NBA's Chris Paul, other
celebrity athletes, invest for an impact
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[March 20, 2017]
By Elizabeth Dilts
YORK (Reuters) - Giving back to their communities has always been a
challenge for pro athletes who get rich quick, because they tend to lose
the money even more quickly. But even those who manage to build a
substantial amount of wealth have a hard time using it charitably in a
way that truly has a long-term impact.
Some celebrity athletes are turning to "impact investing," a growing
niche of do-gooder strategies that aim to put money toward charitable
causes but that would otherwise lack support. Fund managers, of course,
also aim to generate income in the process.
The Turner Multifamily Impact Fund, a private-equity style vehicle
focused on preserving affordable housing, has lately drawn financial
support from NBA All Star Chris Paul.
He joins former World No. 1 tennis player Andre Agassi and Basketball
Hall of Famer Magic Johnson, who have invested in other funds and
projects run by the parent company, Turner Impact Capital and its
founder, Bobby Turner. Their contributions work with dollars from hedge
fund billionaire Bill Ackman, the Rockefeller Brothers Fund and actress
In an interview with Reuters, Paul said he was frustrated by the feeling
that giving away his own millions only "put a Band-Aid on a situation."
As a point guard for the Los Angeles Clippers, he has earned money not
just from the 5-year, $107.3 million contract he signed in 2013, but
also from lucrative endorsements for companies like Nike and State Farm
Paul is worth an estimated $30 million, according to Forbes.
"We were doing basketball courts here or there, we'd always do giveaways
during the holidays, and we did 10 computer labs," Paul said, referring
to a few of the projects the Chris Paul Family Foundation has organized
for disadvantaged kids. "But at times, philanthropy can be frustrating."
Whether impact investing is more successful than pure charitable giving
Unlike simply giving money away, impact investing does provide a return,
which could enable philanthropists to sustain or grow their charitable
giving. But broadly speaking, impact funds have delivered lower returns
than straightforward stock or bond market indexes, according to data
from the Global Impact Investing Network, a trade group.
The funds also charge higher fees than traditional investment tools like
mutual funds and index funds, because of the amount of work that goes
into the investments, such as scouting apartment complexes for
affordable housing funds.
But impact investing proponents argue that analyzing financial returns
alone is misguided.
That is because they are more concerned with whether their money is
achieving an outcome, like preserving affordable housing in a
gentrifying neighborhood, than whether the investment generates a
certain profit. Around 40 percent of impact investors polled by Global
Impact said they seek below- market returns.
Counter-intuitively, funds that deliver below-market returns may be the
most successful because it indicates they would not otherwise receive
funding, said Paul Brest, a professor at Stanford University who teaches
courses on impact investing.
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March 11, 2016; Los Angeles, CA, USA; Los Angeles Clippers guard
Chris Paul (3) moves the ball up court against New York Knicks
during the second half at Staples Center. Gary A. Vasquez-USA TODAY
"That's the sweet spot for impact investing, because by definition,
ordinary investors are not going to invest in that," he said.
Reduced Rent for Services
There were over 400 impact investing funds and products, with $31
billion in committed money, in 2015, the latest year for which data is
available from Global Impact.
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
"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," Turner told Reuters.
The apartments are mostly filled with tenants who earn up to 80 percent
of an area's median income, and rent is no more than 35 percent of a
To make the investment sustainable, Turner said tenant turnover must be
kept low. The fund tries to do that by providing additional services
like community watch groups, free tutoring and on-site clinics run by
other residents who work in law enforcement, healthcare or education and
receive half-price rent for running these programs.
At the Turner-owned Regency Pointe Apartments, a cluster of two-story
red brick apartments 10 miles from Washington D.C., the typical tenant
would earn $54,666 a year, according to U.S. Census data. Rent for a
three-bedroom starts at $1,456 a month, according to the complex's
The fund is aiming for 10 to 12 percent returns net of all fees over the
next few years by keeping tenant turnover and insurance costs low.
Turner's firm does not disclose fees, but generally speaking, industry
sources said similar, private equity-style funds typically charge annual
management fees of 1.5 to 2 percent of assets, plus 20 percent of
A benchmark generated by Global Impact Investing Network shows impact
funds generated 5.58 percent returns over 15 years ending last June. The
benchmark underperformed stock and bond market indexes across all
timeframes it measures.
But people involved in the Turner fund said they are less worried about
financial returns than tackling an affordable housing shortage in big
"In order to really impact change," Paul said, "it costs."
(Reporting By Elizabeth Dilts; Editing by Dan Grebler)
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