Kyle Lukianuk, President, Good Returns Network
Kyle Lukianuk graduated from SMU with a degree in finance and started his early career with Bank of America. He then moved to KPMG, where he focused primarily on internal audit and risk management. His insights into the financial services industry motivated him to explore financial models that foster social impact and make the world a better place.
Kyle is a social entrepreneur with a love for business and a passion for the power of Millennials to address world-scale challenges. He is inspired by social innovation,sustainability and telling stories of impact. He is president of Good Returns Network – an organization aimed at creating a network allowing business to drive impact using innovative finance and meaningful storytelling.
He is responsible for the implementation, development, and expansion of the Good Returns model, an innovative approach to corporate philanthropy.The model was built with the goal of mobilizing private capital, specifically business profits, in order to serve humanity and address key global challenges such as poverty, clean water, energy, oppression, education, environment, health, and conflict resolution.
Kyle was recognized as a Global Game-changer under 30 by the Global Chamber of Dallas.
An Innovative Intersection of Business Investing and Social Impact
Corporations seek innovative ways to create social and environmental impact with the most effective giving solutions to mission-aligned challenges. Maximizing stakeholder value translates to being good corporate citizens. Good Returns enables a new approach to corporate social responsibility with meaningful social impact and illustrative stories engaging employees and community.
Join our conversation with Kyle Lukianuk, President of Good Returns Network.
Listen to more: Activate World
An Innovative Intersection of Business Investing and Social Impact
Kyle Lukianuk, President, Good Returns Network
Season 3, Episode 3
Jon Mertz: 00:02 Welcome to the Activate World podcast, a series on how business leaders have more power to solve societal issues than any elected official. We explore business activism with substance and depth of thought.
Jon Mertz: 00:18 We’re excited today to have Kyle Lukianuk, President of Good Returns.
Jon Mertz: 00:21 Kyle, tell us about your background and how you got involved with Good Returns.
Kyle Lukianuk: 00:25 I’m really excited to be here and thanks for having me. And, as we were talking about leading up to this, it’s been quite an exciting couple of years at Good Returns. A little bit about me, kind of, going back to how I got started on this journey: I graduated from SMU with a degree in Finance and started my early career with Bank of America and then transitioned over to KPMG, focused primarily on internal audit and risk management, but got a lot of exposure into the financial services industry and, through that process, got a little bit discontent, I guess, with what I was doing to foster social impact.
Kyle Lukianuk: 01:17 So I was working at those companies and exploring what it looked like to climb the corporate ladder. I stared exploring different ways to use a financial background to create social impact, and one of the things that had recently emerged was the concept of micro finance, and started doing basically what any millennial would do, which is Google: “Finance”, “Micro Finance”,”Dallas”, which is the city that I was in, and came up with a couple of organizations that were working in that space and started reaching out to them to volunteer and, basically, just to learn more about what micro finance was. But the idea of combining, you know, traditional financial practices with a social outcome was something that was really intriguing to me. So through that process, ended up being on the board of directors for a group here in Dallas called [inaudible 00:02:15] International and, through that process, I met my current business partners, and we came together with the common idea of wanting to use business and more of their financial resources to drive social impact sustainably.
Kyle Lukianuk: 02:31 And so through several conversations and many long hours and late nights, we came up and developed this concept of Good Returns, the whole premise being that companies don’t necessarily have to give to create a social impact. And what we decided to build was a way for companies to provide short term, interest free loans to organizations that we, not so cleverly named, impact organizations.
Kyle Lukianuk: 03:06 There’s three characteristics of impact organizations which are addressing some sort of key human need. We try to map those as closely as we can to the UN Sustainable Development goal, so issues like poverty, energy,environment, education, health, access to clean water, things like that. That’s the first characteristic.
Kyle Lukianuk: 03:27 The second characteristic is that they’re doing it in a financially and operational sustainable way. In other words, they’re not relying on donations to sustain their operations. They actually generate revenue through sale of a good or a service that is directly linked to their social mission.
Kyle Lukianuk: 03:46 And then the third characteristic: That they’re not creating any known negative side effects. So if there is an organization that is, let’s say, addressing poverty but they’re doing it in a way that is creating a significant negative environmental impact, then we wouldn’t qualify those as impact organizations.
Kyle Lukianuk: 04:08 But what we found is that over the course of several years that some studies have come out to show that there is tens of thousands of these types of organizations around the world and there is even thousands of these in Texas alone. And so they don’t all consider themselves impact organizations, but they are addressing a key social challenge and they’re doing it in a financially sustainable way, and we wanted to enable financial resources to be able to grow those organizationsand to grow the solutions that they’ve created.
