- Isabella Lenarduzzi

Money is still controlled by men. Is it to the detriment of women?

Money is still controlled by men. Is it to the detriment of women?

Although women do produce almost as much in terms of financial wealth as men, the way the money is allocated remains the decision of men only and too few women gain from venture capital investment or corporate philanthropy.

In its report on the proportion of men and women in decision-making positions, the European Institute for Gender Equality (EIGE) points out that although women in Europe hold 1/3 of the highest political positions, they remain the exception in public financial management. There is just one woman among the 28 governors of the central banks and two women Finance Ministers in Europe (Sweden and Romania). In the private sector, although the boards of large businesses have increased the number of women a little, mainly spurred on by legislation, (from an average of 9% in Europe in 2003 to 22% in 2015), the proportion of women CEOs is still only 4%.

Yet, there are almost as many women as men in paid employment and they are globally better qualified since they account for 60% of university graduates. Although women are almost as productive in terms of financial wealth as men, the way the money is allocated remains the decision of men only.

In order to have a better understanding of what JUMP can do in this area, I decided to take part in 3 events. One of these, in Berlin, was a European platform for the analysis of the gender dimension in philanthropic and socially responsible investment (ISR), organised by the EVPA (European Venture Philanthropy Association) The other two, in Chicago and Stockholm, were organised by Skytop Strategies and the topic was the role of investment funds in gender diversity on management boards and boards of directors.  In other words, it was to check the impact of investment decisions on the place of women in the organisations chosen by the investors.


Are socially responsible investments more egalitarian?
I thought that for donors and philanthropists the egalitarian aspect would be very important. It is well known that the vast majority of poor people are women, both in Europe and elsewhere. We know that in developing countries a woman spends almost all her income on the family in order to get out of poverty, whereas men contribute less than half of their income.
This was how disillusioned I had been…

Two or three years ago, Eve Ensler, author of “The Vagina Monologues” and founder of V-Day, a movement which combats all forms of violence against women in the world, asked me to help her find donors in Europe. When I showed astonishment that a celebrity like her, leading a struggle of such fundamental importance, had difficulty finding funds, she told me that a recent study proved that only 5% of funding from foundations was specifically targeted to women. Incredulous, I did a quick check on the best known foundations in Belgium. By the same token, I wanted to check if a project led by JUMP on the access to employment of mothers of single-parent families could be of interest to foundations and philanthropists. No foundation and no private philanthropist was interested in the project, even though we know that this target group is the poorest in the country. A manager of the King Baudoin Foundation even said to me: “Basically it’s true … no foundation that we manage has women as its target. However, they are automatically among the beneficiaries of our health, education and migration projects!”

At the EVPA seminar in Berlin, I understood that even for foundations or “impact investors”, it is really exceptional to measure the impact from a gender viewpoint. There is no attention paid to the gender diversity of the organisations that receive money, the sex of the beneficiaries of an action or the impact on unequal organisations in society. Incidentally, out of the thirty or so people present at the seminar, there were only two men. All the managers of philanthropic and Socially Responsible Investment organisations present were disappointed by the lack of interest of men in their organisations. All of them stated that they did not have either the power internally or the tools to ensure that the gender impact would finally be given the recognition it deserves.

However, things are moving … a little.
The first is this training initiative by EVPA for all the managers of foundations and Socially Responsible Investment funds, which at last includes a module on gender stereotypes. Moreover, the European Foundation Centre (EFC) which brings together the majority of foundations in Europe created a thematic network on gender equality in 2014.

The place of women in the funding of a capitalist economy
For at least ten years we have known that diversity and professional equality are essential to ensure the financial and non-financial performance of companies. Therefore, I presumed that in “Hedge Fund” countries there had long been a positive attitude among investors towards companies that were working in this direction and that Europe had everything to learn.

However, in the United States as in Europe, the financial sector is one of the most masculine:
Women account for 10% of Investment Fund decision makers.
20 Hedge Funds (out of hundreds) are owned by women.
25% of portfolio managers are women.

