The Cultural Financial Advisor: Anna Raginskaya
“Sustainable investing can be a powerful tool to address some of these systemic issues as we rebuild.”
6 QUESTIONS WITH Anna Raginskaya
Financial Advisor, Blue Rider Group at Morgan Stanley
New York City
Anna Raginskaya is a financial advisor with the Blue Rider Group at Morgan Stanley, which provides financial services to families, foundations and non-profits, with a special focus on the cultural community. Anna focuses on the Blue Rider Group’s engagement with the art and impact investing communities and strategic planning for non-profit clients. Anna also advises on wealth management issues for Next Gen clients, including entrepreneurship and philanthropy. Anna earned her BA in History of Art and Architecture from Harvard College and MBA from Harvard Business School. She is a co-chair of the Municipal Art Society Urbanists, a member of the Programming Committee of the National Academy of Design, and a partner of the VIA Art Fund.
The Blue Rider Group is committed to sustainable and impact investing, actively incorporating strategies that utilize environmental, social and governance criteria to make investment decisions, helping create positive change and drive investment returns. In addition to addressing their clients' financial needs, the Blue Rider Group facilitates introductions between philanthropists and non-profits, raises awareness about organizations and helps support cultural projects. They are passionate about art and the community of people involved in making, supporting, curating, and caring for it.
1. How is this financial crisis different from 2008?
With this crisis, we have already experienced the deepest recession since World War II, but will also potentially see the sharpest recovery, given the unprecedented level of policy response. When all is said and done, the Federal Government stimulus will likely total over $3 trillion, which is nearly 20% of GDP. This excludes the additional support from the Federal Reserve, which will see their balance sheet potentially triple by the end of next year (an $8 trillion expansion). American consumers were also in a much stronger position going into this crisis, with higher savings rates and less debt than 2008. In addition, we have a healthy banking system and thus the financial infrastructure in place to ease recovery.
However, the way the health crisis has been managed in the US still leaves us vulnerable to multiple waves of infection. Virus testing, serology testing, therapeutics and an eventual vaccine will be critical to controlling future outbreaks. The implications for re-opening the economy are uncertain – it is likely that businesses (and cultural institutions) will be unable to operate at full capacity for an extended period of time.
2. What trends are emerging with regard to recovery… what can we expect from Q3, etc.?
It is an important moment for us to reassess how we live and operate. Interest in sustainable and impact investments – those that seek to generate a measurable social or environmental impact, in addition to commercial financial return – has been growing rapidly in the last decade. The COVID-19 crisis and protests for racial justice we’ve witnessed recently have only accelerated the urgency around this conversation.
The health crisis has disproportionately affected communities of color in the US. This disparity in health outcomes is tied to structural issues: among them, a history of underinvestment in healthcare and community infrastructure, as well as lack of access to capital. Sustainable investing can be a powerful tool to address some of these systemic issues as we rebuild. As a start, a number of investment strategies focus on directing capital to companies with diverse senior leadership, whose policies support living wages and pay equity. According to a recent study by McKinsey, companies in the top quartile for racial and ethnic diversity are 30% more likely to have financial returns above their respective national industry medians.
Investors can also directly target underserved communities: financing affordable housing and healthcare facilities, or investing in technology which increases access to education. Investors with a lens towards impact benefit not just from exposure to potentially stronger companies, but also seeing their investments encourage much needed structural change.
3. How do you see the events of 2020 shifting the economic landscape for philanthropy?
Since this onset of the pandemic we have seen a dramatic increase in philanthropic giving. A great benchmark is Morgan Stanley’s Donor Advised Fund which has been gifting at 4 times the weekly average over the same period in 2019. We see many foundations going above and beyond their 5% giving requirement – treating it as a floor, rather than a ceiling.
Giving has been increasingly local, with a focus on meeting individual needs. Clients are interested in identifying the vulnerable populations within their own communities who have been disproportionately impacted by the crisis. A consequence is that non-profits in other areas, including the cultural sector, have seen donation revenues fall — many now find themselves in precarious positions. The pace of our economic recovery is a critical metric for charitable organizations: those who rely heavily on broad-based membership programs, rather than major gifts, will feel the lingering effects of unemployment among their membership base.
