For a few days, it appeared that the annual SOCAP gathering of impact investors and entrepreneurs would find itself in the middle of a major ICE crackdown on immigrants in the San Francisco Bay area.
With federal agents massing at a Coast Guard in nearby Alameda and demonstrators mobilizing to confront them, SOCAP organizers readied contingency plans to keep the nearly 2,000 attendees safe.
On the eve of the conference, the Trump administration postponed the deployment of federal agents, at least for now. But the three-day conference nonetheless still had to grapple with the realities of “the moment” or “the current environment,” as many speakers referred to the political context in which the event took place. In the midst of a government shutdown, food stamps were being suspended. Community lending is threatened. Climate funding has been eviscerated.
“We often get to live in a happy La La Land of, ‘We fund the good guys. We’re not used to conflict, and that’s something we have to get a little bit more comfortable with,” Candide Group’s Morgan Simon said in one panel discussion titled “Surviving four more years.”
“Everything that we’re mad about, everything that the administration is defunding, we can fund, to some degree,” she said. “It’s like writing an agenda for us.”
At the event’s opening session, Jim Sorenson of Sorenson Impact Group urged the impact leaders gathered in San Francisco to step up and meet the moment.
“We meet at a time when the challenges before us are urgent and undeniable,” Sorenson said. “Equality is being called into question, trust is eroding, divisions are rampant and our planet is under strain.”
“Each of us has a role to play as investors, entrepreneurs, policy makers, philanthropists or storytellers, in shaping a capitalism that serves humanity more than the other way around. This isn’t someone else’s responsibility. It’s ours.”
The challenges appeared to energize the attendees, from local entrepreneurs building community resilience to asset owners looking to mobilize their fellow wealth holders. Several family offices, in particular, seemed more vocal about their “impact-first” orientation to impact investing (watch the replay of our recent Agents of Impact Call, “The surprising resurgence of impact-first investing”).
“People are looking for a reset to re-center the ‘impact’ in impact investing,” said Paul Belknap of the Miller Center for Global Impact, which organized a workshop on unlocking the next era of impact investing.
“There’s so much right now that feels like it’s weighing us down, both individually and collectively,” said Caroline Fernandez of Recast Capital, a women-led fund of funds that invests in women and nonbinary emerging fund managers.
“Thinking about where capital is going and making sure women are in those check-writing positions is a place that we feel we have that leadership role,” Fernandez said at the opening session of SOCAP’s Justice and Economic Prosperity for All track. “To uplift these managers is not just the right thing to do, but looking at the returns, the data shows that they outperform.”
Community power
On the panel with Simon, Adriana Abizadeh-Barbour described how Kensington Corridor Trust is turning local assets into levers of power that enable local residents to shape real estate investment and development in North Philadelphia.
Since 2019, Kensington Corridor Trust has used the neighborhood investment trust model to acquire 31 commercial and mixed-use properties. The Trust, owned and governed by local residents, most of whom are low-income people of color, is helping the locals reframe their neighborhood’s story, from one of extraction to one of self-determination.
“What we do is we purchase real estate on the avenue, and take it off of the traditional speculative market. We place it in trust for the neighborhood to directly own, govern and control the real estate,” said Abizadeh-Barbour, executive director of the trust. “It is a decommodification model. It’s also an anti-displacement model.”
Candide Group, which works with families, foundations, and other investors to shift their investments to impact, has stepped up its climate justice funding. Its debt fund, Afterglow, focuses on climate solutions and empowering low income communities. Candide is also supporting mission-driven community development financial institutions, or CDFIs, as the Trump administration threatens to eliminate the Treasury Department’s CDFI Fund.
“That’s a really easy place for people to be able to step in and support equity and inclusion,” Simon says.
In the Pacific Northwest, VertueLab, a funder and accelerator of early stage climate tech companies in Washington and Oregon, is creating pathways for climate resilience in the sudden absence of federal support.
“We’re starting to flex power at the local and state level,” said Vertue Lab’s Aina Abiodun. “We have an enormous opportunity to work in ways that continue to advance the impacts that we are having, regardless of what’s happening at the federal level.”
The Inflation Reduction Act, along with President Biden’s Justice 40 executive order – among “the most aggressive and forward-thinking ways of righting some of the environmental justice wrongs of the past,” she said – are essentially gone. Vertue, for example, had for years received a federal grant to support entrepreneurs in applying for early stage innovation grants. The grant was rescinded due to inclusive language on the nonprofit’s web site that Abiodun refused to remove. An existing private funder stepped up to fill the gap.
“There are lots of people who want to support us, and we’re asking them, and they’re responding,” she said. “We are being given a chance right now, in these four years, to create a new system, to create a new way of looking at each other, to look at each other as peers in the process of building up our economy and our communities.”
Financing local businesses
Federal funding cuts for everything from small business programs to food stamps are putting strain on local ecosystems.
After DEI programs were cut, Tonitrice Wicks of Winrock, a nonprofit that works with small businesses, has turned more to private funding to assist local businesses in the rural Southeast. SNAP benefits put on hold during the government shutdown pose another challenge. For one Winrock client, a small grocer in a rural food desert, such food assistance made up 60% of the store’s sales.
