Greetings, Agents of Impact!
Hop on today’s call. Agents of Impact Call No. 25 takes up gender-smart investing for a sustainable recovery (see Signals, below). Join Development Partners International’s Takudzwa Mutasa, Alitheia’s Temilade Denton, Trade Depot’s Onyekachi Izukanne and Sarmayacar’s Rabeel Warraich and the Collaborative for Frontier Finance, along with CDC’s Nick O’Donohoe and IFC’s Stephanie Von Friedeburg, today, at 9:30am ET / 2:30pm London / 5:30pm Nairobi / 8:00pm New Delhi. Zoom right in.
- Keep the conversation going. Share your gender-smart thoughts on ImpactAlpha’s Agents-of-Impact Slack channel.
Impact Voices: Pass the Mic
Blueprint Local and LISC are using Opportunity Zones to bridge divisions, beginning in the Southeast. An ambitious community investment agenda can drive meaningful development and growth in both red and blue states. “Programs like Opportunity Zones, which have enjoyed bi-partisan support, offer a chance to bridge political, geographical and financial gaps to catalyze opportunity for millions of people,” write LISC’s Maurice Jones and Blueprint Local’s Ross Baird in an exclusive guest post on ImpactAlpha. LISC and Blueprint Local are partnering on projects in Alabama, Tennessee, Florida, Georgia, South Carolina, North Carolina, Virginia and Washington, D.C. Aligning Opportunity Zone equity investments with community development infrastructure, they say, can “create wealth in communities.” First up: The Current, a mixed-income, mixed-use project in Richmond’s Manchester neighborhood, led by community developer Lynx Ventures. A Hatch Local food hall, a collaboration with food-entrepreneur incubator Hatch Kitchen, will occupy the ground floor.
“As we look to the future of economic development, we need strategies that bring together engaged organizations, residents, and investors in shared efforts to chart a path forward,” write Jones and Baird. Despite unfortunate examples of abuse, Opportunity Zones are bringing private capital to projects that would not have worked otherwise, they argue. Even fast-growing “Zoomtowns,” like San Antonio, Texas and Greenville, S.C., lack adequate access to capital; rapid growth can drive increased inequality, the authors say (San Antonio is among the poorest major cities in the country, and Greenville among the most unequal). The Biden administration is likely to tweak Opportunity Zone regulations to try to do more to help small businesses, which have been gutted by the pandemic. “Thoughtful investment is key,” say Jones and Baird. “Long-term, inclusive community collaborations like this defy the political and financial stereotypes of division.”
Keep reading, “Blueprint Local and LISC are using Opportunity Zones to bridge divisions, beginning in the Southeast,” by Maurice Jones and Ross Baird on ImpactAlpha.
Dealflow: Follow the Money
LISC taps capital markets with $150 million in ‘impact notes.’ The notes from Local Initiatives Support Corp. are the latest example of the public market’s appetite for debt from community development financial institutions, or CDFIs. The S&P ‘AA-’ rated notes will be issued monthly to retail and institutional investors in denominations as low as $1,000. The proceeds will support LISC’s work in affordable housing, small businesses, healthcare and other community investment (see above). The notes are similar to those issued by Capital Impact Partners, an Arlington, Va.-based CDFI, which have raised more than $160 million since 2017. LISC issued a $100 million institutional bond the same year. “The field of community development might be relatively new to the capital markets, but it is not new to meeting investor expectations for performance,” said LISC’s Maurice Jones.
- Diversification. The public markets offer a way for larger CDFIs to diversify their sources of capital and tap investor interest in social impact. Another impetus: A key bank regulator in June finalized Community Reinvestment Act rules that could reduce incentives for banks to finance community development. LISC, with a 40-year track record, has been on a fundraising tear, attracting investment from Kaiser Permanente, Netflix, MacKenzie Scott and others (see, “Maurice Jones, Local Initiatives Support Corp.”).
Micron invests $50 million to reduce U.S. racial wealth gap. Another tech company is investing in closing the racial wealth gap. Data storage company Micron Technology will invest $50 million in cash and short-term investments in an impact strategy managed by RBC Global Asset Management to spur economic growth in Black and other underserved U.S. communities. RBC’s $1.2 billion Access Capital Community Investment bond fund supports affordable housing, job creation, education and more in low- to-moderate income communities, RBC GAM’s Ron Homer told ImpactAlpha. The capital from Micron will buy government-backed bonds made up of loans from local banks and credit unions to spur additional lending (see, “Minnesota foundations invest $17 million in affordable housing and small business bond”).
