How to successfully invest in social impact

Shumei Lam, a second generation member of family business, Azul World operating out of Singapore, recently gave a presentation at Private Wealth Network’s Intergenerational Wealth Forum on social impact in early June. Now managing the family office, she is making sure her father’s legacy lives on. She describes her dad as a modest man who sets the standard for his employees in being thrifty. From humble beginnings, he single-handedly built his business – shaping it alongside strong values on community, honesty, integrity, and a focus on sustainability.

So when Shumei’s father, Larry Lam, passed in 2014 she knew she wanted to see through his philanthropic idea of a sustainable chicken farm in Rwanda. She and her father believed the best way to have social impact is through sustainable investments; a lump sum pay out from companies or businesses didn’t align to their values and stewardship.

Elise Elliott, Partner at Deloitte shares; “It is very important you truly believe in what you’re investing in – you are more inclined to spend time and money on the project; and you become very proud of the achievement. I have worked alongside many clients to help them turn their idea into reality.”

Shumei’s focus was, and has for the past five years, been on social impact – setting up and running a sustainable chicken farm in Rwanda. She shares what it takes to successfully invest with social impact.

  1. Make sure there is a sense of you in the investment: Shumei describes her father as entrepreneurial but also adventurous. Through his work he travelled to many corners of the earth and met many amazing people, but he also understood the investment opportunity in Rwanda.
  2. Play to your strengths and use your established networks – Larry Lam was the first Singaporean investor in Rwanda and as a result had great relationships with members of the government and community.
  3. Plan! Social impact investing takes time – have your family office in order, only then should you focus on improving communities. Shumei and her family worked to a reverse investment model; how much do they need to live on, how much to invest and then how much was left to invest in social impact. Their focus is on a moderate life without eroding the family wealth – maintain it for future generations.
  4. Have a focus – a common pitfall of foreign investors is getting carried away and investing in too many things. Too many things lead to white elephants, frustration from the investor and loss of money for the investor and the community.
  5. Make sure the family is on board – Shumei recognises her family is small, just her sister and mother, but it is important to communicate openly with them on the family office as well as the social impact investing – it is also their legacy.
  6. See double – know your investment, but also know it could take twice as much capital and twice as long. Don’t let the unexpected costs associated with your investment turn you off or turn your investment into a white elephant.
  7. Know your return from the beginning – The most challenging part of social impact investing is balancing social impact with financial return. There is a goal for the chicken farm; it is an investment and not a charitable donation.
  8. Know your market – is your market safe, stable and ready for business? Do the local people have spending power? Is there a market for what you’re producing?

Shumei continues to be very active in her family’s social investment PEAL in Rwanda.

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