The Brief | May 25, 2023

The Brief: Financing social determinants of health, neighborhood preservation bond in Philadelphia, tax credits for mothers, US SIF’s Lisa Woll’s exit interview

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Greetings, Agents of Impact!

Featured: Investing in Health

Health is too important to be left to the health sector alone. Climate change, supply chains, food prices, fiscal issues, the digital divide, and human capital development issues converge in population health. As governments, private investors and international organizations build out the World Bank’s new Pandemic Fund and other next-generation health and fiscal policies, they should take note of our collective capacity, demonstrated during Covid, “to shake off structural constraints, form effective partnerships, and broaden access to care,” John Lipsky of the National Bureau of Economic Research and Aspen Institute, and former Congresswoman and US Secretary of Health and Human Services Donna Shalala, argue in a guest post on ImpactAlpha. “We don’t believe it is necessary to birth a new organization, but instead call on existing ones to strengthen partnerships, develop more nimble financial instruments, and bolster core health infrastructure,” the authors write. 

  • Social determinants. The quality and availability of housing, schooling, food systems and sanitation impact health outcomes. “The responsibility for a nation’s health cannot reside in the health sector alone,” the authors say. Interactions between health and other sectors “require a budgeting approach to track those contributions and investments.” Health-promoting activities that go beyond clinical services, from improved rural sanitation, to rejuvenated food systems, to better housing and schools, are key, they say, as are well-funded, readily accessible primary care and trained community health workers.
  • Public and private. Robust health information infrastructure, including the capacity to collect data, is a core requirement for proving the economic value of healthy populations and for “sound stewardship of public, private and philanthropic funds,” Lipsky and Shalala write. Private investors’ engagement depends on stable and consistent access to innovative financing mechanisms and opportunities to scale success. Promising strategies: “Investments in technology that bring medical services to underserved areas, capture early reports of disease outbreaks, improve the equity of the supply chain, build transparency into procurement processes, and increase workforce productivity, all while serving as an engine for economic growth,” they say.

Dealflow: Investing in Place

Impact muni bond: Social bond to tackle poverty and unlock growth in Philadelphia. The city of Philadelphia is issuing a “social bond” of nearly $100 million to fund affordable housing and inclusive economic development through the city’s Neighborhood Preservation Initiative. The bond is the latest to be highlighted as part of ImpactAlpha’s collaboration with HIP Investor on upcoming bond issues with social and/or environmental significance. The neighborhood initiative will be funded by multiple muni bond issuances, to be repaid through a 1% “development impact tax” on residential construction, and by reducing the existing tax break for commercial real estate construction.

  • Neighborhood preservation. The Neighborhood Preservation Initiative offers support and investment for local businesses and affordable housing in commercial districts in Philadelphia neighborhoods. It has directed $41.7 million to support 93 businesses and facilitated 5,905 housing units, benefiting 4,000 households.
  • Social bonds. Philadelphia lags in terms of residents’ income, income equality and employment opportunities compared to peer cities. Says Stella Yao of HIP, which rates Philadelphia an above-average 64.1%, “the social bond issuance highlights Philadelphia’s commitment to addressing these concerns and implementing measures to improve the well-being of its residents.”

Village Capital and Volunteers of America back Let’s Get Set to help low-income mothers claim tax benefits. Millions of low-income taxpayers in the US miss out on an estimated $12 billion each year in unclaimed tax credits. Many new mothers can’t afford filing fees charged by accountants and are unaware they qualify for programs like the Child and Dependent Care Tax Credit. Let’s Get Set provides online tax services to low-income mothers with annual incomes under $70,000, helping users maximize refunds and minimize penalties. For the 2022 tax year, the woman-led company says its customers received average refund checks of $2,901. It has helped customers claim nearly $20 million in tax credits since launching in 2020, a spokesperson told ImpactAlpha.

  • Inclusive fintech. Village Capital backed Let’s Get Set via its Financial Health Innovation Fund, a $3 million program-related investment fund that it manages for MetLife Foundation. Volunteers of America, through its Futures Fund, joined the round with a $150,000 SAFE Note. The size of the round was not disclosed.
  • Check it out.

Dealflow overflow. Other investment news crossing our desks:

  • ConnectDER raised $27 million in Series C funding for its “collar adapters” for electricity meters that are meant to streamline the distribution of electricity to EV chargers, solar panels, heat pumps and other smart appliances. (Electrek)
  • Era92 Fund secured $425,000 in seed financing to provide financial services and financial literacy support to micro and small businesses in Uganda. (Causeartist)
  • Montreal-based Novisto scored $20 million in Series B financing to help companies operating in the US and Europe improve their ESG data collection and reporting. (Novisto)
  • Austin-based Acadeum raised $11.9 million in a Series B round to help underserved students chart a more direct and affordable path through college. (Acadeum)

Signals: Reclaiming ESG 

US SIF’s Lisa Woll: Attacks on ESG demonstrate the growing importance of sustainable investing. The old adage still serves: “First they ignore you, then they laugh at you, then they fight you, then you win.” For Lisa Woll of US SIF, the attacks on the use of environmental, social and governance factors in investment decisions is a measure of the growth and importance of sustainable and impact investing. “This is truly the moment where we know the field has arrived,” Woll says in an interview with ImpactAlpha. “Because we’re big enough and important enough that we’re seen as important to attack.”

  • Leadership transition. After 17 years as US SIF’s CEO, Woll stepped down earlier this year from the leadership of the research, education and advocacy nonprofit that represents members with more than $5 trillion in assets under management (Maria Lettini, formerly of FAIRR Initiative, took over this month). In that time, the field has grown from $2 trillion to more than $8 trillion, even including a methodological reset in recent years that culled many firms without specific impact criteria.
  • Backlash to the backlash. Woll thinks the backlash against ESG may introduce new people to a field they may not have otherwise known. “I don’t think by any means this is a done deal. I’m not sure it will ultimately be truly deleterious to the field,” she says. “You’re seeing, particularly in red states, stories on sustainable investment on the front page of newspapers for the first time.” The attacks have reinforced Woll’s belief that impact investors must become more engaged in public policy debates. “We have to stay focused. We have to stay defended on this. We have to be responding in meaningful, data-driven ways.”

Agents of Impact: Follow the Talent

Samantha Davidson, ex- of Mercer, will replace Noel O’Neill as Cambridge Associates’ president and head of global investing in July… In New York, the Global Impact Investing Network is looking for an impact measurement and management engagement director, Environmental Defense Fund seeks a senior foundations officer, and Citi Impact Fund has an opening for an operations and risk vice president.

The Nature Conservancy is recruiting an conservation deputy director in South Africa… Blue Forest is hiring a remote private credit manager, accounting director and controller, and a grants finance associateLuminate Strategic Initiatives is looking for a remote policy director.

Calvert Impact, 60 Decibels, LISC and Community Reinvestment Fund will host a webinar on the Southern Opportunity and Resilience Fund, Tuesday, June 6… Deal Source Africa launched at the West Africa Deal Summit in Accra, Ghana this week to connect businesses and funds with investors. 

Thank you for your impact.

– May 25, 2023