The Brief

The Brief: Making the case for transformational change

ImpactAlpha · November 21, 2024

Greetings Agents of Impact!

In today’s Brief:

  • Bridge building and forceful stewardship
  • Digital financial services to rural Colombia
  • AI solutions for climate
  • Pushing back on the “the nonprofit killer”

How to bridge differences and build a thriving future. How to make progress in a divided nation? The Rippel Foundation and TheCaseMade brought together leaders from across the country earlier this year to help them see their shared stake in building healthier communities. That included people addressing the key issues this election year in the US: inflation, healthcare costs and partisanship – issues that are also connected to the conditions people and communities need to thrive, from basic healthcare to meaningful work. The foundations’ work revolves around two core practices: strategic casemaking, which helps build public support for transformative ideas; and shared stewardship, which leverages the changemakers in communities to build equitable systems. “If we invest in these practices now, particularly in underserved communities with the most to gain, we’ll be able to put solutions in place faster and get to the better, more thriving future we all want within a generation,” write Becky Payne of Rippel Foundation and Tiffany Manuel of TheCaseMade. The organizations have put together a playbook that outlines both approaches and their practical applications.

  • Making the case. Strategic casemaking taps decades of social science to identify ways to get people off the sidelines and equip them with tools for systemic change. What works: focusing on people’s aspirations rather than crisis-driven narratives and negative statistics. In Massachusetts, Citizens’ Housing and Planning Association used the approach to build support for affordable housing and transit-oriented development. Shared stewardship looks for common interests, mutual benefits and opportunities to connect across boundaries. One example: Healthy Communities Delaware, a public-private collaboration managed by the Delaware Division of Public Health, Delaware Community Foundation and the University of Delaware Partnership for Healthy Communities. The multi-sector network of stewards has invested $7 million in community-based organizations to improve life for Delaware communities. 

Defending long-term value amid political backlash. We’ve been here before. “In this moment of heightened tension, responsible investors must be mindful and recall how much collective power they have demonstrated in the face of similarly adverse circumstances,” write incoming Majority Action co-executive directors Bryant Sewell and Whitney Shepard in a guest post. During Donald Trump’s first term, responsible investors organized to secure climate-scenario analyses at major oil companies and majority votes to address gun violence risk and halt financing to private prisons. Environmental, social and governance metrics aren’t political statements, argue Sewell and Shepard. “They’re essential tools for understanding real business risks and opportunities in a rapidly evolving global economy.” This moment, they say, “demands more than passive resistance or strategic retreat. It demands bold action and forceful stewardship.”

Dealflow: Financial Inclusion

Accion invests in Banco Contactar to drive digital financial services to rural Colombia. Accion made a $15 million investment in the Colombian bank via its $152.5 million Digital Transformation Fund, which helps microfinance and other financial services firms digitize their products and services to serve more people. Banco Contactar is part of an organization with a 32-year track record bringing microfinance products to Colombia’s rural communities via a network of 100 rural branches. It secured a banking license earlier this year to expand its range of products. The bank has originated $148 million in loans to 140,000 borrowers, 75% of whom work in agriculture and 50% of whom are women. Its clients will initially need support adopting online loans, digital savings accounts and e-wallets, but “in the next few years, most transactions will go through new channels,” Accion’s Adelina Dasso told ImpactAlpha. “We see the potential of generating more efficiencies for the company and for clients.”

  • Climate protection. Microfinance lenders have become frontline workers in the climate crisis. Their clients are among the most vulnerable to climate impacts and have the least access to affordable products and services to boost their resilience. Banco Contactar sends alerts to customers informing them of ways to prepare for climate impacts on their livelihoods and households. A key priority now is climate insurance. About 90% of the bank’s borrowers have some type of insurance protection, compared to 40% or 50% at most other rural microfinance organizations in Accion’s portfolio, says Dasso. “They’re working with insurance companies to see what kinds of insurance [customers] need to prepare for climate change.”
  • Peer learning. Banco Contactar is Accion’s sixth Digital Transformation investment. Dasso, who spoke to ImpactAlpha during a visit to Mumbai, noted that rural customers face many of the same issues, whether they’re in Colombia or India, Peru or Indonesia. “Having a global fund is something we leverage to help with best practices,” she said. Banco Contactar is an innovator in climate finance and leads on risk management. Los Andes in Peru and Annapurna Finance in India are more advanced on gender. Flexi Loans in India has been creative in building scale through partnerships. “These companies are in different countries, so it would seem there is nothing they could easily share,” said Dasso. “But in fact, that is happening.”
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‘AI for impact’ VC firm Blue Bear raises $160 million climate fund. Blue Bear Capital has clinched a $160 million fund focused on software and AI solutions that increase the efficiency, reliability and scale of critical climate infrastructure. “We invest in companies that automate the energy industry,” Blue Bear’s Carolin Funk told ImpactAlpha. Investors in Blue Bear’s third fund include the Rockefeller Brothers Fund, the McKnight Foundation, the Walton family’s Zoma Capital, UBS, WovenEarth Ventures, and executives at private equity and infrastructure funds investing in a personal capacity. Blue Bear has raised an additional $40 million in follow-on commitments. 

