The Brief | January 31, 2023

The Brief: Municipal finance for fiscal justice, financing restoration with future carbon credits, impact notes, green steel, community-led funds

The team at


Greetings, Agents of Impact! 

Featured: Muni Impact

Activest’s FIRE strategy seeks to bend the arc of municipal finance toward ‘fiscal justice.’ It’s distressingly easy to find places where city finances are distorted by systemic racism or outright bigotry. It’s harder to spot projects that are using financial tools to redress social harms and advance racial equity. Activest, the investment research and analytics firm, made its reputation by calling out credit risks in cities that, for example, are reliant on excessive fees and fines on their residents of color. To finance solutions, Activest is preparing to become an investment advisor itself. With Florida-based Community Capital Management, Activest later this year plans to launch the FIRE Fund, for “fixed-income racial equity,” to help investors back municipal bonds and other fixed-income products that move capital to what it calls “fiscal justice.” “FIRE addresses the way that debt in the form of fixed-income products has been inaccessible, extractive and harmful for Black residents,” Activest’s Ryan Bowers tells ImpactAlpha. “FIRE provides a different model of investing that centers the voice and perspective of Black people and communities and takes a regenerative approach to community wealth-building.”

  • Search for solutions. FIRE will look beyond standard municipal bonds to, for example, provide debt for community development financial institutions that finance small businesses in low-income communities. It will also invest in bonds from special districts for schools and water systems, and even corporate bonds targeted to social needs, such as broadband infrastructure. The goal is to “have a toolkit that goes beyond what we don’t need, to talking more proactively about the things that we do need,” Bowers says. The $160 million social bond issued by the city of Chicago last week is an example of the kind of proactive instrument the FIRE fund may look for. The bond will finance affordable housing, electric vehicles, the cleanup of vacant lots and rehabilitation of abandoned buildings, along with the planting of at least 75,000 trees over five years.
  • Risk premium. The city of Memphis, which has been roiled this month by the police beating and killing of Tyre Nichols has been cited as an example of the “Black tax” that hamstrings the efforts of many Black-majority cities to improve schools, streets and neighborhoods. The city and surrounding county, however, also demonstrate underappreciated risk factors such as high rates of pretrial detention and arrests for low-level offenses. The trick is to know which kinds of mispriced risk will predominate going forward. “It is the case where one person’s Black tax is another person’s premium returns,” Bowers said. For cities that are improving their racial-equity performance, the FIRE fund aims to lower that risk premium over time.
  • Join Agents of Impact Call No. 48. Activist’s Ryan Bowers will join Diane Manuel of Adasina Social Capital, Eric Glass of Justice Capital and other Agents of Impact to explore “Investable opportunities in high-impact municipal finance” on ImpactAlpha’s call tomorrow, Feb. 1, at 10am PT / 1pm ET / 6pm London. Special guest: Greater Share’s Dana Bezerra. Final call to RSVP.
  • Keep reading, Activest’s FIRE strategy seeks to bend the arc of municipal finance toward ‘fiscal justice,’” by David Bank on ImpactAlpha. Catch up on all of our coverage of Muni Impact, made possible with support from the Robert Wood Johnson Foundation.

Dealflow: Regeneration Finance

Obvious Ventures backs Senken to finance reforestation through ‘carbon forwards’. Berlin and Cape Town-based Senken is a blockchain-based carbon credit trading platform. Its next offering is a form of advance-purchase carbon credits to support reforestation and ecosystem restoration projects in development. The carbon credit “forwards” provide investors with discounted carbon credits in return for financing environmental projects upfront. Senken plans to test the concept with a verified mangrove restoration project in Kenya. Obvious Ventures led the $7.5 million financing round. Offline Ventures, Inflection, Kraken Ventures and Climate Capital participated.

  • Future carbon. Senken is minting 500 tokens for carbon credits that will be issued in 2025, which can then be claimed as offsets or traded. The financing mechanism assumes a rising price on carbon. Like traditional commodity futures, the carbon forwards allow investors to hedge against fluctuations in carbon values. Senken’s first project will support the protection and restoration of 3,700 acres of severely degraded mangroves in Kenya. Mangroves are highly efficient carbon sinks, as well as critical coastal barriers against extreme weather events, the company explains. The project is led by Vlinder Climate and certified by Verra.
  • Natural capital. Senken’s model, if successful, would provide much-needed “last mile finance” for countries in the global South (for context, see “Voluntary carbon markets face a reckoning over credit quality and environmental impact”). Varaha is supporting mangrove restoration in India while generating carbon credits to boost farmers’ livelihoods. Climate Asset Management is looking to invest in carbon credit projects that support smallholder farmers in Africa.
  • Check it out.

