Impact Investor Rejects Zero-Sum View, Urges Advisors

Roy Swan, director of the Ford Foundation’s Mission Investments team and author of the book Positive Sum, argues financial advisors can help reduce zero-sum thinking by steering clients toward impact investments and donor-advised funds that aim for market-rate returns while pursuing social goals.

The book, published last month, traces how simplified readings of Adam Smith and Milton Friedman have supported a narrow view that prioritizes short-term profit. Swan presents historical examples and behavioral research to show where those interpretations differ from the original texts.

Swan manages more than $1 billion in mission-related investments at the Ford Foundation. He previously co-led a global sustainable finance unit at a major investment bank. The foundation’s investments target affordable housing, quality jobs, financial inclusion and global health while pursuing risk-adjusted financial returns.

One device in the book places actual Smith and Friedman quotations next to common assumptions about their views. Swan highlights Friedman’s advocacy for a negative income tax as an instance of a more nuanced policy position than is often attributed to him.

A personal anecdote appears in the book: after a serious football injury in 1980, several physicians predicted paralysis but Swan recovered and competed in a track meet six months later. He uses that experience to illustrate the limits of binary thinking.

For advisers, Swan recommends specific actions such as encouraging clients to consider donor-advised funds for their tax benefits and philanthropic potential. He also points to impact investments that seek market-rate returns and measurable social outcomes as alternatives to the assumption that social goals require lower financial returns.

Swan notes political resistance to concepts like ESG investing and diversity, equity and inclusion, which he says can complicate public discussion. At the same time, a research firm reported $3 billion of positive inflows into sustainable funds in the second quarter and a total of $398 billion in sustainable assets under management.

Pete Stavros, co-head of global private equity at KKR, and former Ford Foundation president Darren Walker contributed the book’s foreword and endorse Swan’s critique of a zero-sum view of capitalism.

Swan argues advisers can influence client expectations by expanding offerings to include mission-aligned investments and philanthropic vehicles, and presents those changes as a way to direct private capital toward specific social challenges.