  • Demand for digital. Funk sees a growing opportunity as clean energy infrastructure and energy-intensive industries are commercialized and reach critical mass. They “are ripe for automation,” said Funk. Blue Bear’s first and second funds invested in companies supporting renewable energy projects, such as Raptor Maps, which makes “digital twins” of solar assets to forecast, monitor and manage performance, and Omnidian, a remote monitoring tool for solar assets. With its third fund, the firm is also eyeing opportunities in the data center and climate adaptation sectors. The fund will invest in around 20 companies.
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Dealflow overflow. Investment news crossing our desks:

  • Four Danish pension funds committed 2.7 billion kroner ($38.1 million) to SDG Investment Fund II, an emerging markets private investment fund run by the Investment Fund for Developing Countries, Denmark’s development finance institution. (IFU)
  • Fusion energy company Tokamak Energy raised $125 million from East X Ventures, Lingotto Investment Management, British Patient Capital, Sabanci Climate Ventures and other investors. (Tokamak Energy)
  • Chicago-based Synapticure secured $25 million to provide virtual support to neurodegenerative disease patients and their caregivers. (Synapticure)
  • Generate Capital secured a $1.2 billion revolving credit facility backed by 14 institutional lenders to finance sustainable infrastructure projects. (Generate Capital)
  • BNP Paribas Asset Management and the International Woodland Company raised $130 million for their Future Forest Fund, a European “Article 9” impact fund that invests in sustainable timber production. (Portfolio Adviser)

Signals: Democracy Watch

Nonprofits sound alarm on House bill that would give the Trump administration power to crush dissent. The bill’s been called “the nonprofit killer.” Charitable organizations are mobilizing to defeat the bill, being voted on today in the US House of Representatives, that could stifle free speech and progressive activism. HR 9495, aka the “Stop Terror-Financing and Tax Penalties on American Hostages Act,” would give the Treasury Secretary unilateral power to declare a nonprofit “a terrorist-supporting organization” and strip its tax-exempt status, without due process or disclosing the reasoning. “The executive branch would be handed a tool it could use to curb free speech, censor nonprofit media outlets, target political opponents, and punish disfavored groups across the political spectrum,” warned the ACLU in a letter signed by hundreds of nonprofits. 

  • In the crosshairs. The language, tacked on to a more innocuous bill aimed at protecting Americans hostages from amassing tax bills, was pulled from a bill first introduced last fall, when college campuses erupted in protest over Israel’s bombardment of Palestine. Lawmakers in May requested information from Treasury Secretary Janet Yellen on 21 groups, including Students for Justice in Palestine, Open Society Foundations, Rockefeller Brothers Fund, Tides Foundation and the Bill and Melinda Gates Foundation that they said may have provided funding to the protestors. Nonprofits fear an emboldened Trump administration could wield the tool to go after organizations working on everything from humanitarian aid, racial justice, women’s reproductive rights and even nonprofit news.
  • Push back. A vote last week on HR 9495 was defeated on procedural grounds but is expected to pass today – or when a Republican-controlled Congress convenes next year. Nonprofits and their supporters have flooded their elected leaders with calls to quash the bill, which is the sort more often seen in repressive governments. Trump has not been shy about his desire for retribution, vowing to use the military if necessary to go after what he has called “the enemy from within.” Ultimate use of the law will depend on Trump’s Treasury pick. Apollo CEO Marc Rowan and former Fed governor Kevin Warsh are the top contenders. But the fast tracking of HR 9495, even before Trump takes the Oval Office, has raised alarms. “If we do not push back against this legislation, it is only a matter of time before the scope of these attacks grows exponentially,” said Tranée McDonald of the Interfaith Alliance. “The very core of our democracy is at stake, and we cannot afford to be complacent.”
  • More.

Agents of Impact: Follow the Talent

Nest welcomes Cordes Foundation’s Steph Stephenson as a board member… Social Finance hires Mary Santalla, previously with Citizens Financial Group, as an impact investment associate… Social Capital Partners brings on Karim Harji, director of the Oxford Impact Measurement Programme at the University of Oxford’s Said Business School, as a fellow.

Melanie Hui will become CEO of Luminate, replacing founding CEO Stephen King in January… Nia Tero’s ‘Aulani Wilhelm will succeed co-founder Peter Seligmann as CEO… World Education Services is looking for an investment senior manager… Climate United is hiring an equitable workforce director… DC Green Bank has an opening for a solar investments director.

👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.

Thank you for your impact!

– Nov. 21, 2024