Bringing microfinance back, CZI and Gates Foundation team up, rural economics in the West



#Featured: Recap

“Impact” is back at the center of the impact investing discussion. This week’s big deal, the $190 million financing of EverFi, brought to the surface questions about the industry’s commitment to “inclusive edtech” (and also about the highly touted impact metrics of the deal’s lead investor, TPG Growth’s new Rise Fund). The real impact of renewable energy, on indigenous and other human rights and local communities, was the subject of the week’s most provocative report. And proponents of microfinance, perhaps the original impact sector, took more recent impact investors to task for, in some cases, forgetting about poor people.

But you knew all that, and more, because you read The Brief. Bonus question: What did Ikea do this week? Test your impact IQ with this week’s Brief Quiz №12:

What did Ikea do? And other questions from The Brief Quiz #12

#Dealflow: Follow the Money

Chan/Zuckerberg and Gates Foundation team up for “personalized learning.” The biggest question in the red-hot edtech market (see this week’s EverFi and MarcoPolo raises) is whether tech advances will shrink or widen educational inequality (see, “Silicon Valley aims to democratize individualized education”) Now comes Chan/Zuckerberg Initiative and the Gates Foundation, which are committing $12 million over four years to New Profit, a Boston venture philanthropy fund, to create the Personalized Learning Initiative. New Profit will provide $1 million grants and support to seven organizations: Highlander Institute, Big Picture Learning, iNACOL, PowerMyLearning, the Learning Accelerator, Transcend, and Valor Collegiate Academies to test approaches that “give students more agency in their own learning journey and provide teachers with tools to tailor classroom instruction to the unique needs of each student.” With the edtech market heating up, open questions remain: Will technology and artificial intelligence drive equality or inequality? Will for-profit or nonprofit models deliver better results? How can technology make personalized learning work for all? Our friends at EdSurge have more detail on EverFi, which this week raised $190 million, mostly from the new Rise Fund from TPG Growth.

The Intermountain West gets a debt fund to finance non-profits. Half of U.S. economic output is concentrated in urban areas, but half isn’t. Intermountain Impact Investments, a Washington-based nonprofit fund manager, was founded by two self-described “middle aged guys” who’ve spent their careers running and funding nonprofits. Its new $2.5 million fund targets cities with populations under 50,000 in eastern Washington, eastern Oregon, Idaho, Wyoming, and Montana. The Rural Asset Replacement Fund, the first of three planned funds, will finance the replacement of the “stuff” that wears out, from roofs at community centers to refrigerated trucks for food banks. i3 has big plans to build $1 billion of rural wealth, create 20,00 jobs and improve the lives of 20,00 children and their families by 2025.

California Wellness Foundation moves ahead on $50 million impact investment plan. The growing number of foundations committing to mission-related investments from their philanthropic endowments has set off something of a land rush among investment advisors eager for their business (see, “Ford Foundation to tap endowment”). The latest scrum is being conducted by the California Wellness Foundation, which quietly announced this month it was committing $50 million over five years for program- and mission-related investments, or MRIs, to expand access to healthcare services in underserved communities. “We’re eager and excited to be embracing MRI as a way to further our philanthropic impact, but we’re in the early stages of this work,” Cal Wellness’ Richard Tate told ImpactAlpha. Applications are due Monday for advisors seeking to help build the foundation’s strategy.

Singapore Life raises $50 million for “insurance tech” for small merchants and individuals. Singapore Life launched in 2014 to offer life and savings insurance, one of the fastest-growing sectors of fintech. In Asia, the life insurance market alone is projected to grow by eight to 13 percent by 2020. Singapore Life’s Series A funding is one of the largest such rounds ever in Southeast Asia. Impact Capital Holdings, a subsidiary of Credit China Fintech Holdings, took a 34 percent stake firm for $21.3 million. U.K.-based private equity firm IPGL also participated in the round. In Asian countries where public systems of social protection are under-developed “insurance can complement basic safety nets in healthcare, post-retirement income or even disaster recovery planning,” according to Michael Rellosa of the Asean Insurance Council (see, “BIMA raises $38.4 million for mobile microinsurance in Africa, Asia and Latin America”).

See all of ImpactAlpha’s recent #dealflow.

#Signals: Ahead of the Curve

Bringing microfinance back into the impact investing conversation. Microfinance never went away — it just went mainstream. The sector still commands the majority of impact investing assets (and most exits in 2016). Microloans and other financial services targeting the poor now have “a central role in national financial systems all over the world, with hundreds of millions of clients, affected household members likely approaching one billion, and penetration into the majority of low-income communities in the world,” say Paul DiLeo and Anna Kanze of Grassroots Capital Management and Lehigh University’s Todd Watkins. The trio led a gathering at Lehigh earlier this month to raise the profile of microfinance among mission-drive investors who might have moved on “in search of the leading edge of innovation and impact.” They’ve come out swinging. In two posts (here and here) DiLeo, Kanze and Watkins lament the “hyperactivity and incoherence” coming from the impact crowd, while touting microfinance institutions’ “four-decades-deep, hard-earned understanding of heterogeneous needs at the BoP,” or base of the economic pyramid. Indeed, without microfinance, there’d be no inclusive fintech. It’s no longer debated, the writers suggest, that “the poor can constructively use and be sustainably provided with a comprehensive range of financial services — unthinkable 20 years ago.”

#2030: Long-Termism

These megatrends will determine the fate of the global goals for 2030.Two years into the 15-year Sustainable Development Goals, the United Nations has identified six megatrends that could boost — or bust — progress toward the goals. The report flags important choices for governments, investors and civil society in efforts to end poverty, boost health education and health outcomes, eliminate gender disparities and take on climate change. Here are the first three (tune in Monday for the rest):

Progress against poverty is uneven. Absolute poverty has fallen, as has inequality between countries. But income disparities within countries continue to rise. How societies choose to distribute economic gains will determine whether whether progress is shared by all segments of society.

Demographic dividends are not guaranteed. Europe, North America, Asia and Latin America have rapidly aging populations. People are on the move, between countries seeking economic opportunities and political refuge. Managed effectively, global migration can bring profound benefits to both sending countries (remittances and networks) and receiving countries (labor, taxes and care services). Africa stands to benefit from a “demographic dividend” of growing productivity from its youthful population, but smart policies are required to capture the benefits.

Climate change is here. Action to address climate change will shape both equitable economic development and the health of natural systems. Countries bearing the brunt of climate change are usually least responsible for triggering them. That means the overexploitation of ecosystems, degraded air and land, marine pollution and biodiversity decline are likely to continue in the short-term, making 2030 goals tougher to reach.

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