The Brief | October 7, 2019

The Brief: Catholic ministries of impact, Better Ventures’ impact tech, Kiva’s loans to women top $1 billion, impact-weighted accounts

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Catholic institutions pledge to increase impact investments in climate action and social equity. Catholic congregations long known for providing healthcare and services for the poor are expanding their ministries to drive positive impact through their pension and investment portfolios. Six U.S.-based Catholic institutions with a combined $40 billion in assets issued a “Catholic impact investing pledge,” committing more of their capital to tackle climate change and social inequity. Members of the Catholic Impact Investing Collaborative are issuing a global call to other Catholic institutions to boost allocations from pension and other investment funds to create “measurable, positive, social and environmental outcomes in service of people and planet.” The proactive approach goes beyond merely screening out “sin” stocks, as many Catholic institutions have done for years, calling for “meaningful allocation targets” for impact investments, but does not include specific new commitments of capital.

“Putting the pledge out there is intended to inspire,” says John O’Shaughnessy, CEO of the Franciscan Sisters of Mary in St. Louis, who will launch the pledge today in a keynote address in London. “It’s truly time to get off the sidelines.” In addition to the Sisters, signers of the new pledge include Ascension Health, the second-largest nonprofit health provider in the U.S., and Mercy Investment Services, the investment arm of the Sisters of Mercy and Mercy ministries. Catholic congregations have long practiced faith-aligned investing through low-interest loans, public market screens and shareholder advocacy. What’s changed is the growing recognition that mission-aligned strategies exist now across asset classes and that impact investments can deliver the returns necessary to support operations and pension obligations. The Catholic Impact Investing Collaborative will roll up the pledges and commitments at a Catholic impact investing summit at Chicago’s Loyola University next September, the five-year anniversary of Pope Francis’ encyclical “on care for our common home.”

Keep reading, “Catholic institutions pledge to increase impact investments in climate action and social equity,” by Dennis Price on ImpactAlpha.

Dealflow: Follow the Money

Better Ventures closes $32 million fund to spur early impact tech. Since 2011, Oakland-based Better Ventures has provided first-in capital to 27 impact tech ventures. Four of those deals hail from its newly closed, $32 million Fund III: Portland-based Knock Software, whose app helps cities manage mobility; Nigeria’s 54gene, which is building Africa’s first genetic “biobank”; plant-based meat company Emergy Foods; and drug discovery startup Unnatural Products. The investments signal a shift to fields like artificial intelligence, data science and life sciences that present new opportunities for impact. “We’re doubling down on technical founders leveraging ‘breakthrough innovations’ in science and technology,” Better Ventures’ Wes Selke wrote in a blog post. Fund III will focus on enabling a lower-carbon sustainable economy, data driven health and an adaptive global workforce. Check it out.

Kiva hits $1 billion in loans to women. Kiva launched its pioneering crowdfunding platform nearly 15 years ago. Since then, it’s become a lifeline for micro-entrepreneurs around the globe, especially women, who make up 80% of its borrowers. Now, Kiva has reached a milestone: $1 billion in loans to women. The zero-interest loans went to 2.7 million women in 94 countries, giving the San Francisco-based nonprofit insights into products and practices that can drive women’s financial inclusion. What works: loans that don’t require collateral or savings accounts; financial literacy training; and community members who vouch for entrepreneurs. “It’s easy to count dollars,” Kiva’s Goldie Chow told ImpactAlpha. “What’s more difficult is getting into the weeds of how to encourage women’s financial independence and what products should actually look like.” Read on.

National Community Investment Fund secures $5 million loan to invest in Chicago’s underserved communities. Benefit Chicago, a partnership between The Chicago Community Trust, MacArthur Foundation, and Calvert Impact Capital, committed the capital for Chicago-based NCIF’s Credit Strategies Fund. NCIF is looking to secure $25 million to lend to community impact initiatives in Chicago’s South and West sides.

Waycare secures $7.3 million to give city transit planning a data boost. The Israeli startup collects real-time and historical data from connected devices and apps like Waze to help city planners manage and plan traffic flow. Waycare is part of a new crop of investor-backed transport data startups that includes San Francisco’s Remix and Swiftly, Portland’s Knock, New York’s Coord and Cape Town’s WhereIsMyTransport. SJF Ventures led the Series A round.

Signals: Ahead of the Curve

Weighting accounts for impact. CEO members of the Business Roundtable recently got on board the stakeholder revolution, but the folks in accounting have not yet got the memo. Company performance is still measured by shareholder value alone. Harvard Business School’s George Serafeim, along with the Global Steering Group for Impact Investment and the Impact Management Project, is seeking to quantify in monetary terms a company’s social and environmental value. ‘Impact-weighted accounts’ would serve as a sort of impact P&L statement and offer a more holistic assessment of corporate performance. “The truth is, we can measure social impact with a greater degree of accuracy and rigor than we use to measure financial risk,” Sir Ronald Cohen, chair of the GSG, wrote in ImpactAlpha last year. The impact-weighted accounts initiative is part of Harvard’s broader effort to “reimagine capitalism,” Serafeim, who teaches a popular class on the topic, told ImpactAlpha. Three months before the Business Roundtable’s new statement, Serafeim presented evidence to the group showing “firms with strong purpose and strategic clarity about that purpose and firms with strong material ESG performance create more value.”

  • Line items. Impact-weighted accounts are “line items on a financial statement” that reflect “a company’s positive and negative impacts on employees, customers, the environment and the broader society,” Serafeim and coauthors T. Robert Zochowski and Jen Downing explain in a recent report.
  • Impact accounting. Inputs might include the raw materials, water and electricity used by a company; outputs could include the amount of greenhouse gasses emitted. It’s tougher to measure actual impacts. The authors identify 56 companies, mostly European, that have experimented with monetary impact valuation, producing environmental or total profit and loss accounts. At least 86% measure environmental impacts, half estimate employment or social impacts, and one in five estimate product impacts.
  • Culture change. The researchers are working through the complexities of creating a unified accounting system for impact that could guide investor and corporate decision-making. “Once you develop structure you start to change norms, values, beliefs and incentives,” says Serafeim, an influential voice in the shift to stakeholder capitalism (see, “Q&A with Harvard’s George Serafeim: The link between corporate governance and environmental and social impact).
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Agents of Impact: Follow the Talent

Tesla co-founder Marc Tarpenning joins Spero Ventures, which spun out of Omidyar Network last year… Zebras Unite announces a partnership with Village Capital and funding from the Kauffman Foundation… Nonprofit Finance Fund seeks a chief financial officer in San Francisco, Los Angeles or New York… Gates Foundation’s strategic investment fund is hiring an associate in Seattle… Renewal Funds is looking for an investment analyst and an assistant in Vancouver (see, “Renewal Funds closes fourth impact fund at $109 million)… LA Cleantech Incubator, known as LACI, will announce its first investments at LACI Power Day Oct. 16 in Los Angeles.

Thank you for reading.