Yet, according to a KPMG study in 2015, women who own or manage Hedge Funds have much higher performance than their male counterparts: a yield of 59.43% as against a global average for all funds of 36.69%, despite the fact that they say they find it harder to mobilise capital.
Some blame testosterone which distorts risk measuring…. This argument does not interest me because its impact could never be measured outside its context and it justifies the assigning of different roles in society based on biological sex. On the other hand, if women are generally better financial managers than men, it is probably due to the difficulty they have advancing in the world of finance and that those who actually succeed in doing so are generally better than men. As the Secretary of State, Madeleine Albright said: “There is plenty of room for mediocre men but no room for mediocre women”.

To obtain more equality in companies through pressure exerted by investors, we should not wait until there are more women among the decision makers of the financial sector as we risk waiting far too long. In order to benefit from the undeniable superiority of financial performance of companies with more mixed management than others, more and more investment funds are being set up.

In Stockholm, I met the managers of RobecoSAM whose « Global Gender Equality Impact Equities » fund invests in companies that give special attention to gender equality and diversity as well as to sustainability. “A company with a strong focus on gender equality is characterised by recognition and promotion of gender diversity and in this context recruits, develops and builds the loyalty of female talent at all levels of the organisation including management and board level.” The aim of the fund is to outperform the MCSI World Index. The companies are chosen according to the methodology developed by EDGE on almost 3,000 companies. Among them are: DSM, Cisco, Unilever, Pepsico, Allianz, Procter&Gamble, Estée Lauder, etc.

One of the first gender funds is the Fonds Valeurs Féminines, (Female Values Fund) which has two criteria for investment:
– Companies with female management (enterprises managed by a woman or companies where women have a significant presence at management level)
– The sectors and sub-sectors where purchasing is strongly associated with women (cosmetics, luxury goods, specialist distribution, clothes, food and services).
This fund is doing much better than most. This is as to be expected when you read RobecoSam’s study “Does corporate gender equality lead to outperformance?” which compares the share portfolios of Investments Funds made of companies which score well on gender diversity, compared with others. There are many cases where these companies outperform others but nobody speaks about them and none of the people I know in the world of finance know these funds and, besides, are not interested in knowing more about them. So, I wanted to find out why. Junwei Hafner-Cai, Senior Analyst at RobecoSam, replied: “Twenty years ago green impact funds were considered as provocative and a non-sense for business. This is now the case for gender equality impact funds”. I hope the credit that will be accorded to these funds changes, even if it takes 20 years! However, I am not that optimistic … as soon as there is a question of promoting the sharing of economic power between men and women, even if the aim is to make money, there is strong opposition which manifests itself as indifference, contempt or even discredit.

It is vital to raise awareness of the fact that all decisions of financial allocation have an impact on inequality in society and assign a different value to people, companies and actions.

Do women entrepreneurs have the same access to capital as men?
Throughout the world, enterprises created and managed by women do not grow as big as those set up by men but they also have a lower rate of failure. And yet they only have half the capital.

In Belgium, no bank and hardly any public bodies that provide enterprise funding examine the money given to women in relation to that given to men (or if they do the results are not in the public domain). With regard to start-up subsidies or micro credits, I often hear that the files submitted by women have a higher success rate. What is the total value of funds allocated to women entrepreneurs? How much is the investment in venture capital in expanding businesses owned by women? There are figures for other countries…

A DELL study carried out this year in the United States shows that only 3% of start-ups that benefited from venture capital have a woman CEO. More generally women entrepreneurs attract only 4% of venture capital.

In France too, the proportion of companies managed by women decreases as the size of the companies increase, even though they tend to outperform in their sector as well as in their turnover category. This paradox may be explained mainly by their more limited access to funding; while they represent about 15% of French SMEs, fewer than 5% of transactions are made with SMEs managed by women. “The analyses show a patent under-representation of enterprises run by women in French investment capital portfolios” » underlines Dunya Bouhacene, founder of Women Equity.

This is why it is becoming increasingly common to hear that after the right to vote, reproductive rights and economic rights, feminist demands must now turn to women’s access to capital.

