Greetings, Agents of Impact!
Featured: Impact Measurement and Management
Accounting for impact at Candide, MicroVest, Echoing Green and other investment managers. The age of ad hoc impact reporting may be coming to an end. In the meantime, we’ve taken a swing through five very different annual impact reports. Caveat: “Impact reports produced by investors vary significantly in the quality and scope of information covered and are often of limited use to investor stakeholders wanting to critically evaluate those reports for their own impact performance management purposes,” according to the Impact Frontiers collaboration. In the coming months, Impact Frontiers will be working to build consensus around impact reporting, including by integrating various voluntary standards with the verification framework developed by BlueMark.
- Community Capital Management: Fixed-income and public-equities impact investing. The Ft. Lauderdale, Fla.-based investment advisor introduced the concept of “direct impact investing” in 2001, six years before the Rockefeller Foundation coined “impact investing” as an industry-wide term. Through its fixed-income holdings, CCM in 2022 invested $308 million in 533 majority-minority census tracts, including 68 loans to low-income minority borrowers and 40 to minority women borrowers, according to its 10th impact report.
- Candide Group: Shifting power and interrogating impact investing. The advisor to families, foundations and other investors gave investees leeway in what metrics to highlight. Elevating the leadership of historically marginalized individuals and creating high quality jobs were the two most prioritized outcomes among investees. Candide completed the allocation of its $40 million Olamina Fund and began raising for a Climate Justice Fund with a $50 million target.
- Builders Fund: Buyout and growth capital for impact enterprises. With $130 million in assets under management, the San Francisco-based manager writes checks of up to $20 million for cash flow-positive companies with up to $100 million in revenues. For the year, the firm tallied 137 jobs created across its portfolio, including 70 for low- and moderate-income individuals, and counted 132,000 tons of carbon inset, avoided or reduced through operations, along with 1,300 tons of material diverted from landfills.
- Echoing Green: Seed investments to advance racial equity. In 2020, the fellowship program and social enterprise accelerator set a goal to launch and scale 520 racial equity-focused social enterprises with the help of its $75 million Racial Equity Philanthropic Fund. At the midway mark, the nonprofit reported that it’s about a third of the way there, having made seed or follow-on investments in more than 130 social enterprises in 40 countries.
- MicroVest: Providing capital for financial inclusion at scale. The microfinance lender announced at the end of 2021 that it was being acquired by international development advisory firm DAI. The goal: to secure “a capital budget to systematically think about how we scale this business,” MicroVest’s Gil Crawford told ImpactAlpha at the time. The firm went on an investment sprint in December, deploying $63 million of the total $149 million invested in 2022, according to its latest impact report. Its capital supported 20 financial institutions in 14 countries.
- Keep reading, “Accounting for impact at Candide, MicroVest, Echoing Green and other investment managers,” on ImpactAlpha. Send us your questions about impact reporting and we’ll put them to BlueMark for an FAQ-style article. Also, send us your impact report for next month’s roundup.
Dealflow: Returns on Inclusion
Ariel Alternatives secures $1.5 billion to build the pipeline of minority-owned suppliers. Black, Brown, Indigenous and other diverse-led businesses receive just 2% of Fortune 500 companies’ procurement spend, according to the Black-led private equity firm. Corporations in the U.S. have pledged $50 billion to increase supplier diversity by 2030. Ariel will buy up mid-sized companies that aren’t minority-owned, overhaul management, and connect them to corporate procurement offices. It will also invest in mid-sized minority-led businesses and support their inclusion in corporate supply chains. “Project Black” will acquire a majority stake in up to 10 companies. Last year, it acquired Sorenson, a communications company serving the deaf community.
- Corporate investors. Project Black secured backing from Walmart, Merck & Co., Lowe’s and Salesforce, The Wall Street Journal reports. Microsoft’s former CEO Steve Ballmer and his wife Connie Snyder invested $400 million. JPMorgan Chase will co-invest up to $200 million alongside Ariel as part of its $30 billion racial equity pledge.
- Supplier gap. Ariel Alternatives, a subsidiary of $16 billion asset manager Ariel Investments, launched Project Black in 2021 to accelerate corporate supply-chain diversity commitments. “The problem was that diverse firms didn’t exist at a scale that could take advantage of the opportunity,” Ariel’s Les Brun told the Journal. By focusing on mid-sized businesses, Project Black hopes to “change the paradigm around Black and Brown businesses, and to have people stop thinking of them as small and disadvantaged but as equal competitors,” he added.
- Check it out.
Dealflow overflow. Other investment news crossing our desks:
- Women-led Buoyant Ventures in Chicago raised $76 million to invest in climate tech ventures led by women and diverse founders.
