Tax cut complicity, social justice ETFs, finding Einsteins, the $600B global goal opportunity in…



Greetings, ImpactAlpha readers!

#Featured: ImpactAlpha Original

Complicit: Where are impact investors as the tax bill transfers wealth to the rich? Talk about a meme whose time has come. “Complicit” is the word of the year, according to Dictionary.com, which made the selection even before the last few holdouts among Senate Republicans traded their votes for the tax cut for vague promises about health care, Dreamers and deficits.

In her opening remarks at last week’s High Water Women Investing for Impact Symposium, Anna Snider of Merrill Lynch put the word up on the big screen. It wasn’t hard to notice that the impact-oriented advisors and money managers in the room were patting themselves on the back for moving millions, while Congress was moving trillions, mostly in the other direction. Yet the tax bill went virtually unmentioned throughout the day.

Read David Bank’s reflections on the elephant in the room, on ImpactAlpha.

Apologies! One of Friday’s most popular items included the wrong link. Here it is again:

Anyone can get in the impact game. A growing number of public-market offerings are allowing smaller retail investors to align their money with their values. Lena Backe, a social-impact analyst at San Francisco-based Pacific Community Ventures, has created a quick guide to navigate the minimums, fees, investments types — and impact — of leading online advisors for retail investors. For anyone thinking about their financial — and impact — goals for the New Year, give it a read.

#Sponsored: Bird + Stone

The climate is changing for gift giving. #WeAreStillIn and you know we need to continue the conversation about climate action. Make a statement this holiday season and donate to leading environmental organizations with Bird + Stone’s first unisex bracelet — the Climate Cuff — made of upcycled brass. ImpactAlpha subscribers get 15% off with code IMPACTALPHA. Check out this conversation starter.

#Dealflow: Follow the Money

Zoma Capital invests in workforce development startup PAIRIN. The Denver-based software company has developed a method for assessing job candidates’ “soft skills” and offers online mini-lessons to help candidates improve their critical thinking, decision making and social-emotional skills. Zoma, the Colorado-focused social investment arm of one of the billionaire Walton family offices, made an undisclosed investment in PAIRIN. A recent survey indicates that employers think recent college graduates lack important fluency in problem solving, public speaking and writing — skills that are least vulnerable to automation.

Impact Shares, YWCA, NAACP develop publicly traded social justice investments. The Dallas-based non-profit investment manager Impact Shares is partnering with YWCA Metropolitan Chicago and the NAACP on two social-justice exchange-traded funds, bundles of stocks listed on a stock exchange. The Impact Shares YWCA Women’s Empowerment ETF will focus on public companies committed to women’s empowerment through health or workplace advancement. The Impact Shares NAACP Minority Empowerment ETF will focus on companies dedicated to minorities’ empowerment through hiring, fair wages, promotion practices and products and services. The two ETFs will be listed on the New York Stock exchange as WOMN and NACP respectively. They are expected to launch in January. Proceeds raised from each ETF will be directed back to the YWCA and NAACP.

Follow the People. The Ford Foundation has hired Roy Swan to lead its New York-based mission-investments team. The Foundation has committed to invest $1 billion over the next 10 years towards causes aligned to its program goals. Swan previously worked at Morgan Stanley as managing director of its Global Sustainable Finance team, its Community Reinvestment Act officer, and CEO of Morgan Stanley Impact Small Business Investment Company. After nearly three decades at The Economist, Matthew Bishop is joining the Rockefeller Foundation as a managing director of its Bellagio Center. The Center’s mission is to “improve the lives of poor or vulnerable people globally,” and it provided early support for the impact investing field. Bishop co-founded the Social Progress Index, and is the author of several books, including Philanthrocapitalism.

See all of ImpactAlpha’s recent #dealflow. Send deal tips and news to thebrief@impactalpha.com.

#Signals: Ahead of the Curve

Finding Einsteins: Reducing inequality could quadruple innovation rates.The latest research from Raj Chetty and the Equality of Opportunity Projecthas found disturbing disparities in innovation rates by family income level, race, and gender that have little to do with ability. The researchers were able to study the lives of more than a million U.S. patent holders by linking patent and tax records with elementary-school test scores. They found, for example, that children whose parents were in the top 1% income bracket become inventors at 10 times the rate of children from families with less than the median income. White youth are three times more likely than black youth to become patent holders. Less than one in five inventors are female. Eliminating these gaps could quadruple the rate of innovation, says Chetty and team. “Improving opportunities for disadvantaged children may be valuable not just to reduce disparities but also to spur greater innovation and growth,” they write. What else can help? Exposure to innovation, say the researchers. Daquan Oliver and WeThrive, for example, are building a pipeline of entrepreneurs starting in middle school. “We do a pretty good job at identifying the kids who are good at throwing a football or playing a trumpet,” Steve Case, AOL founder-turned-investor, told the New York Times. “But we don’t do a particularly good job of identifying the kids who have the potential of creating a phenomenal new product or service or invention.” Case recently announced a $100 million fundto invest in entrepreneurs in Middle America.

#2030: Long-Termism

In the Middle East and North Africa, the 2030 global goals are a $600 billion opportunity. Businesses focusing on resilient cities, sustainable agriculture and new energy could propel more than $637 billion in new business activity and 12.4 million jobs in the region by 2030. A new report from the Business & Sustainable Development Commission, the same group thatidentified $12 trillion in economic potential related to the U.N.’s Sustainable Development Goals, also cites urban construction, mobility, and affordable housing as potentially large job creators. Companies are seizing the opportunity. Pure Harvest and AeroFarms, which focus on local food cultivation, have been attracting regional investment. Other MENA startups are also stepping up with solutions to refugee hardships. “The Goals are relevant to the Middle East and North Africa, where we see a young dynamic population motivated to seize opportunities and make positive contributions to the wider society,” Arif Naqvi, CEO of the $10 billion private equity firm Abraaj and a member of the business commission, said in a statement.

There’s a caveat: “Business can only realise the Global Goals opportunity by paying its fair share of taxes, creating good jobs with fair wages and conditions, and addressing rising unemployment,” the report’s authors write. The Gulf has a poor track record for working conditions, particularly among its immigrant labor community; an expose last year accused Qatar of using forced labor in construction of the 2022 World Cup Stadium. ”There remains a long road for the region as a whole to become inclusive and sustainable,” particularly for women and refugees, says Mark Malloch-Brown, who chairs the commission. More businesses could be coaxed to solve major regional challenges by national initiatives to transition from oil and gas-dependent economic growth, like Saudi Arabia’s Vision 2030 and the U.A.E.’s ambitious2050 renewable energy target and zero-carbon smart city, Masdar. Fred Sicre, a managing director at Abraaj, told ImpactAlpha: “Companies that do not embrace the opportunities of long-term value creation will be replaced.”

Onward! Please send news and comments to TheBrief@impactalpha.com.

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