ICA Growth Fund backs four Black and Latinx businesses with ‘impact notes’. The Bay Area-based nonprofit accelerator and investor supports small businesses while encouraging owners to prioritize social impact objectives. Its latest investees include 5 Element Food Therapy, which offers pet nutrition services. Bolita produces fresh masa and other Mexican food staples. P. Harrell Wines is a Black and Latina woman-owned wine company. Ziva Naseer produces luxury handbags. “Each of these four founders have already built impactful businesses that serve our local community,” said ICA’s Princess Aghayere. “We’re excited about their growth potential and look forward to partnering with these founders for a long time to come.”

Dealflow overflow. Other investment news crossing our desks:

  • Steel giant ArcelorMittal led green steel producer Boston Metal’s $120 million Series C equity round.
  • Fundación WWB Colombia, a Colombian foundation focused on women’s empowerment, acquired Bamboo Capital Partners’ and two other investors’ minority stakes in microfinance institution Banco W.
  • Venture capital firm Inclusion Japan and Ethiopia’s Kazana Fund are partnering to invest $100 million in early-stage Ethiopian startups. 
  • Investors backed Nigeria’s TradeLenda and South Africa’s LulaLend, both fintech startups providing loans and supply-chain finance to small businesses. 

Impact Voices: Community Capital

How Fair Food Network is reshaping investment norms to fight wealth inequity. New place-based funds that take a community-first approach are helping shift power dynamics and investing norms that have led to wealth inequity. “Capital is an expression of relational, structural and personal power,” write Anjali Deshmukh of Make Justice Normal and Fair Food Network’s Noah Fulmer and Kate Krauss. “Though often made invisible, these power dynamics are root causes of wealth gaps.” The Fair Food Network, an Ann Arbor, Mich-based nonprofit, is helping stand up the Michigan Good Food Fund, which is raising grant and catalytic capital to unlock $40 million for mission-driven and diverse-led food enterprises. A community board made up of local food entrepreneurs, nonprofits, government, and financial and technical assistance providers sets direction and performance targets for the collaborative.

  • Community of practice. The Michigan Good Food Fund draws from pioneers such as REAL People’s Fund, Black Farmer Fund, and Thousand Currents’ Buen Vivir Fund, which shift power dynamics between investees and investors (for background, see, “Centering community voices and power in investment processes“). The fund also takes inspiration from Runway and Co-Op Capital, which provide catalytic capital as a stand-in for friends and family support. Place-based, community-first funds are in development in Hawaii and New Jersey. Centering people, rather than transactions, “opens pathways toward a more equitable future, where investment products meet community needs,” the authors write, “and for those who do not fit the mold today, the mold is recast.”
  • Keep reading, “How Fair Food Network is reshaping investment norms to fight wealth inequity,” by Anjali Deshmukh, Noah Fulmer and Kate Krauss on ImpactAlpha. 

Agents of Impact: Follow the Talent

ImpactAlpha partner event: New Ventures is hosting the Latin America Impact Investing Forum, or FLII, Feb. 28-March 2 in Mérida, Mexico. ImpactAlpha subscribers get 35% off with the code IMPACTALPHA35.

ImpactAssets promotes Dana Cotter to managing director of impact and adds Alice Lowenstein, ex- of Litman Gregory Asset Management, as chief operating officer. From the White House, Christian Peele joins ImpactAssets as chief of staff and head of strategic planning; Kavita Vijayan, ex- of Reinvestment Fund, becomes director of strategic marketing communications. 

British International Investment promotes Chris Chijiutomi to head its Africa operations… BlueHub Capital names Brenda Loya, ex- of Amalgamated Bank, as chief operating officer… 

Aaron Jackson, ex- of Detroit Neighborhood Entrepreneurs Project, joins Fair Food Network as program director of Michigan Good Food Fund (see above).

Upaya is hiring a senior communications associate in India… Also in India, the Michael & Susan Dell Foundation seeks a program manager… YLabs is recruiting a project lead for digital health, a senior associate and a senior researcher… GitLab Foundation is looking for a director of measurement, evaluation and impact analytics… Salesforce seeks a sustainability lead for its Salesforce Platform… Uber is recruiting an ESG program manager.

WMO International Greenhouse Gas Monitoring Symposium is underway in Geneva… Africa Rise is hosting “Bridging the gender gap in investment and financial services sector in Mauritius,” Thursday, Feb. 2… US SIF is offering an online course on the fundamentals of sustainable and impact investment, Wednesday, March 15.

Thank you for your impact.

– Jan. 31, 2023