- Climate risk software company Risilience secured $26 million in Series B financing from Quantum Innovation Fund, IQ Capital and National Grid Partners.
- Baltimore-based Sunstone Credit raised $20 million to provide loans to businesses wanting to switch to solar energy.
- SunFi in Nigeria scored $2.3 million to help households enroll in lease-to-own and monthly subscription solar energy plans.
- Israel’s NT-Tao clinched $28 million to develop a prototype for small-scale nuclear fusion plants.
Signals: Racial Equity
Four ways impact investors are supporting economic mobility for Black Americans. The median Black household in the U.S. has one-tenth the wealth of the median white household. Over the next decade, the racial wealth gap could cost the U.S. economy $1.5 trillion per year in lost economic value, according to the McKinsey Institute for Black Economic Mobility. The racial reckoning that followed the 2020 murder of George Floyd pushed investors, corporate executives and policymakers to recognize the risks of systemic racism (see, “Seven ways finance has changed in the year since George Floyd’s murder”). Roughly $350 billion in investment dollars have been committed since then, but trillions is needed to make a dent. In “A guide to impact investing in Black economic mobility,” McKinsey highlights eight investable themes with potential to address the barriers to Black economic mobility. Among them:
- Affordable housing. Investing in real estate impact funds that are preserving and creating quality housing, as well as creating pathways to homeownership for Black Americans, can help Black renters save on monthly payments and build wealth. Denver-based Dearfield Fund for Black Wealth, backed by the Robert Wood Johnson and Gates foundations, is providing interest-free down payment assistance loans to Black families purchasing their first homes. L.A.-based SoLa Impact’s Black Impact Fund has backing from investors including CalSTRS, Pacific Premier Bank and PayPal to invest in affordable housing in Black and Brown communities in the U.S.
- Education equity. Black students are more likely than white students to attend underfunded schools in low-income communities. Backing edtech companies focused on low-income Black students and supporting Black educators and schools can help improve education outcomes for Black students. New York-based Equitables Facilities Fund is deploying low-cost and long-term facility loans to Black public charter schools in low-income communities. Baton Rouge, La.-based MasteryPrep, which was acquired by Achieve Partners late last year, provides low-cost tools for teachers to help low-income and underserved students prepare for standardized tests.
- Health equity. Black and white Americans experience drastic disparities in health outcomes due to lower access to affordable healthcare, quality providers and lower health literacy. Black-led venture capital fund Jumpstart Nova, which is backed by healthcare heavyweights Henry Ford Health System and Cardinal Health, invests exclusively in Black healthcare startup founders. Black-led Cayaba Care and Mae are addressing health inequities for pregnant Black women.
- Financial inclusion. Black Americans are twice as likely to be denied credit as white Americans, and have access to fewer cost-effective options for mortgages, car and business loans, and insurance. Greenwood, a Black-led neobank backed by Bank of America, JPMorgan Chase, Mastercard and Visa, provides banking services for Black individuals and business owners. Black-led Esusu, which is backed by Serena Ventures and SoftBank Opportunity Fund, helps low-income Black renters build credit scores by reporting their rental payments to credit bureaus.
- Keep reading, “Four ways impact investors are supporting economic mobility for Black Americans,” by Roodgally Senatus on ImpactAlpha.
Agents of Impact: Follow the Talent
J.P. Morgan promotes David Maloof to vice president of sustainable growth equity… 2X Global seeks a remote communications lead in the U.K… The Collaborative for Frontier Finance is recruiting an analyst and a part-time project coordinator… Arctaris Impact Investors is hiring a private equity analyst or a deals associate in Boston… The Global Steering Group for Impact Investment is looking for a chief marketing and communications officer.
The W.K. Kellogg Foundation seeks a mission driven investments analyst… Bridges Fund Management is looking for summer interns focusing on investment and client and strategy development… CapShift is hiring summer interns and fellows remotely or in Boston… Intuitive is looking for a director of sustainability and climate action in Sunnyvale, Calif… The U.K. Sustainable Investment and Finance Association is recruiting an events manager in London… Raymond James is recruiting a sustainable investing consultant in St. Petersburg, Fla.
The Rainforest Alliance is looking for a senior project manager in Abidjan, Côte d’Ivoire… South Pole seeks a chief of staff in Zurich… Ben & Jerry’s has an opening for a global social mission director in South Burlington, Vt… IFC is looking for a communications consultant… The 7th annual Impact Investing Symposium will take place Friday, Feb. 24 at Washington University in St. Louis.
Thank you for your impact.
– Feb. 6, 2023