The Teller Window
A view into the work of the New York Fed

« | Main | »

May 26, 2022

Closing Remarks at “Money and Mission: Creating 21st Century Capital Markets for Better Social Outcomes”

On Tuesday, May 17, the New York Fed hosted “Money and Mission: Creating 21st Century Capital Markets for Better Social Outcomes.” The event’s featured speakers were Rev. Cory Anderson, chief innovation officer, Winthrop Rockefeller Foundation; Geoffrey Canada, founder and president, Harlem Children’s Zone and William Julius Wilson Institute; Audrey Choi, senior advisor, Morgan Stanley; Andrea Levere, president emerita, Prosperity Now; and Clara Miller, president emerita, the F.B. Heron Foundation.

Otho Kerr, the New York Fed’s director of strategic partnerships and community impact investing, delivered closing remarks. His comments, lightly edited for length, follow.

Otho Kerr: How lucky are we? Not only to be able to be present with one another today — finally — but to be able to do the work that many of us do: supporting the lives of others.

The Fed’s goal — known as the dual mandate — is “maximum employment, stable prices, and moderate long-term interest rates.” What’s of particular interest to me — and connected to the work that our Community Development team does at the New York Fed — is the “maximum employment” component of the mandate. As Atlanta Fed President Rafael Bostic said last summer, this requires “the dismantling of barriers” that prevent folks from fully participating in the economy or deprive them of the opportunity to contribute to output and growth.

At the New York Fed, our mission is to “make the economy stronger… for all segments of society.” In the Community Development group, we’re seeking to drive capital toward solutions to problems that are the barriers that prevent underserved communities from equitably participating in the U.S. economy. And that’s what is so important about the conversation we’re having today.

Philanthropy, impact investing, and the capital markets all have a role in lifting up individuals, families, and communities so that each one of us can not only contribute to the economy, but also benefit more equitably from its fruits.

But, as Clara Miller, the featured speaker at today’s event, says, our infrastructure is broken. Philanthropic dollars, mainly from foundations, flow through late-19th century plumbing, corporations are learning that they need to redefine long-term success, and impact investing is still finding its footing, greatly informed by philanthropic and corporate models.

There is no doubt that there is a moral imperative behind the work we all do, closing or eliminating gaps and disparities between individuals, families, and communities, especially for communities of color. But there is an evidence-based, practical imperative as well.

San Francisco Fed President Mary Daly said, “Many groups fare less well than the averages we hear about each day. But disparities for Black Americans, many of whom bear the costs of both historical and current discrimination, are especially sizeable.” She said, “[l]eaving these gaps unaddressed is clearly unfair. But it’s also unproductive. It keeps millions of people on the sidelines or underutilized, and sells the economy short.” She added, “[n]o entrepreneur would ever stand for it. The question is, why do we?”

In their research, our San Francisco Fed colleagues found that “systemic disparities and inequitable opportunities by race, gender, socioeconomic status, and a myriad of other indicators results in a misallocation, or complete sidelining of talent, that ultimately bridles economic growth.” Analyzing the years from 1990 to 2019, and eliminating gaps in employment, hours, and education, while giving racial and ethnic minorities the economic value of their white counterparts, San Francisco Fed researchers found that the U.S. economy would have had an additional $34 trillion in 2019 dollars more output during those three decades if gaps in labor market opportunities and returns hadn’t existed.

So, whether you’re the person who has the moral imagination to see the world as it should be or sees it in purely economic terms, you have every reason to join this group before you today and reimagine how philanthropy, impact investing, and the capital markets in general can better support historically underserved communities.

Today, our esteemed group talked about the potential for philanthropy to act as both a source of capital and a model for the fundamental changes needed to address today’s challenges. And what was especially productive was that while each one of our guests is 100% focused on positive impact, their respective perspectives were greatly informed by the vantage point from which each person pursues impact. Thanks to them, I think there are at least four big takeaways:

  • Communities need a greater voice. We know that in order for change to happen — for investment to stick, if you will — communities must be a material part of the conversation and the decision-making.
  • Organizations’ and individuals’ balance sheets should be a central focus. Today we heard the case for enterprise capital, what Clara Miller also calls “philanthropic capital.” Philanthropic capital asks philanthropy and impact investors to step up and invest more in nonprofit organizations, investing beyond that which merely covers cash flow to build financial strength and resilience by developing infrastructure and organizational capacity. Philanthropic capital allows organizations to make different decisions — decisions that focus on the long term, effectively matching long-term capital with long-term needs. With regard to people, Rev. Cory Anderson understands that it’s dated thinking to believe that we can help communities thrive if individuals and families are merely meeting their daily cash needs. We need to help them build wealth. Wealth plays an important role in an individual or family’s ability to withstand financial shock or economic disruption and to support future generations. Research shows that wealth allows an individual or family to chart a more constructive path forward.
  • Foundations, corporations, impact investors, and nonprofits need to reset their objectives. Why do foundations, for example, limit their distributions to the IRS minimum of 5%? As Clara said, we’re facing existential events, while foundations are focused on maintaining or increasing the size of their corpus. Geoffrey Canada observed that if we are going to fund some of the toughest problems in America, we need to give nonprofits the capital they need to fix those problems. And Audrey Choi noted that corporations likewise need to rethink their objectives. She shared that there has been a pronounced evolution over the past decade in how capital market investors and clients regard sustainability and ESG. Increasingly, they are understanding that the S is as important as the E. That pace needs to be accelerated.
  • Align incentives with our objectives. Should asset managers and CIOs continue to be compensated solely on return, or can social and environmental impact be a part of how they define success? Can we create disclosure documents that require organizations to pay heed to financials, impact, and inclusion? As Audrey noted, if we could see how “inclusive” a company or organization is, it could lead to different outcomes.

We surely need the time to dive deeper and explore more ways to move more capital toward mission. But this is a start, and until then, I want to thank our participants for their energy, wisdom, and commitment to others. And I want to express my gratitude to you, the audience. Your mere presence today is testimony to your interest in improving the lives of others.

Thank you.

Ellen Simon is a corporate communications specialist in the Communications and Outreach Group at the New York Fed.

This article was originally published by the New York Fed on Medium.

The views expressed in this article are those of the contributing authors and do not necessarily reflect the position of the New York Fed or the Federal Reserve System.


The Teller Window is a publication featuring expert knowledge and insight from the New York Fed, including thoughts and perspectives from senior leaders. It offers a deep look at issues that matter to the Federal Reserve’s Second District and the nation.

Articles on the Teller Window focus on the people and programs that help the New York Fed support the U.S. economy. They are written for a wide audience with the aim of illustrating what we are doing and why it matters. Stories include editorials, interviews, explainers, and reports on events and trends in our communities and region. The Teller Window is edited by the Communications and Outreach Group on behalf of the New York Fed. Separately, for analysis from New York Fed economists working at the intersection of research and policy, please see Liberty Street Economics.

The New York Fed began publishing on the Teller Window in November 2022. Articles with dates earlier than November 2022 were originally published by the New York Fed on Medium.

Step up to the Teller Window to learn more about the New York Fed’s work and views.