Jon Mertz: 04:46 Before we get into more of the details of what you do, how do you define social impact investing?
Kyle Lukianuk: 04:51 Well, there’s two, sort of, categories that I see a lot of groups fall into: There’s, sort of, what I call the socially responsible investing, that’s where you’re talking more along the lines of ESG screening. You’re basically taking out a lot of the negatives in your portfolio or you see a publicly traded company that’s doing good in the world and you decide that you want to invest in that company. I consider that socially responsible investing, where impact investing is actually using a traditional financial resource, whether that’s a portfolio that you have or financial assets, to actually take a financial position along side an organization that, like I said earlier, is creating social impact as a direct component of the operations of the organization. And so instead of just, let’s say, buying publicly traded stock, that could be investing and purchasing shares and providing seed equity for an organization that’s starting out in the social enterprise space. Or it could also be providing debt, like we do. Actually taking financial resources that would otherwise be invested elsewhere and leveraging those to create social impact with the expectation that there is going to be some level of financial return.
Jon Mertz: 06:29 So walk us through why a company would want to get involved in the Good Returns model?
Kyle Lukianuk: 06:33 Well something that I’ve believed for quite a while is that the traditional philanthropic model has a really low ceiling when it comes to companies. Companies can only give so much, and the reason for that is because they’re structured to have an entirely different objective than normal philanthropic giving. So when you look at companies and the idea of having shareholders and driving value for those key stakeholders, when they give money away there’s a bar that they, kind of, have to achieve to still be able to prove that there’s a return on investment for those Dollars, and in the conversations that we’ve had with companies, they keep saying this term of, you know, “We need to do more with less”.Or “How do we get more strategic in how we give things away?”
Kyle Lukianuk: 07:28 And, for a longtime, the options were, you know, you had your local charities, and you just, kind of, had to write checks. And now we’re seeing a lot of companies be a little more strategic and focusing on employee engagement, allowing employees to make decisions, and what we’re hoping to see, and what we have seen, is that companies are also exploring new ways in how they give back and not just accepting that they have to write a grant check each year. We come in and say, “What if you took next year’s $5 million and you put it through our cycle for one year so that money can do good, and when it comes back, then you can donate it?” So with the same amount of dollars they’re able to greatly increase the impact of what that money will do and to build new partnerships with organizations that, again, have a sustainable way of addressing cause areas that the companies really care about.
Jon Mertz: 08:28 Right. So after a company puts some of their profits into your Good Returns model as a loan, you match them to the impact organizations that fit their intent. Is that correct?
Kyle Lukianuk: 08:38 That is correct. Yes.
Jon Mertz: 08:39 And that there’s a huge value for a company in that loan approach too. Right?
Kyle Lukianuk: 08:43 Exactly. So if you kind of go back to the give $5 million away, let’s say that that $5 million returns, so that, right off the bat, is a lower cost of investment, if you will. But what we found and what we really incorporated into our model that drives value for the companies, is a story telling process. So what we do is we work with the companies to, again, identify cause areas that resonate with their values, their corporate structure, their employees and the communities that they operate in, and when we make those investments in the form of short term interest free loans, then we run a story telling process to actually go into those organizations and capture the impact that’s being created, whether that’s women being empowered to have opportunity to have living wage so that they can provide for their families; or that may look like providing opportunities for individuals that are formerly incarcerated so that they can re-enter society and be given the same opportunities as anyone else.
Kyle Lukianuk: 10:03 We love film. We love photography and we love narratives. So bringing those back and to actually share those stories with all the key stakeholders in the company, so that could be employees, that could be customers, that could be shareholders, that could be vendors or suppliers, which may result in further investors or donors or individuals that can provide their skills and expertise to address challenges that the organization faces.
Jon Mertz: 10:35 It seems like one of the by-products of what you do is that you’re really helping companies to develop themselves from within?
Kyle Lukianuk: 10:41 As you mentioned, it’s huge value for the companies themselves because there’s a growing landscape, or growing emphasis,by my generation and the upcoming generations in the workforce that is really asking companies to be bigger corporate citizens in the world and to be leaders in this space. And so the companies that don’t adapt to that are going to struggle from a talent acquisition standpoint and an employee retention standpoint.
Kyle Lukianuk: 11:13 So we’re actually going to see failure to be a socially innovative leader. You’re actually going to see the consequences of that on the financial bottom line. You may not be showing up right now, but if it hasn’t already, it’s about to. And so we’re really talking to companies who are starting to realize this and want to participate in something that’s innovative, sustainable and is something that can be replicated from company to company to company.
