and as easily as we liked. So we thought, let's make this really simple and become a 501 C three ourselves.
Leah Brickman
And I think intentionally build it as a 501, which, as opposed to setting ourselves up as a daft holder, we were kind of very intentional about wanting to mobilize capital and allow people who already have donor advised funds to mobilize that capital, as opposed to sitting and holding their funds. And so we've instead structured ourselves as this platform to mobilize that capital and move it, as opposed to holding it so those who already have DAF can make investments through us but not set up kind of their entire fund there.
Patrice Brickman
Yeah. Our intent isn't to collect money and hold it. Our mission is about mobilizing the capital. So we want to get it in and out again and then back in and to do good. It's a little bit more of a dynamic maybe model, but we're super clear on mobilizing the capital, not holding it, not that we wouldn't hold it while people make decisions. And we're not going to be like, you can't stay here for too long, but the idea is to get it out into the world in the hands of these founders and fund managers.
Marcia Dawood
It's a very interesting model because if you were just thinking about it from a 501 standpoint, you could say, okay, people are going to donate to you, and then you'll mobilize the capital and you'll continue to do good and all that kind of stuff. But what you were saying, leah, is that there's this money sitting in these funds, and how do we access that, too? So it's like you're getting the best of both worlds.
Patrice Brickman
How does she put. How people can understand it?
Marcia Dawood
So tell us a little bit about the companies that are getting the capital.
Patrice Brickman
Sure. We currently have a platform of companies that have been with us for a while, and some of them came through inspire capital, or we've known them, but when we launched, which was in November, we had about five funds.
Leah Brickman
Yeah. So we have kind of a whole variety of different companies and funds. So we have direct equity investments. Some of our companies are kind of keep company. We have everybody water.
Patrice Brickman
Bold reuse.
Leah Brickman
Bold reuse.
Marcia Dawood
I love everybody water.
Leah Brickman
Yeah. And then also venture capital.
Patrice Brickman
Yeah, we've got five funds. So Loreen's fund, Halcyon, Lafayette Square, Black Star Fund, Rethink Impact, Zelle Capital at six, and they're all run by underrepresented fund managers doing amazing things. And then almost a third sector in and of itself, although it is a company, is Daintree Capital. And what's unique about Daintree is that she's not a fund. Alicia's not running a fund. She has a company, but she is making investments. She's doing working capital loans to people who would otherwise have a really hard time getting that money. So we sort of put danger in a category all its own, which we like a lot.
Leah Brickman
And I think most importantly, as a 501, our diligence is predominantly around the charitable alignment with our mission and our work to support underrepresented founders who have historically lacked access to investment capital. And so that is really kind of.
Patrice Brickman
Important piece of it. You're right.
Leah Brickman
Our focus, and what it's also important is that we are kind of use this term sector agnostic. We are sector agnostic essentially, because we're really focused on the founder. So that's who we're supporting with providing this investment capital to. And so it's exciting because the companies and funds we support are all very different in themselves, have different goals.
Patrice Brickman
And we're not presuming to be a fund that has an expertise in, say, ed Tech or health tech. We're trusting these founders and fund managers to go be experts in their field. But I'm trying to think of something that's kind of, we have a lot of impact. We just do. But if somebody said, no, I want to go make the greatest KoozIe that's going to go around beer cans or whatever they're called, I don't know Koozie. But the point is, it's not about the what, it's about the who is doing that. And it's about the representative founder who, if they looked differently, they could walk into a bank and get a small business loan or get financing so much easier than the founders that we're supporting. They're really up against a wall on that.
Patrice Brickman
And that's our priority. They can do cocktails, mixers if they want. I don't care so much about that. I care that the founder has access to capital.
Marcia Dawood
That's amazing, because we hear over and over again, and I'm sure that you do, too, that the friends and family round, just getting off the ground, getting that initial capital is just so incredibly hard. And being able to get maybe from Daintree capital of small loan, or having somebody invest at the very earliest of stage with their philanthropic capital, that is just so incredible.
Patrice Brickman
We think it's exciting. And back to Daintree. Daintree's statistics are incredible. Many of their founders with one loan, double their.
Marcia Dawood
Amazing.
Patrice Brickman
It's amazing. But to your point, Marsha, those first hurdles, if they can't get over those first hurdles, not everyone has friends and family with a big bucket of money.
Marcia Dawood
That's right.
Leah Brickman
Yeah.
Patrice Brickman
Too. And that's where the, I think, systemic stuff we hope to change comes in.
Marcia Dawood
So if somebody has a company that they're interested in supporting, and they're not necessarily affiliated with you yet, would they be able to bring that company to you and then also make a donation themselves and then have that money go to work for that company?
Patrice Brickman
Absolutely. In fact, we just did one a few weeks ago. Yes.
