Investing Close to Home to Build Intergenerational Wealth
How one Nashville investor is using the ImpactAssets’ Client Recommended Investment service to support underestimated entrepreneurs in her community.
The content from this post is based on a recent impact investing lab. You can watch the full conversation here, or read on for key highlights.
Key Takeaways:
- Direct loans to underestimated founders can be a powerful financial tool
- Finding the right partners for each stage of the investment process is critical
- DAF assets can be used more boldly for deeper impact
For the last 15 years, ImpactAssets has been working with clients at every stage of their impact journey: from those just beginning to define their values and strategy, to experienced investors ready to deploy capital toward real-world outcomes. That work spans asset classes, impact themes and check sizes — from the tens of thousands to the hundreds of millions.
Sallie Bailey, a Nashville-based investor and former CFO, is a vivid example of what becomes possible when a client with clear impact goals connects with the right investment partners.
Since 2023, Sallie has been using her ImpactAssets Donor Advised Fund (DAF) — and specifically, ImpactAssets’ Client Recommended Investment service — to provide loans to entrepreneurs from underestimated communities in Nashville. The approach is personal, hands-on and built for the long haul.
“The bottom line of what we are trying to do is build generational wealth for people who historically have not had great access to capital,” Sallie explains. “We’re not just impacting the entrepreneurs that we are investing in. We’re impacting their children and hopefully their grandchildren.”
Expanding Community Engagement
When Sallie retired in 2018, she was already an active volunteer for several Nashville organizations. But she sought more. “I was looking to have a greater impact in our community,” she says, “and in a way that felt more tangible and expanded my community engagement.”
Her impact vision was straightforward: provide small, affordable loans to local entrepreneurs who have historically struggled to access traditional loans. Compounding the challenge, these underestimated founders often can’t turn to friends and family for capital either, as those networks frequently face the same barriers to wealth-building.
To put the vision into practice, Sallie partnered with Eric Johnson, Henderson Professor and Dean Emeritus at Vanderbilt's Owen Graduate School of Management, whose graduate students conduct due diligence and prepare each investment package for review. The students gain real-world investing experience in the process, while developing an eye for creditworthy borrowers that the traditional lending system too often overlooks.
The choice to make loans rather than grants was deliberate. Loans help entrepreneurs build a credit history — a critical steppingstone toward accessing more traditional financing. And because the capital is repaid, the same funds can then be used to support future entrepreneurial enterprises.
ImpactAssets Makes It Possible
Executing small loans — and servicing them thoughtfully — is not something most financial institutions are willing to do, but it is one way that ImpactAssets fills a critical gap.
“What ImpactAssets brought to the table for us was the ability to have client recommended investments at a small level — $25,000 — which is impactful to our entrepreneurs,” Sallie says. Beyond deal execution, ImpactAssets handles compliance review, capital calls, distributions, and ongoing monitoring and reporting.
Sallie notes that the ImpactAssets team also provides flexible loan servicing — working with entrepreneurs who may not always pay on a strict schedule. That kind of flexibility generally doesn’t exist with traditional lenders, Sallie notes. “But if you’re working with entrepreneurs from communities that are not used to having loans, this is part of the whole learning process.”
Eric Johnson puts it simply: “We couldn't do any of this without ImpactAssets.”
While Sallie has made a number of private loans through her DAF, she wants all of her ImpactAssets DAF to be invested for positive impact. ImpactAssets makes that easy: All client assets that haven’t yet been deployed as a private investment or grant are invested in model impact portfolios through the ImpactAssets Investment Platform. It means all client capital is always at work for impact.
Real Results and Lessons for Other Investors
Since inception, Sallie’s $350,000 DAF has made loans to 15 entrepreneurs, with more to come. One pair of married entrepreneurs — owners of the only African American-owned Black hair care beauty supply store in Middle Tennessee — used their loan to expand inventory and grow the business. Another, a cold-pressed juice maker, grew sales from less than $40,000 to six figures in just two years after using her loan to purchase a commercial juicer.
“It’s probably the most meaningful use of my charitable funds,” says Sallie.
For donors considering a similar path, Sallie suggests: “Just jump in and find the right partners…[DAF funds] are great funds to use in a way that might appear ‘riskier’ than we might do with our normal, non-DAF investment account. Take a risk — because the return on this investment, frankly, can’t be measured monetarily.”
LEGAL AND PROGRAM DISCLAIMER: This is not a solicitation to buy or sell securities, nor a private placement offering pursuant to any private placement memorandum that must be issued to qualified investors. It is an informational description of charitably oriented, social purpose investment options that have been approved by ImpactAssets only for use in its donor advised fund asset base. It is only for use by its donors. This does not constitute tax advice. Please note there are a number of factors to consider when assessing the tax implication of gifts to charity. Individuals should consult with a tax specialist before making any charitable donations.
This spotlight features a current client of ImpactAssets, Inc. No cash or non-cash compensation was provided to the client.