Jon Mertz: 11:46 It seems many businesses are now moving beyond the 1980s, 90s approach of maximizing shareholder value as their only focus to looking at more of a stakeholder value, a model of being good corporate citizens.
Kyle Lukianuk: 11:58 Yes, and I would… I think you alluded to this, but I would actually … I’d argue that their focus is still the exact same: That it is to maximize shareholder value but what they’re realizing is that there’s a lot more inputs that go into that value calculation than just simple bottom line revenue and expense or profit margin on a product or service that they sell and more than just client acquisition. That they’re actually, they’re seeing now that being a good corporate citizen has a positive impact on their financial bottom line which then, in turn, impacts their shareholder value. And so they’re just starting to see a more extensive landscape, which includes all these different factors.
Kyle Lukianuk: 12:57 So, again, when we’re talking to companies one of the big things that keeps popping up is talent attraction and employee retention. You know, if you have an employee turnover rate every five years and that number shrinks from five years to three years, that’s a huge cost for the corporation when you start factoring in having to go out and recruit, training, any loss of expertise in that space,things like that. There’s a direct cost for something like that. And so if you can leverage a, sort of, corporate social responsibility initiative to lower that rate or, in this case, increase it so that people are staying at your company longer, that’s going to cause you to perform better financially.
Jon Mertz: 13:50 I know you essentially provide one-year loans to impact organizations. I’m curious if there are longer term loans?
Kyle Lukianuk: 13:55 We hope that over time we can start blending different sources together or find companies that, kind of, have that two to four to five-year horizon but, for us, 12 months is very manageable internally for us as an organization. It’s something that a corporation that maybe doing this for the first time is a timeframe that makes a lot of sense for them.
Kyle Lukianuk: 14:21 And then on the impact organization side, we actually found quite a few impact organizations that they need short term capital specifically. So, not that they would turn away a two to four year term, but that they can do a lot of impact with 12 months, especially when you get into the global landscapes, so when you’re operating with organizations internationally, especially in developing parts of the world, the capital turnaround rate, you know, we may see something from six to eight months and so, effectively deployed, an organization, for instance, in the Dominican Republic that we worked with, they can take one of our loans and they can actually deploy it into the field twice. So they deploy it specifically as micro loans to women entrepreneurs. They go through a program.The average term of those loans is six months. When the money comes back they can push it out again.
Jon Mertz: 15:25 You said that the investment is essentially risk free from the company’s side. How do you support that?
Kyle Lukianuk: 15:30 Every company is 100 percent sure that they’re going to get 100 percent of their principal back at the end of each year, and so what we set out to do is build an impact investment vehicle that investors could put their capital into and it would target a financial return while also serving as collateral for guarantee. So earlier this year we developed a partnership with a group here in Dallas called Inverdale Capital Management and they not only [inaudible 00:16:06] handle all the structuring of the strategies and the fund, but they aggregate the entire guarantee for any investor that is participating in that program and they issue that [inaudible 00:16:22] to us and then we can go to companies and say,”We’re guaranteed up to X millions of Dollars”.
Kyle Lukianuk: 16:28 And so that’s a really unique way to provide guarantee because it’s, as far as we know, the first ever impact investment vehicle quite like that.
Jon Mertz: 16:41 How do you predict Good Returns will look three years from now?
Kyle Lukianuk: 16:44 Well, hopefully, we’re with pretty much every Fortune 1000 company here in the DFW area and we’d love to see an annual loan portfolio somewhere between $50 million to $100 million and then a set of guarantee funds, again, probably at Inverdale that’s in the $50 million to $100 million range as well that’s providing the backstop and performing well; that’s bringing in additional impact investors year over year. And then we’d love to have a network of thousands of organizations all-round the globe that are receiving Good Returns style capital and really making movement when it comes to issues of poverty, access to clean water, energy,health, education, justice.
Kyle Lukianuk: 17:40 We would love to see Good Returns in the capital that’s being provided really catalyzing those organizations to take advantage of unique market opportunities, and in the event that we can bring all these piece together and drive value for every single constituent that’s involved, whether it be the company, the impact organization, the impact investor, the guarantor, then that’s a huge win, not just for Good Returns, but to start asking more of these questions on, “Okay.What else can we mobilize? What other systems can we start challenging so that we can build mechanisms that enable more financial resources and more expertise to flow into the social impact space?”
Jon Mertz: 18:30 If some of the tech businesses in the San Francisco area use this model to support organizations working to improve homelessness, it would be interesting to seethe impact they’d have.
