A Double Bottom Line Mutual Fund for Haiti's environment???

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A Double Bottom Line Mutual Fund for Haiti's environment???

Post by admin » Sat Sep 25, 2004 12:35 pm


This is a straightforward proposition, not an analysis, but I do invite some meaningful debate on the proposition.

First, I am going to recall extensively Henri's definition of a "Double Bottom Line Mutual Fund" or what I would simply call in my unsophisticated language "an investment vehicle with social objectives".

I also recall this extraordinary offer from Henri D. that may have possibly gone unnoticed: "As you know, talk is cheap, but doing is often expensive in time, energy and funds. We are perfectly ready, willing and able to accompany others if they are willing. Like I said, free of charge and excluded from the offering."

Finally, I want to point to some "solutions" that have been proposed by Jean Erich René in his recent interview, posted elsewhere on this forum, and ask: "CAN WE or CAN WE NO
T create a fund in which all investors - sophisticated or not - who are anguished by what is happening to their beloved Haiti, participate to reclaim the land, acre by acre, from the ravages of natural or man-made disasters?"

Forget, one damned short minute, about competing ideologies, failed states, the responsibilities of the public vs. private sectors, the elites vs. the masses. For one damned short minute! And ask ourselves: Do we accept the notion of Haiti becoming a desert in less than 50 years? Do we accept the notion of telling our children our grandchildren some day "Oh yeah, there once was a country called Haiti... and I loved it but watched it die." If we do not, then what are we going to do about it?

No doubt there are countless academic prescriptions, book solutions, ideological battlegrounds, political upheavals, revolutions to be fought, etc. No doubt. No doubt. But considering the heavy toll inflicted by tropical storm Jeanne and the fact that some meteorologists are alread
y predicting some very rough weather patterns for the next ten years, it should be obvious by now that the time is short.

Hence my straightforward proposition to my expert brothers and sisters: CAN WE CREATE A FUND TO SAVE HAITI?

Guy


Reference 1:

[quote]A Mutual Fund, as you know, is simply a vehicle that permits individuals to pool their funds to invest for a targeted return.

A "Double Bottom Line Mutual Fund" is the same thing but where the investment objectives are defined to assure that all funds are invested in socially responsive or responsible areas: things which bring benefits both to the investors and to the community. The criteria are quite specific and the fund managers have to respect them of face the music. Example a large scale windmill project, a business incubator, small business loans, small scale low-cost housing construction with proper drainage. Funds can have any objectives the founders
elaborate for both bottom lines. That is what gives a fund its unique properties and also attracts a certain kind of investor which shares the objectives.

That sounds simple enough, but the realities are that creating a mutual fund cost anywhere between 300-500 thousand dollars to respect legal, fiscal and SEC Registration requirements and takes about 6 months. Maintenance varies between 75-125 thousand a year. And quite frankly well it should.

The object of those obstacles is to assure that things stay on the up-and-up. They help assure that the people doing it are legitimate, that the proper governance and financial accountability needs have been respected.

That is required if one is to market his funds to the general public. Meaning to what the SEC defines as "the general public" or in other regulations "unsophisticated investors"

As you see, the criteria and constraints for creating a fund are extremely constraining as well they should be.

A wealth of incredibly com
plex information is available on the SEC website, but quite frankly attorneys are needed to set those things up.

The setup, legal, fiscal and registration fees for PromoCapital cost upwards of 250,000 US dollars.

Our bank and funds are both designed to have the double bottom line we spoke of earlier because that is what the founders of PromoCapital desired and it is expressed in the mission statement.

We expect at some point to have a mutual fund like this but do not have it today. Why? Simply because the costs would eat up investor funds.

What we decided to do in order both to enable a fund and respect the SEC Regulations is create what is in effect a venture capital fund called the PromoCapital Fund. That is seperate from the Bank and is a free-standing unit, in which the bank invests alongside other investors. The good news is that it can do what is necessary respecting all the rules, the bad news is that it is only available to what is called "sophisticated investors". We d
o not even present the fund to the general public or unsophisticated investors. Why? Because it is against the law to do so. Before we send anyone a prospectus we first qualify them as being suited to receiving it by having them fill out a 12 page questionnaire.

