One of the major challenges for rich pro athletes who get their money quick happens to be giving back to their community. This happens because there is a possibility of them losing their money even more quickly. Those who have managed to accumulate a substantial amount of wealth, barely ever use it for charitable causes, neither do they use it in ways that have long term effects that are positive.
Some celebrity athletes are turning a new leaf and have started “impact investing”. Impact investing is a growing sector with strategies that are aimed at doing good, their goal is to channel money towards more charitable avenues that have been neglected or have never been shown the support they need. It is also the aim of fund managers to generate income from the process
A privately-owned equity body that is focused on preserving housing that is affordable, The Turner Multifamily Impact Fund; has gotten support financially, from NBA All Star Chris Paul
Chris Paul Joined Magic Johnson, a Basketball Hall of Famer and Andre Agassi, a former World No. 1 tennis player in making such move. Both Magic Johnson and Andre Agassi have invested in projects and funds that are run by Tuner Impact Capital, which is the parent company of The Turner Multifamily Impact Fund and was founder by Bobby Turner. The contributions they have made so far works with dollars from the Rockefeller Brothers Fund, actress Eva Longoria and hedge fund billionaire Bill Ackman.
In a recent interview with Reuters, Chris Paul said he was tired of having the feeling that the huge amounts of money he gave could only “put a Band-Aid on a situation.”. Being a point guards for the Los Angeles Clippers, Chris has earned a lot of money from major indorsements with huge companies like State Farm Insurance and Nike; he has also earned from his 5 year $107.3 million contract he signed in 2013.
Forbes has placed an estimate on Paul’s worth and this is placed at about $30 million.
Paul mentioned a few of the projects that the Chris Paul Family Foundation has been able to organize for kids that are disadvantaged. “We were doing basketball courts here or there, we’d always do giveaways during the holidays, and we did 10 computer labs,”. He also said, “But at times, philanthropy can be frustrating.” It is still unclear if charitable giving is more successful than impact investing. The main feature of impact investing is that it comes with returns and these returns can make it possible for the philanthropist to either sustain or grow their charitable giving. But so far, the impact funds have not been able to match the delivery returns that bond market indexes and stocks are known for, this fact is according to the data provided by the Global Impact Investing Network.The funds from impact investing has way higher fees than the traditional investment tools like the index funds and mutual funds and this is caused by the intensity and amount of work that is put into the investments, such as looking for apartment buildings for affordable housing funds.
The advocates of impact investing argue that the analysis of the financial return alone is wrong. This is because the major concern is that the money keeps on achieving its outcome; an example is
That is because they are more concerned with whether their money is achieving an outcome, like preventing the death of affordable housing in areas that needs to be improved than the amount of profit that is made. Almost 40 percent of people who have invested in impact investing have said that they expect below-market returns.
Contrary to popular beliefs, investments that deliver below-market returns tend to be the most successful because it shows that these projects would not have received funding, said Paul Brest, a professor who teaches course on or relating to impact investing gins Stanford University
“That’s the sweet spot for impact investing, because by definition, ordinary investors are not going to invest in that,” he said.
Rent Reduction for Service
In 2015, there were over 400 impact investing products and funds, with $31 billion in money that has been committed. This is the most recent data that available from Global Impact.
The Tuner Multifamily Impact fund is run by former hedge-fund manager Bobby Turner, it was founded in 2015 and has raised $264 million in capital. So far, it has acquired nine apartment complexes that are situated on the outskirts of cities such as Austin, Dallas and Las Vegas.
Run by former hedge-fund manager Bobby Turner, the Turner Multifamily Impact Fund launched in 2015 and raised $264 million in capital. It has so far acquired nine garden-style apartment complexes on the outskirts of cities like Dallas, Austin and Las Vegas, according to the fund’s website.
“We’re trying to give housing to people who make too much money for subsidized housing but do not make enough for luxury rentals or home ownership,” Bobby Turner said to Reuters reporters.
A lot of the time, these apartments are occupied by people who make up to 80 percent of the average income expected by people living in an area, and the actual rent required of them is below 35 percent of the salary they earn.
For the investment to be sustainable, Turner said that the turnover of the tenant has to be kept low. This is done by the provision of additional services such as clinics, watch groups and free tutorials that are run by other residents who have jobs in fields such as healthcare, law enforcement or education; and these tenants that render these services pay half the rent for running these programs.
At the Regency Pointe Apartments which is owned by Turner, a group of red brick apartments, 10 miles from Washington DC, the average tenant makes about $54,666 (this is according to the numbers provided by U.S. Census data) while the rent starts at $1,456 a month for three bedroom apartments, based on information gathered from the complex’s website.
The aim of the fun is to get between 10 to 12 percent net returns on all the fees over the next couple of years, this they plan doing by ensuring that the tenant turn over and insurance costs are low. The firm doesn’t give out information on its fees but other sources say that most privately owned equity-style funds normally have an annual charge/management fees of 1.5 to 2 percent of the assets, plus up to 20 percent of profits.
A measure generated by Global Impact Investing Network has shown that impact funds generated about 5.58 percent returns in slightly over 15 years, and this ended in June. The measure performed poorly when relate to stock and bond market indexes. But Paul says that for the fun’s success, there has to financial returns. Paul said, “That’s the fuel we need to bring in investors and reach even more communities and families,”. He also said, “When you combine a positive financial return with positive social impact, you can make a huge difference for people.