Options such as Small Business Administration loans, which are also paused during the shutdown, “are not working in this current climate,’ said Wicks.
That has forced local leaders to get innovative. “We’ve all become dependent upon the federal government and state government to get things done,” said Frank Scott, Jr., the mayor of Little Rock, Ark, on a panel about small business finance.
“While it’s chaotic, it creates an opportunity for more creativity for cities across the US to get more involved.”
Little Rock, for example, is helping local businesses get the capital and technical support they need to thrive. The city encourages large companies to procure from minority- and women-owned businesses and, since the Covid pandemic, has run a dozen training programs to prepare local businesses to supply them and access capital.
The city works in concert with local stakeholders such as foundations, banks, credit unions and CDFIs. “There’s a lot more room for different banking, independent financial institutions, social capital businesses, to really lock in with cities,” said Scott.
Access to finance is a perennial issue on Native lands, and financial providers are often distrusted. Alisha Murphy, an economist with the Navajo Nation Division of Economic Development, is working with Change Labs to deliver small business loans and guarantees through the Navajo Small Business Credit Initiative.
The partners first took the time to listen to the needs of local entrepreneurs and design a process tailored to them.
Growing up on the reservation, “I thought loans and credit cards were just bad words,” Murphy said. “We hope to have that first ever loan program change the way that our community members talk about access to capital.”
Catalytic capital
In a standing-room only session moderated by ImpactAlpha’s David Bank, panelists discussed the gap between ambition and deployment in catalytic capital. Ceniarth’s Greg Neichin delivered a blunt assessment to lead off the session:
“I think that allocators should probably have less big ideas and should focus on getting money out the door, instead of having clever ideas that they can talk about on stages.” The London-based family office has deployed $500 million of impact first capital over the past decade.
“They don’t care why any of us do the work. They don’t care if we’re clever. They don’t care if we do it because we’re religious,” he said. “They just care that money gets down to the communities that they serve.”
While momentum is building, the majority of catalytic and impact-first capital still comes from philanthropic and impact-driven investors, not commercial markets.
“We have to be honest about who those partners are going to be and not start pitching this as something that is going to take us all the way to mainstream,” said MacArthur Foundation’s Urmi Sengupta. “It is not.”
MacArthur, along with Rockefeller Foundation and Omidyar Network, established the Catalytic Capital Consortium in 2019 to build an evidence base and establish best practices for bridging capital gaps worldwide. Since last year, 10 new funders have joined C3. In addition to Ceniarth, family office funders include Blue Haven Initiative and Builders Vision. Also joining are the Ford, Lemelson, Small, Surdna, Sorenson Impact and Walton foundations, along with the Soros Economic Development Fund (disclosure: C3 sponsors ImpactAlpha’s coverage of catalytic capital).
“We’re seeing this unprecedented moment where it really is challenging us to think differently,” Chante Harris of Eunoia Group, an investment advisory firm that looks to accelerate the deployment of climate infrastructure, said in a separate session. She pointed to opportunities to invest in nature, which has traditionally taken a back seat to climate tech and in emerging markets, which need massive amounts of climate-resilient infrastructure.
Eunoia is working with a consortium of families and foundations on creating a recoverable grant structure to invest in climate companies that are looking to move into commercial production and build their first facilities in communities, a notoriously treacherous stage for startups.
“This moment is kind of calling all of us and giving us all an opportunity to build bespoke portfolios. Philanthropy and impact capital is positioned better than ever before to not only test these models at a time when we desperately need new things, but also to really show that it’s possible and that you’re not necessarily always giving up impact for return.”
AI = Accelerating Impact
Social enterprises are working to counter the dominant forces that appear to be steering artificial intelligence toward even greater concentrations of power and economic stratification.
Natives Rising, a nonprofit focused on economic empowerment for Indigenous communities, has been leading AI workshops to enable Indigenous community members to be part of the AI conversation and “ensure that we are protecting the things that matter to us,” Betsy Fore of Velveteen Ventures, an Indigenous-lens venture firm, and a board member for Natives Rising shared at a different session.
“We see such an uptick there in terms of creating the access and the opportunity to our community to lean in and be able to upskill,” Fore said.
The SOCAP conversation, in public sessions and closed door meetings, leaned towards how to ensure artificial technology is developed and deployed responsibly and values humans over profits.
The tech ecosystem has disproportionately impacted historically excluded groups, and now it is coming for the rest of society, said Lyel Resner of MIT. He noted the youth loneliness and mental health epidemic, the collapse of the integrity of the information ecosystem, increasing fraud and deep fakes, and the prospect of a surveillance state and mass unemployment.
“These are things that everyone feels,” Resner said at a session on unlocking $10 billion for responsible technology over the next five years that was supported by the Siegel Family Endowment.
“We need capital that is willing to experiment with different business models, to experiment with different forms of value creation, and we need it now,” said Camille Canon, an entrepreneur in residence at Jonathan Soros’ JS Capital who collaborates with Resner.
Canon is working with the Soros’ family office to “have multiple forms of values coded into return considerations” for capital structures and vehicles. “I often think of the work that we’re doing as building the plumbing to connect capital with founders and operators, who are 10 steps ahead of where asset holders are.”