In the long term, there are some positive trends for philanthropy. COVID-19 has forced all of us to operate more efficiently, and we have seen remarkable collaborative energy across the philanthropic community - Artist Relief is a great example of this. As our federal and local governments continue to deal with the aftermath of the crisis – and our corresponding budget deficit – philanthropy will have a larger role to play. It must flex this muscle to step in and fill the gaps at scale, and with a lens towards equity. A recent, exciting development is large foundations turning to the capital markets to increase their grant-making capacity. Morgan Stanley was a joint underwriter on the Ford Foundation “Social Bond”, which will allow the foundation to significantly increase their support to arts and cultural organizations impacted by COVID-19, and in the fight for social justice.
4. What are some prudent actions institutions can take with their endowments and investments?
We often help our institutional clients better align their investment portfolios to their mission and values. Individuals and families can also engage in this dialogue, and now is an opportune time to do so. The first step in this journey is to understand what you own; clients are often surprised by the mismatch in the values of the companies they are invested in and their own principles.
There are a wide range of impact objectives that investors may consider — the UN Sustainable Development Goals can be a helpful guiding framework for investors who are just beginning this journey. And of course, the approaches will vary: from minimizing exposure to objectionable industries, to proactively investing in targeted sectors to create specific social benefit.
Ultimately, sustainability is increasingly being seen as an important aspect of financial analysis – a prudent investor will work to understand the sustainability-related areas of risk and reward within their portfolio, and find ways to mitigate or enhance them.
5. You’ve written extensively about the ongoing big crisis: climate change. What lessons can be applied from the pandemic to the cultural sector’s response to climate change?
What this crisis has shown us is that collaboration on a mass scale is possible in the face of a common threat. It has also laid bare the real impacts of not heeding scientific warnings and waiting to act.
We are fortunate that the COVID-19 crisis will likely be resolved with developments in testing and a vaccine (and a massive stimulus, which is helping to pull the economy out of recession). However, the impacts of climate change are almost impossible to reverse. In addition to the dire ecological impact, a study released last year by the National Bureau of Economic Research predicted that the U.S. economy could shrink 10.5% by 2100, if significant steps are not taken.
Cultural organizations have an opportunity to be role models in their response to climate change. They can reduce their carbon footprints and prioritize sustainable investments, and also proactively share their actions with their constituents to inspire others.
6. From your vantage point, do the crises of 2020 accelerate the involvement of next gen high net worth individuals in cultural philanthropy?
Absolutely! I think this crisis has revealed many things – top of mind for me is our interconnectedness as a society, the fragility of our communities in their current state, and the extraordinary importance of the arts. The arts have frankly allowed many of us to get through this experience.
Access to the arts is also a question of social justice, and cultural organizations are an important resource plugging the gaps in our education system. Next-gen donors who connect these dots have all the more reason to be strategic with their giving in this area.
Anna Raginskaya is a financial advisor with the Blue Rider Group, and focuses on the Blue Rider Group’s engagement with the art and impact investing communities and strategic planning for non-profit clients. She also advises on wealth management issues for Next Gen clients, including entrepreneurship and philanthropy.
Anna earned her BA in History of Art and Architecture from Harvard College and MBA from Harvard Business School. She is a co-chair of the Municipal Art Society Urbanists, a member of the Programming Committee of the National Academy of Design, and a partner of the VIA Art Fund.
The Blue Rider Group is committed to sustainable and impact investing, actively incorporating strategies that utilize environmental, social and governance criteria to make investment decisions, helping create positive change and drive investment returns. In addition to addressing their clients' financial needs, the Blue Rider Group facilitates introductions between philanthropists and non-profits, raises awareness about organizations and helps support cultural projects. They are passionate about art and the community of people involved in making, supporting, curating, and caring for it.
(Photo by Matthew Morrocco.)