Social Wealth

OUR MOTIVATING CHALLENGE

From the oil and gas that have fueled the global economy for a century, to metals like lithium and cobalt that are critical to the energy transition today, natural resources provide governments with significant wealth — windfalls that can strengthen their economies, or distort them. History shows that robust governance and strategic investment can make the difference between a resource curse and a resource blessing. While some governments have built permanent, multi-generational investment structures to grow and invest their natural resource wealth, others have struggled to seize the opportunity. 

In the face of this challenge, JFI’s Social Wealth initiative helps governments structure and invest pools of public capital, especially those derived from natural resource revenues, in order to preserve shared wealth while catalyzing inclusive and sustainable economic growth. Adopting a producer-country perspective, with a focus on low and middle income countries, we are particularly attentive to strategies that can help natural resource producers move up the value chain.

OUR WORK AND IMPACT

We help partner governments to gather and compound the proceeds from natural resource extraction throughout the world to benefit the public in the form of social wealth funds. We use financial modeling and governance expertise to transform these revenues into portfolios of public assets, and then to devise strategies to actualize these funds’ long-term missions — to facilitate productive investment that is socially beneficial and environmentally sustainable.

In Brazil, we have strengthened the management of over $1 billion public funds for social programs in territories covering 4.6 million residents. In summer 2024, together with local partners, our team wrote and passed Law 14.937 authorizing the country’s subnational SWFs and charging Brazil’s SEC with the authority to regulate them (included as an amendment to a bill from the national development bank BNDES). The legislation formalized the existence of these funds (which previously had no clear basis in federal law) and established who should regulate them.

Beyond Brazil, we have engaged with governments and sovereign wealth funds around the world, and are currently working on proposals and modeling for a multi-sovereign investment fund in partnership with the climate-vulnerable nations that comprise the V20. We are also collaborating with the International Forum of SWFs on impact metrics, an essential but underdeveloped component of this ecosystem, and will host a convening in May 2025 on models and practicalities.

OUR CAPABILITIES

Software Development

In partnership with public managers and policymakers, our international team of software developers and financial modelers builds and adapts custom planning software to support revenue management, portfolio modeling, and scenario analysis.

Fund Structuring and Governance

Alongside public officials, we work with fund managers to hone the purpose and strategic orientation of sovereign investment vehicles, implement best practices around governance and transparency, and productively engage peer institutions and potential collaborators, in country and internationally.

Capital Markets Engagement

At the heart of our work is a conviction in the power of building bridges between the managers of public capital, particularly in low and middle income countries, and the spaces in which global institutional investors build partnerships and make deals. Increasingly, sovereign investment is seen as a powerful signal to market actors. Using public finance to anchor follow-on investment can catalyze strategic sectors and contribute to national development objectives.

Impact Strategy and Measurement

Strategic investment funds require sophisticated methodologies for evaluating social outcomes that align with ESG principles while reflecting local and cultural nuances. Our team of econometricians and social scientists employs quantitative methods (descriptive statistics, cross-tabulation, comparative analysis, and data visualization) alongside qualitative methods (thematic analysis and case study selection) to help fund managers target and assess economic and social impact.

OUR GOALS

Our goal is to become the  premier global advisor to sovereigns, sub-sovereigns, and other public entities seeking to make permanent public investment in resilient infrastructure and the energy transition. We seek cross-cutting support from public, private, and philanthropic actors to support work with policymakers and other high-impact partners across the world.

PARTNER WITH US

We partner with social wealth fund managers, academics, policymakers, and government officials in the US and abroad. Examples of this work include a study of financing and infrastructural options to support cash transfers and economic development in Compton, California, as well as our ongoing collaboration with UFF and the Treasury of Niterói, Brazil to develop tools and resources for the newly created Fundo de Equalização da Receita (Budget Stabilization Fund), including stochastic modeling software for portfolio analysis and risk management.

SELECTED PARTNERS

• Forum of Brazilian Sovereign Wealth Funds

• International Forum of Sovereign Wealth Funds

• The Vulnerable Twenty Group (V20)

• Brazilian Development Bank (BNDES)

• Association of Brazilian Development Banks (ABDE)

• Universidade Federal Fluminense (UFF)