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The Aha Moment: How investors can support veterans

By: Equities.com

October 31, 2024 at 14:19 PM EDT

The Aha Moment: How investors can support veterans

Veterans Day is coming up on Nov. 11, and as the wife of a veteran, it has special significance for me. But if you are a supporter of veterans, can you reflect that in your investments? Should you even try? If you’re wondering what might be possible, I’ve got an AHA Moment for you.

Veterans bring quality skills to the workforce, and research suggests that companies on the forefront of recruiting and promoting veterans find value in doing so. For example, a 2021 analysis from JUST Capital showed that companies with active veteran hiring and supplier policies had strong profitability compared with companies that show no evidence of those policies.

But the options to align your portfolio with veteran corporate leadership are limited. Two exchange-traded funds (ETF) stand out:

A stock ETF called Pacer Military Times Best Employers ETF VETS that screens for companies with documented veteran hiring and supplier policies.
A bond ETF from Academy Asset Management, a veteran-focused investment firm, called Academy Veteran Impact ETF VETZ . It invests in bundles of asset-backed loans targeted to military members.

The small number of choices reflects the fact that most advocacy initiatives take on veteran employment, not veteran investment. But there’s another route you can take: Investing in notes that provide funding for nonprofits focused on veteran interests.

LENDonate

LENDonate is a unique financing firm that matches investors with nonprofits who need funding, using a custom-built technology platform. LENDonate initiates loans to nonprofits after assessing their risk and assigning a risk rating. They then list these loans on their platform, allowing investors to choose opportunities that align with their values or social mission.

LENDonate isn’t the only company that provides notes to nonprofit borrowers, but their platform makes their notes uniquely accessible to the wider investment community. You need to be an accredited investor to invest. But for those with larger portfolios, their offering provides a powerful way to line up your money with your values.

One other advantage of LENDonate is that their matchmaking approach builds a sense of community and creates impact opportunities that might not otherwise happen. A perfect example is their recent success in providing funding for Compassion Residio Services (CRS), a nonprofit in Lodi, CA that provides emergency housing and case management for veterans.

Compassion Residio Services

Compassion Residio Services (CRS) was founded in 2019 by Fritzie Pascual, a nurse who is particularly concerned with homeless senior veterans. Initially, CRS was fully funded by the Veterans Affairs Department, but like many nonprofits, their services and revenue took a hit during the COVID-19 pandemic. Pascual reached out to LENDonate for a loan in 2021, but approving the loan was not a simple matter.

“We were challenged to approve the loan because there was no clear source of repayment, and the government contracts she had were in a state of flux,” said Vivienne Hsu, founder of LENDonate.

But the potential of CRS to make a positive impact on veterans, seniors, and the homeless community were too great to ignore. So LENDonate’s credit committee started looking for an out-of-the-box solution.

“As a lender we need to decline loans as a normal course of business. But every now and then a nonprofit applicant’s backstory compels us to go above and beyond. CRS was one of those organizations,” Hsu said.

LENDonate’s solution was to reach out to a specific investor with whom LENDonate had built a relationship. They knew this investor was willing to take on risk if it meant working with a nonprofit having a powerful impact.

So LENDonate made the match, and helped create a unique lending arrangement between them. CRS used the funds to not only maintain operations until grant funding kicked back in, but also to expand their geriatric veteran services. In the end, they paid the loan off in less than two years.

Building on veteran success

“We find a lot of values-aligned investors are prepared to give nonprofits a chance in this way, but there aren’t a lot of options for them,” Hsu said.

CRS is such a great Aha Moment because it shows how the power of finance, used thoughtfully, can benefit both sides of the equation. CRS gets to survive a rough patch and go on to greater success, while a values-motivated investor is able to provide impact directly where it is needed.

One important takeaway from the CRS example is that it is possible to use investments to support veterans, for those who feel motivated to do so. But the larger takeaway, in my mind, is this: To have success as a values-aligned investor, you need to work with financial people who are also values-aligned. When you can connect with a firm like LENDonate, the Aha Moments can be endless.

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