Leah Brickman
So anyone who is interested in making an investment and has a company or fund that fits into our kind of charitable purpose, so led by an underrepresented founder can just like they would kind of get involved with us, recommend that company for us to do, to just confirm that diligence and alignment with our work and make a donation to inspire access, and we will direct that investment in the company that they've recommended.
Patrice Brickman
Specifically. They make a donation, we diligence that it really is an underrepresented founder that's going to be getting that capital and benefiting from that capital. And then we approve them. Then they get a side letter. The donor would get a side letter stating, this is our intention with your donation. And that's how it works.
Marcia Dawood
Who goes on the cap table?
Leah Brickman
Fire access.
Patrice Brickman
Yeah, sorry. I do inspire access.
Marcia Dawood
Okay.
Patrice Brickman
There is an inspire capital, and that's confusing. But that was how we started in investing. This is a different platform. Yes. And inspire sits on that cap sheet. That's exactly right.
Marcia Dawood
Okay. And then what happens when there's an exit? Because I'm sure there will be many exits. And then the capital comes back to inspire access. Then what happens with it?
Patrice Brickman
Yep.
Leah Brickman
So if any returns are made back to inspire access, we receive those funds, and then we direct them back to the charitable entity, the original donor's charitable entity. Or they can opt to reinvest it to support more founders, but it is philanthropic capital that now kind of belongs to the donor.
Marcia Dawood
So it could evergreen and just keep.
Leah Brickman
Yeah.
Marcia Dawood
So one person could make a $25,000 donation, and then it could go to a company, and then that company returns $250,000 because they got a ten x return. Yay. And then that $250,000 could be reinvested into other companies, and it would be more found still based on the original donor's direction.
Leah Brickman
Wish.
Marcia Dawood
Yeah, or direction. Got it.
Patrice Brickman
Absolutely.
Marcia Dawood
Yeah. That's pretty cool. And then same thing with funds. If you're directing capital into a fund like Loreen's fund. Loreen was just on the podcast not too long ago for 125 ventures. If it went into her fund, for example, then eventually it would come back to you, and you could either invest it in her fund again if she had another fund, or something like that.
Patrice Brickman
That's right. Exactly. Our hope and our expectation is that people are going to be really excited when they see how their capital, their philanthropic capital grows and the difference that it makes in the entire landscape. And they're just so excited. They keep reinvesting, but value is they can do whatever they want to when it comes back.
Marcia Dawood
Right?
Leah Brickman
Yeah.
Marcia Dawood
I just don't think enough people know that this is even something that can be done. We haven't been talking about it for long enough.
Leah Brickman
We're learning that on a daily basis, we have the opportunity to work with all different individuals. So people who are very steeped in the kind of investing space, they make investments on a regular basis, and they're unaware that they can also make investments with their philanthropic capital. So that's been exciting to be teaching that to people. And then on the other side, we're working with people who have donor advised funds and don't even recognize that they're sitting being invested in mutual funds and ETFs, and that there's the opportunity to actually direct that towards mission aligned investments and support women and people of color and kind of bridging that investment gap with those funds.
Patrice Brickman
Our big reason why we form the 501 C three is if you're a donor who has money at a donor advised fund, you're going to have a hard time talking fidelity into letting you go do a one off investment. Right? Because Daff holders, they don't have the bandwidth for that to let each person do it. But that's where we are making it easy for donors to say, no worries, I'm making a grant to a 501 just like I would any other 501 c three, and then we have the agreement to go off and do our mission, what we're going to do.
Marcia Dawood
So that's huge, because the way I understood it until I met you was you had to have a self directed, donor advised fund. So if I had money in a donor advised fund at Fidelity, I would have to move it to another place before I could then go and make an investment in a for profit company.
Leah Brickman
Right?
Patrice Brickman
Yes.
Leah Brickman
That is exactly what we're hoping to solve for.
Patrice Brickman
We're hoping to just make it again. It's all good. I mean, the self directed donor advised funds are great.
Leah Brickman
Awesome.
Patrice Brickman
Anybody working in this space is great. I say all the time, there's over $200 billion sitting in desk, not out in the world doing good. A lot of people need to be doing this work. So we're excited to be one of the people, but I'm excited for there to be a hundred of us, actually, more.
Leah Brickman
Yeah.
Marcia Dawood
Oh, that's a great goal and a great dream.
Patrice Brickman
Yeah.
Marcia Dawood
Well, Patrice and Leah, thank you so much for being with me today and explaining all of this. This is very exciting. You know how I love them. Get totally geeked out on this stuff. So we will definitely put all the information about inspire access in the show notes and let everybody know about it. Otherwise, thank you so much for being with us.
Leah Brickman
Thank you for having, again, so much.
Patrice Brickman
Thanks for the work you're doing, by the way, and letting the world know about all of this. It's really thank you.