Isabelle Germain, founder of Les Nouvelles News, on-line media that covers the news from an equality viewpoint, describes her search for funding: “We presented Les Nouvelles NEWS to investors. After blood, sweat and tears trying to explain our editorial line and its importance in forging equality between men and women, they indicated that they would follow us if we were able to produce content for advertisers in the cosmetic and fashion worlds. In that way, we could be funded by the advertising… The investors that we met, when they did not try to divert our editorial line, did not understand it (or acted as if they didn’t). They harbour illusions that “the myth of equality has happened already”, and do not understand why it is urgent to restore the information balance.

In France, women represent 11% of all Business Angels. If we imagine that they are more likely to have a more equal view about investments (still to be proven), their small number will not help in restoring the balance of capital acquisition.

In Berlin, I met Suzanne Biegel who explained to me that when she decided to invest in “Daily Worth”, which provides financial information and training for women, she found herself very isolated as the other investors thought that the market was not interesting enough. Daily Worth now has more than one million subscribers! Buoyed by this experience, Suzanne set up a community of investors and philanthropists with the aim of giving women the means to make more of an impact on the world.

On request of the European Commission, the Intesa SanPaolo bank in Italy analysed the gender of applicants for credit investment and the gender of the banker who decided to grant the credit or not. They found that a woman entrepreneur had a better chance of obtaining the credit if she defended her application with a woman at the bank rather than with a man. Female solidarity? Certainly not. It was more the same way of apprehending the risks and the financial projections, even though the bankers are certainly not sheltered from gender stereotypes, which work against women who go into business.

Catherine Wable, co-founder of Brainbox and Company, which produces a games console for visually impaired people, says: “In order to obtain funding it is sometimes necessary to bluff one’s way. Once while raising money I got this feedback: I was told that I did not get people dreaming … Perhaps women are less inclined than men to double their figures while only half believing in them. Yet, this is what works with certain private investors.” Some banks take this subject seriously. Nathalie Prévost-Reboul of the BPCE group: “We developed a sensitisation kit for our advisers to counter some perceptions that could be circulating: it is true that the turnover of enterprises set up by women is lower after 3 years than those set up by men, but their companies survive longer and do not carry a greater risk”.

In order to be considered and to succeed in obtaining investment credit or capital, it is essential for women to be aware of the prejudices against them. Laurence Tassone, of the “Banque Publique d’Investissement” (France), observes: “In innovative enterprises, the financial projections prepared by men are on average 1.5 times higher than those of women. Most women will remain below €50,000. This starting level penalises them as it does not allow them to enter the venture capital grid, and investors often want to invest in more substantial projects. »*

Cinema as an example
There were 3 women directions competing at the Cannes Festival this year alongside 17 men. Yet, worldwide, films directed by women win proportionally more prizes than those directed by men. From the beginning of this article the figures show that women or enterprises that have mixed management, outperform but that this has no impact on investment decisions. Is this also the case for cinema?

The European Women’s Audiovisual Network  denounces the fact that one film out of 5 in Europe is directed by a woman whereas women directors represent 44% of graduates of cinema schools. Here too the explanation is mostly financial. This study points the finger at the cold feet that investors get when it comes to funding films directed by women. In fact, 84% of the funding was assigned to films that were not directed by women. As fewer films by women are funded, the market loses confidence and so there is less investment. Women’s projects are considered high-risk projects and so off-putting for investors. Out of 1000 professionals of the sector questioned, 56% consider that a woman director has a negative impact on private funding, and 31% on public funding. *

The place of women in the economy depends on their access to capital
If private capital is generally managed by men, what is the real effect on social projects, enterprises and innovations created by women? “If 3% of venture capital goes to women, that means that 97% goes to men. Where is the equality in that?” asks Teresa C. Younger, Chairperson of « Ms. Foundation for Women »

What is the impact on women’s lives and on equality of public funding decisions that do not take into consideration organisations in society that are still unequal?

Private investors, philanthropists and public policies, which understand the tremendous challenges of access to capital for women, could play an essential role in the transformation of society, while at the same time increasing their own return on investments.

Isabella Lenarduzzi
Founder and manager of JUMP « Promoting Gender Equality, Advancing the Economy »

*Much of the information in this article has been reproduced from “Les Nouvelles News