Jessica Droste Yagan Shares a Purpose First Approach to Spending and Investing

Jessica Droste Yagan, Partner & CEO, Impact Engine

Our money has power, but it also has purpose.

That’s the key message Jessica Droste Yagan, Partner & CEO of Impact Engine, wants Purpose First leaders to understand. It’s a belief that’s served as a connective thread throughout Jessica’s professional life. She explains, “I’ve spent my whole career thinking about purpose—the purpose of money.” Today she pursues that work through Impact Engine, a venture capital and private equity firm focused on investing in companies working toward solutions to social and environmental challenges.

In Purpose First Entrepreneur, Pete Wilkins advocates for ensuring investors are aligned with a company’s purpose, but we each act as investors in our daily lives—whether formally or as consumers—and can use our spending power purposefully. Jessica emphasizes that there’s an advantage to using purpose to weigh important decisions—for example, starting a business or choosing one employer over another—the same is true for the multitude of other choices we make every day when we spend or invest money.

Jessica says that she often uses a quote from Gandhi as guidance: “Happiness is when what you think, what you say, and what you do are in harmony.” Purpose First Entrepreneurs do this with their labor and time by aligning what they do for a living and how they make change in the world. Our work doesn’t have to be separate from our advocacy. The same, Jessica says, is true with our money—we can infuse our spending and investing with the same level of purpose as our charitable contributions.

We recently talked with Jessica about spending and investing with purpose, understanding how to make the greatest impact with our money, and why asking questions is a powerful action.

The advice that you frame with that quote from Gandhi is so clear and powerful. What do you think is a good first step for anyone looking to move from thinking and talking about purposeful uses for money to taking action with our spending and investments?

The first step is just owning the fact that you’re part of a system that has both positive and negative impacts, but you can be an active part of that system if you have options and time.

Then you can set your priorities. You can’t do everything at once. There are no perfect humans, and there are no perfect businesses. Decide what’s most important to you or where you can have the biggest impact.

I know a lot about sustainable food, for example. I ran sustainable sourcing at McDonald’s for eight years; I’m probably much more knowledgeable than the average person. And still, if I were to go to the grocery store and try to optimize every single thing on my list, I would spend all week trying to decide which was the most sustainable brand on the market or how to balance labor conditions and climate change. It’s just not feasible.

I know that in my cart I can make the greatest impact with our meat/protein purchases, so that’s where I invest time, research, and money. It’s about being thoughtful and intentional—and pragmatic.

What advice would you give to small business owners or start-up founders who are looking to be more purposeful in their business spending?

Nobody should feel like they have to bear the whole world on their shoulders and seek perfection. Running a small business is super hard—you have to make payroll and you feel like you’re barely staying afloat most of the time.

Find the areas where you have choices and where you can make the biggest impact. So if you can’t buy sustainable paper right now, don’t beat yourself up. Recognize that there’s a continuum of choices, and weigh where you can have an impact in a way that supports your business goals at the same time.

Obviously high-net-worth impact investors have quite a bit of choice in what they invest in, but for many of us, our investments are largely in things like 401Ks or IRAs. How can we make a positive impact with our investments, even if our choices are more limited?

You don’t need to take responsibility for figuring everything out on your own, but start taking action that aligns with your values by asking questions. Asking questions is a form of taking action. Most people don’t know exactly where the money in their 401K or mutual funds is invested, but we can become more demanding consumers.

Start by asking the experts. Ask your investment manager or your employer, “What is in this fund? What do these companies do? What options do I have?” The more people asking the questions, the bigger the impact on the market.

Eventually one or two of those firms are going to realize, “A lot of people have been asking these same questions. We’re likely going to get even more clients if we offer more sustainably oriented products.” And then those products get created. The more people have demanded zero-carbon portfolios, for example, the more those are offered and the more cost competitive they become.

Supply and demand works, but first the experts need to know that the demand is there. We just need to voice the demand.

Even if we can’t make major changes to our investment portfolios, are there other ways we can use our money to support businesses making change in the world?

New businesses and products have to get to scale, and consumers make that possible with their purchases.

There’s lots of evidence in the market right now that making money and doing good don’t have to be separate. We have so many clear examples of companies that were started to solve an important problem and have gone on to be hugely successful and have gone public. Beyond Meat and Patagonia come to mind as just two examples.

But that success starts with consumers who have options being willing to invest their money in purchasing new products. As an example, our family was one of the first buyers of a hybrid car when they first hit the market. Obviously, the technology was new and needed some improvements. But I believed really strongly that in order for different kinds of more environmentally friendly cars to become affordable and to be higher quality, someone had to invest in version one.

A car is obviously a large example, but there are many more approachable ones as well. Think about where you buy your coffee in the morning. Do you feel good about the way they treat their workforce? Do you know anything about where they get their beans? Make your purchases and your investments as purposeful as your philanthropy because they are just as impactful—maybe even more so.

 For more information and resources on impact investing, Jessica recommends CNote, Honeycomb Credit, RSF Social Finance, Calvert Impact Capital, Invest for Better, Toniic, The ImPact.