January 17, 2002
Idiosyncratic Firm Invests Old Money in A New Way
by William Baue
Through investments in documentary films, Lowell, Blake & Associates earn a healthy profit for
their clients and shows non-profits how to operate within a business model.
When opening a newspaper, most investors turn straight to the business pages to check stock quotes.
Investors with Boston-based Lowell, Blake &
Associates are equally likely to consult the arts and entertainment section to follow their
investments. Lowell, Blake breaks the mold of traditional investment firms not only by engaging
exclusively in socially responsible investing, but also by advancing a novel investment model-the
financing of films.
Founder James H. Lowell II conceived the firm's unique
investment approach as a reaction against the financial habits of wealthy families such as his own,
which tended to invest in ways that perpetuate their privilege. Lowell believed these fortunate
few could afford to use their money in ways that promote positive social transformation while still
earning respectable returns.
Lowell particularly eschewed charitable contributions,
which the elite use to assuage their guilt by donating paltry sums to non-profits--a waste of time
and money, in Lowell's opinion. Better to invest in ventures that generated modest profits while
promoting worthwhile causes, he believed.
Toward this end, Lowell, Blake innovated a model
for financing educational films. The first such film, Whales, needed $350,000 more than the
financial support offered by the National Wildlife Federation (NWF) to reach its $3.5 million
budget. Lowell, Blake convinced its investors to put up this money, provided the structure would
instruct non-profits how to operate more business-like.
"By widening the measures of
performance to include both financial and social considerations, we are able to help non-profit
participants recognize the needs of private investors and show private investors how non-profit
interests must be served," explained Patrick McVeigh, vice president of investment research at
Lowell, Blake . "Unlike other film projects, we insist that investor recoup be the first priority
and disallow any producer participation before all initial investments have been recouped," he
Whereas most non-profit films work only within budgetary constraints, the
Lowell, Blake model required the film to make money enough to pay off its debt. This constraint
acts as an incentive for the filmmakers to create a movie that entertains while it educates.
Whales did both, returning on the investment and then generating a profit not only for
Lowell, Blake investors, who will ultimately earn some 50 to 75 percent profit, but also for the
NWF, which recouped $2.7 million on its $1.65 million investment.
Dolphins, replicated the success of Whales, which attracted some seven million
viewers worldwide. Dolphins grossed more than $37 million in 2000 to become the
highest-grossing large-format documentary that year. Both films used technology innovated by the
IMAX Corporation (ticker: IMAX)
for projection in specially-equipped giant-screen theaters, and both were nominated for Academy
Lowell, Blake has continued to implement its investment model by financing two
subsequent films. One is Bears, which premiered in July 2001, and the other is Coral
Reef Adventure, which is slated for release in spring 2003. The NWF, which increased its
membership base significantly through exposure afforded by the films, requested Lowell, Blake's
involvement in Coral Reef Adventure before throwing its support behind the project. However,
Lowell, Blake investors and the NWF are not alone in profiting from the films.
large-screen format of the films limits their distribution to theaters equipped for IMAX
projection. Typically, these theaters are housed in cultural institutions such as the Boston
Museum of Sciences, the Smithsonian Institution, the Osaka Science Center, and the Swedish Museum
of Natural History, to name but a few. These institutions profit from ticket sales while also
attracting viewers to their other exhibitions.
What's more, these films educate viewers
about environmental issues. As a result of Dolphins, Club Med changed its policy to
disallow ski boats from speeding through dolphin habitats. Lowell, Blake is hoping that Coral
Reef Adventure is equally successful in bringing attention to the alarming state of coral reefs
around the world. Currently 70 percent of all coral reefs are at risk of disappearing.
"Through Coral Reef Adventure, we can . . . creat[e] a potential catalyst for global
change, while earning a reasonable return for our investors," said Lowell, Blake Vice President