- Stepping up. Corporations are starting to step up efforts to reduce the racial wealth gap by investing in Black and other underserved communities. Twitter committed $100 million to a racial justice fund (see, “Twitter invests $100 million in OFN’s new racial justice fund” and “Mobilizers of corporate cash for community impact”).
KKR invests in CMC Machinery’s sustainable packaging technology. The private equity giant’s $1.3 billion Global Impact Fund, which closed earlier this year, made an undisclosed investment in CMC Machinery. The Italian family-owned company produces custom-fit boxes for Best Buy, Garmin and other companies, reducing raw materials and void filler. KKR said the investment contributes to Sustainable Development Goal No. 12, responsible consumption and production (see, “What we know about KKR’s $1 billion Global Impact Fund”). CMC is the fund’s fourth deal in Europe. It expects to make a dozen investments in total. More.
Signals: Ahead of the Curve
A guide for fund managers investing in gender equity. Venture capital, private equity and debt firms raised $4.8 billion for strategies focused on gender equity in 2019, up from just $1.1 billion in 2017 (see, “Development financiers seek to hook private investors on gender lens investing“). A new guide from U.K. development finance institution CDC Group and the International Finance Corp. aims to provide fund managers “with a road map to strengthen gender diversity within their firms, and incorporate a gender lens into investment decision-making.” Highlights:
- Multiple lenses. “Gender-smart investing is not only about counting women and men,” write the authors of “Private Equity and Value Creation: A Fund Managers Guide to Gender Smart Investing.” Rather, it is about how gaps between women and men influence business performance and thus the performance of investment funds. That includes women’s representation in organizational leadership; workforce diversity; a gender-inclusive value chain; how products’ design and distribution are serving women; and how operations benefit or harm women.
- Inside out. For fund managers, gender strategies begin at home, through commitments to build women’s leadership and gender-balanced investment teams in their own firms. Externally, fund managers can adopt a gender-lens by choosing a focus area (such as advancing women in leadership or inclusive value chains), defining specific gender-related outcomes to target, and incorporating benchmarks into deal terms and legal agreements.
- Management and measurement. How to quantify whether a fund is empowering women entrepreneurs? Look for discrepancies between how much and what type of capital is invested in male versus female founders. How to determine if a portfolio company is enabling a gender-inclusive value chain? Compare how many suppliers are male- versus female-led, and the size of the contracts they’re awarded. The guide offers a list of deal-level indicators and benchmarks.
- Gender-smart Call. CDC’s Nick O’Donohoe and IFC’s Stephanie Von Friedeburg will launch the guide on ImpactAlpha’s Agents of Impact Call No. 25 at 9:30 ET today. Zoom right in.
- Share this post.
Agents of Impact: Follow the Talent
Dina Powell McCormick is named global head of sustainability and inclusive growth at Goldman Sachs. McCormick, who led Goldman’s impact investing and 10,000 Women and 10,000 Small Businesses programs, rejoined the firm after a stint with the Trump administration… The Runway Project has rebranded itself as RUNWAY (see, “Local funds model the racial reckoning and renewal central to the COVID recovery”)… Ann Leng, ex- of AC Investment Management, joins Spring Lane Capital as CFO and COO… Sam Fankhauser, ex- of Grantham Research Institute, joins the Oxford Net Zero Initiative at the University of Oxford… Goldman Sachs Asset Management seeks a fixed income ESG and impact investing analyst in New York…
ImpactAlpha’s David Bank is moderating “Corporates and impact investing” with Bill Young of Social Capital Partners, Adrianna Alterman of Salesforce Ventures Impact Fund and TELUS’s Blair Miller at Mars Impact Week, which takes place Nov. 30-Dec. 4… As You Sow hosts “Workplace Equity & Racial Justice” with Andrew Behar, Meredith Benton and Olivia Knight, alongside Patience Marime-Ball of Women of the World Endowments, Wednesday, Nov. 18… Climate XChange is hosting “Green Infrastructure” with UMass’s Jane Fountain, Christine Conn of the Maryland Department of Natural Resources, Sacoby Wilson of the Environmental Justice and Health Laboratory, and Will Allen of Conservation Leadership Network, Friday, Nov. 20.
Thank you for reading.
– Nov. 17, 2020