That means that a modest investor has no place at the table.

There are a lot of ways to accomplish the same objectives, and create a place at the table, including more modest investors in a double botton line mutual fund type of structure and I will get that info and be back, as will Managing Director Patrice Backer, so we can explore the solutions.

I warn you get ready for a headache because there are mighty complex criteria to respect to get one of those up.

The good news is that it can be done, and up and running 3-6 months from now if there is a real demand.

As you know, talk is cheap, but doing is often expensive in time, energy and funds. We are perfectly ready, willing and able to accompany others if they
are willing. Like I said, free of charge and excluded from the offering. [/quote]


Reference 2:

Please read "Le drame des Gonaives" by Jean Erich René at http://haitiforever.com/forum/viewtopic.php?t=1396

HenriD

Post by HenriD » Sat Sep 25, 2004 8:34 pm

<quote>

But I never sensed any momentum whatsoever coming from his end to help MIT2 along. Even though his Publishing House would have been a beneficiary of such automated software solutions. Years before any competitors!

<unquote>

Marylin,

I take this opportunity to applaud your very laudable efforts.

I truly regret I was not then and am not now in a position to solve everyone's problems and support every worthwhile effort in the way people would expect me to. No one here has that kind of brainpower, energy, time and money, I ceratinly don't.

In your opinion, how many times a week do people accord me magical powers to help them accomplish their dreams... and when I can't, see them holding it against me.

All I can do is try and whether you knew it or not, acknowledge it or not, I did. I am not a fairy godmother and have spent a great deal of my time, money and health as well trying
to advance socially responsible and money losing causes and enterprises. Believe it or not I actually also have a few highly challenging problems of my own to deal with from time to time and cannot provide momentum, every place needed to everyone who needs it, on the schedule required.

I find it disappointing that in response to Guy's post above on specific subject you found of some value to dump on me, elegantly enough, but dumping nonetheless.

I am truly tired of people dumping on me and mine. My primary business and personal asset is integrity and credibility, not money, and I reject whatever it is you mean by "I never sensed any momentum whatsoever coming from his end to help MIT2 along". It is your prerogative to have not sensed something, as it is mine to present my perspective.

On a more constructive note:

In response to both Guy's question and yours, a double bottom line Mutual Fund starts by defining "the socially responsable objectives in both macro-strategic terms, and
by providing examples"

A worksheet to develop that might look like this:

The Social Objectives of This Fund Are:
The Financial Objectives of This Fund Are:

The Lifetime of the Fund is:
The Potential Investors of this Fund Are:
The Potential Beneficiaries of This Fund Are:

The Minimum Investment by an Individual Investor is:
The Maximum Investment by an Individual Investor is:

The Minimum Loan or Equity Position in any Single Project is:
The Maximum Loan or Equity Position in any Single Project is:

That is all done on paper so multiple parties can review and refine.

Once that is done, a level 1 legal, fiscal and regulatary analysis is performed, and a reality check is performed, constraints identified and solutions devised to overcome the constraints.

And then it moves to the next level of design.

Henri

HenriD

Post by HenriD » Sat Sep 25, 2004 8:43 pm

Hi Guy,

There are very serious regulatory constraints when you are taking money from the general public to invest in a mode such as you describe. It can be done but we have not yet found a way to do it because unless we do enough of the research ourselves and some of the legal work is pro-bono, or else you end up spending the whole investment setting up the structure.

What and who we need to find to help us find those solutions are attorneys, preferably Haitian-American, with expertise in US Securities Laws.

I am not familiar with the text by Jean Erich René but will read it now and get back to you.

We also need Patrice chipping in here as he is highly competent on the matter.

I'll get back to you later.

Henri

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