Celebrating Women and Investing

In honor of Women’s History Month, Stella Tai, Stewardship Investing Impact and Analysis Manager at Praxis Mutual Funds, interviews Lori Scott to reflect on the contributions and achievements of women in the field of investing.

Lori Scott joined Praxis Mutual Funds as a Trustee in 2023, and is the Managing Director, Impact Credit at Lafayette Square. Lori previously worked at the John D. and Catherine T. MacArthur Foundation, Anthos Asset Management, Armature Consulting, and Calvert Impact. She brings over 25 years of experience in community development finance and has paved her own way in the impact investment field. 

 

Stella: Tell us about your background and how you got into investment management 

Lori: I came to impact investing indirectly. I grew up in a steel mill town in Indiana that became increasingly economically distressed, and going to college was my way out. My first job was at a City of Chicago program that funded artists to bring their work to disinvested neighborhoods. Over and over, I saw the power of arts to engage people, create community, preserve culture and enrich lives, but against the backdrop of deep economic inequalities. This sparked my interest in community development, and I went back to get my MBA with the vague notion that business skills could be used for good purposes.

After business school, I became a real estate lender at Illinois Facilities Fund, a community development finance institution, making loans to nonprofit social service facilities like child-care centers. For decades now, CDFIs have shown how to build healthy portfolios seeking to generate a consistent yield while making capital available where mainstream financing was not available.

Stella: Why was a focus on underserved women, people and places important to you? 

Lori: Reimagining how capital can be used to solve problems is what drew me to this work. Impact investing can be used as a tool to realize human potential by re-channeling capital to support quality basic goods and services like quality health care, affordable housing and quality jobs. It is a tool for making systemic changes increasing the support of underserved women, diverse entrepreneurs and fund managers, further shifting capital to underserved people and places and making strides to bridge the wealth gap. 

Stella: What are your current views on the state of gender-lens investing? 

Lori: When I first joined Calvert Impact, a leading impact investing institution, our investment strategy was centered on community development and affordable housing in the U.S. and microfinance internationally. Microfinance was where I first learned about gender-lens investing, as many of the early microfinance models focused on women, and it became a wide-scale demonstration that very poor women around the world were a good credit risk. 

There is so much inspiring work going on right now in gender-lens investing, with a global blossoming of talent pioneering innovative investment strategies and contributing to thought leadership, research, and data. There has been an uptick in diverse voices in the gender conversation – an overdue improvement. 

Stella: What would you say to those who are still concerned about the perceived risk of this kind of investing?

Lori: When we talk about risk, it’s important to unpack the assumptions that are underpinning the assessment and be aware of perceived risks. What data, if any, is informing the risk aversion? This is a fertile time for experimentation with investment to create change and, in parallel, there are rapid advancements in impact data collection and interpretation. 

There is a broad range of impact investment products available for people all along the risk-return spectrum, in different asset classes, geographies, sectors, and impacts. Some strategies require capital that has more modest return expectations, or objectively have higher risk to achieve a certain outcome. This variation in risk tolerance among investors is one of the reasons we created the Catalytic Capital Consortium at MacArthur Foundation, in partnership with Rockefeller Foundation and Omidyar Network. 

Stella: What are some of the advances that you have seen in making the investment management field more diverse by attracting more women, including women of color?

Lori: Bringing diversity to all levels of decision making is critical to addressing the systemic barriers that result in unequal access to resources for women. Women were hired into only 37% leadership roles in 2022 and women hold just 29% of board seats. Something is amiss since a higher proportion of women on boards is correlated with higher credit ratings, according to Moody’s Investors Service.

Additionally, in 2022, women founded start-ups raised 1.9% of all venture capital funds, only about 12% of decision makers at venture capital firms are women, and 65% of firms do not have a single female partner. When you layer in race, the numbers plummet further. For example, less than 1% of US venture firms are led by Black women and only 0.3% of U.S. venture capital goes to Black-women-owned businesses. 

These appalling numbers show the urgent need to increase women’s inclusion. When this is combined with the data that shows increasing participation of women improves performance, until we fix this, everyone loses. 

While many of the general statics of women in leadership are grim, the CDI and impact investing space has made significant progress toward gender equity. I’ve been privileged to work for and learn from several amazing women leaders in this field: Trinita Logue, founder of IFF; Shari Berenbach, Lori Chatman and Lisa Hall at Calvert Impact; and again with Lisa at Anthos, a family office in the Netherlands; and with Debra Schwartz, at MacArthur Foundation. The firm where I work now, Lafayette Square, has about half women and half people of color on staff and it feels like I’ve landed in the bright future of equal opportunity.

Stella: Why should we continue to focus on the issue of women in investing even as progress is being made?

Lori: According to the World Economic Forum’s Global Gender Gap report 2022, it will take another 132 years to close the global gender gap at the current rate. The pandemic further increased pressures on women globally, due in part to increased caregiving responsibilities. I don’t think we fully understand these effects on slowing the progress to reach gender parity. Adding the lens of race, ethnicity, and/or location makes these statistics even more stark and the need for tailored strategies more urgent. So, much work remains to be done. 

Stella: What wisdom or challenge can you leave us with?

Lori: Be curious and listen more, especially to the people that you are intending to help!

 

(Top image: the VisionFund International, a CDI investment Praxis has through Calvert Impact)

Interview by Stella Tai, Stewardship Investing Impact and Analysis Manager. Stella provides primary leadership for the promotion, integration and development of impact investing and reporting. Stella guides the development of financial products that meet the needs of low-to-moderate income communities, helps promote the integration of faith and finances through Everence products and services, and works to grow opportunities for impact investments. Connect with Stella on LinkedIn.

Praxis Mutual Funds pursues diversity and inclusion not just at its own board table, but also throughout its investing and shareholder advocacy activities. Addressing inequality in corporations is one of Praxis’ two primary shareholder advocacy objectives for the next several years. This effort is supported by an active proxy voting strategy that emphasizes diversity and inclusion on the boards of the companies in which Praxis invests. We believe that the inclusion of diverse voices at the board table leads to better outcomes.