Kyle Lukianuk: 18:40 Absolutely. I mean, I’m not saying that Good Returns, again, is the silver bullet, but there’s new ways constantly emerging and new perspectives that are coming in and saying, “Okay. Just because we’ve done it a certain way for so long,doesn’t mean it’s the only way to do it”. And even if a new way of doing things fails, it doesn’t mean that everything about that new way of doing it is wrong. It’s just simply that there may be a very [inaudible 00:19:14] lower component of whatever you’ve built that didn’t quite work right, you know? You and I have talked about some of this stuff and we did a whole lab together on putting together some of these pieces. If you want to build a bicycle, you don’t put the whole bike together. So you have to build little pieces and then test that out, and then once you get the pedal right, then you build the rest of the frame. And then when you get that right, you build the tire. Then after you’retesting after all these things, then what’s really not working is the wheel.And that has nothing to do with the pedal.
Kyle Lukianuk: 19:54 So what I’m most excited about, I think, with my generation and some of the questions that we’re asking, is we’re starting to really focus on challenging some of the status quos and we’re not afraid of failure.
Jon Mertz: 20:12 It’s no surprise that you’re recognized as a Global Game-changer under 30 by the Global Chamber of Dallas, how are you different than other millennial business leaders?
Kyle Lukianuk: 20:21 Man! Well, I don’t know much about different. I think the difference is just the opportunity that I was given and really the community that I’ve had around me. I just had an amazing team of people that have been there before and have built and sold companies and worked through a lot of these things. And so everything that we’ve gone through and continue to go through and the successes and the failures, they’ve been through that so they know, kind of, how to navigate it,which is so important, and they’re not of my generation.
Kyle Lukianuk: 21:00 So, I get the kind of leverage, that expertise. But what I’ve seen and where I’ve talked to a lot of people in my generation about is this idea of finding purpose and going back to my story there was a time when I was like, “Okay. What I need to do is just move to South America and just work in an orphanage for six months”, which is amazing work and, obviously, that work continues and needs to happen. But what I’m starting to get excited about is my generation asking, “Okay. What are the skills that I currently have and what’s the background or the education or whatever it may be that I’ve been able to acquire over the years and how do I use that specifically to drive social impact?”
Kyle Lukianuk: 21:55 You’re going to continue to see people talk to the next generation and say, “It doesn’t matter if you started up your career here or your career there”. Wherever you go you’re generating value for society, hopefully, but also for yourself and experience that you can leverage later in life.
Jon Mertz: 22:13 What’s your best advice for business leaders who want to get their company involved in impact investing?
Kyle Lukianuk: 22:18 To really take a deep dive and look into the identity of your business or organization, and understand, “What are you guys uniquely positioned to address?”. So, you know, when I look at financial services companies and I look at them and I say, “Man, you guys should really be driving and leading the case for innovative finance for social impact. You guys should be the ones that are moving the needle on every activity. You should not be lagging behind other organizations. You guys should be the ones moving the needle”.
Jon Mertz: 22:57 That’s great. I’m just amazed by the progress that you’ve made over the past year and a half and the way that you’re engaging business leaders and companies to find another path to having impact in their communities and in our society.
Kyle Lukianuk: 23:08 Ah, thank you, Jon. That means a lot coming from you and I’m looking forward to seeing what these next couple of years have in store, and when you get back to Dallas, you know,we need to catch up ’cause it’s been too long.
Jon Mertz: 23:21 Yeah, absolutely. Thank you for your good work.
Kyle Lukianuk: 23:23 Absolutely, Jon. Any time, and we’ll be talking soon, I’m sure.
Jon Mertz: 23:33 Listeners, we’d love to hear from you.
- What do you think of the Good Returns model?
- How is their model of impact investment an improvement on traditional models of giving back?
Jon Mertz: 23:42 Send your perspective to me at jon @ activateworld.com. That’s jon without an H, jon @ activateworld.com. Write it out or record it. Send it my way. We want to hear and share your thoughts.
Jon Mertz: 20:14 Be sure to tell your friends and colleagues about the Activate World podcast. Encourage them to subscribe, listen, and share from their favorite podcast platform, Apple, Google, Spotify, iHeartRadio, RadioPublic, and others. Let us know how we’re doing by leaving a review. Your reviews mean a lot to us.
Jon Mertz: 24:13 And join us next time as we explore the creative economy with the co-founders of Creative Startups, Tom Aageson and Alice Loy.
Jon Mertz: 24:21 Activate World is a team endeavor. Special thanks to Kayla Waldstein and Kent Nutt. Music by Jason Goodyear.
Jon Mertz: 24:28 For Activate World, I’m Jon Mertz.