Greetings, Agents of Impacts!
R&D. It seems we will all have to learn how to hold two thoughts at once: resilience in the face of the enormous and disorienting challenges presented by the coronavirus pandemic; and resolve to make this unprecedented disruption matter – that is, as an opportunity for fundamental system change. ImpactAlpha is canvassing Agents of Impact for their thoughts on both. Below, we round up some signals of that resilience. Tomorrow: disruptive change.
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Signals: Ahead of the Curve
Relief and resilience. The coronavirus crisis is showing in stark terms the fragility of our infrastructure, supply chains, communities, companies and portfolios. Dispatches from the mobilization:
- Cash is king. “Risk means not having cash when you need it,” said Heron Foundation’s Clara Miller (citing the late Peter Bernstein). “The thing that matters the most is right now is cash, cash, cash, agreed Visa Foundation’s Graham Macmillan. On Visa’s payments side, he said, “We’re witnessing a lot of very profound disruptions in industries.”
- Emergency tools. The lesson of the Ebola recovery, says Laurie Spengler: quickly put in place financial instruments for stabilization. A stabilization fund for emerging markets is under discussion by major development finance institutions. In the U.S., community development financial institutions “are preferred lenders in low-income communities and can be a channel for emergency funds from the Small Business Administration,” Spengler says. Caveat: Many CDFIs are themselves at risk from their exposure to businesses that have suddenly lost revenues, including food and retail hubs, arts organizations, and critically, health clinics. Housing lenders will see an immediate reduction in rent rolls as tenants lose their incomes.
- Repayment holiday. Beneficial Returns is offering its social enterprise borrowers a three-month payment holiday. “Managing the cash of a social enterprise is plenty hard without a pandemic turning everything upside down,” says Beneficial Returns’ Ted Levinson. The fund’s investors agreed to their own holiday by not cashing checks Beneficial had already sent. Levinson hopes the repayment holiday will inspire others. “This is a time for impact investors to be bold,” he says. The Soros Economic Development Fund will consider bridge financing or follow-on investments in portfolio companies, and has mobilized an investment team to look for impact investing opportunities to respond to the COVID-19 crisis. SOCAP Markets is compiling resources for social enterprises.
- Local relief. New York’s emergency fund for local nonprofits (see below) is the largest of a slew of emerging efforts. Candid (created by the merger of Guidestar and Foundation Center) is tracking COVID-19 relief funds established by U.S. foundations for nonprofits and affected populations. A sampling: The Baltimore Community Foundation is targeting the area’s workforce and vulnerable populations; Chicago Community Trust, United Way and the city of Chicago are focusing on nonprofits providing emergency services. San Diego-based Mission Driven Finance has a running list of local support, including the San Diego Foundation’s Community Response Fund, the Restaurant Workers Community Foundation’s Emergency Relief Fund, and a forthcoming San Diego Small Business Relief Fund. Nexus, a global network of philanthropists, impact investors and social entrepreneurs, has gathered a list of COVID-related resources for nonprofits.
- Flexible capital. Flexibility is the watchword on Mission Investors Exchange’s round-up of crowdsourced ideas for shoring up grantees and portfolio companies. Practice patient capital, amend credit policies to allow for flexibility, help investees keep the doors open, and provide grants and technical assistance when appropriate, advises Local Initiative Support Corp. “Be willing to assist with bridge capital to shift and pivot business models,” tweeted Nia Impact Capital’s Kristin Hull. Not all businesses are going to survive the next few months, says Mission Driven’s David Lynn. The priority, he says, should be those that support fair wages and gender and racial equity.
- First, survive. Then, regenerate. Survival is top of mind for the millions of people who work for small businesses that live week-to-week, says Blueprint Local’s Ross Baird. “I think we’re seeing a lot of symptoms of deeper cuts that we have,” he says. “We’ve been bleeding for a long time as a society and as a planet. People don’t realize they’re bleeding until they feel faint.”
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Dealflow: Follow the Money
Philanthropies back $75 million emergency fund for New York nonprofits. The NYC COVID-19 Response & Impact Fund is offering emergency, zero-interest loans of up to $3 million and grants to New York-based nonprofits addressing essential healthcare, food insecurity, as well as arts and culture. Nonprofit Finance Fund is leading the fund’s loan origination. The fund is backed by a long roster of philanthropic organizations. Applications can be made here.
Lightsource BP secures $250 million to finance Texas solar project. The solar developer, a joint-venture between Lightsource and oil and gas giant BP, will use debt financing from HSBC and NatWest for a 260-megawatt solar plant in northeast Texas. Lightsource BP acquired solar technology manufacturer, Array Technologies, in January. BP, under new leadership of CEO Bernard Looney, has pledged to become carbon neutral by 2050 (see, “Net-zero pledges by BP’s new chief raise the stakes for oil majors”).
Novi raises $1.5 million for supply chain transparency platform. Novi is a software startup that aims to help companies manage and track data on their ingredients suppliers, and eventually help them reformulate products to be safer and more sustainable. The female-founded company’s seed round was led by Defy Ventures.
Series: Walking the Talk
Making my money work for my kids and their future. Calvert Impact Capital’s Beth Bafford is breaking a taboo: She’s discussing her own personal finances to help others think about how to move money into impact and sustainable investments. “If you don’t think or talk about your investments, it is not likely that you’re doing anything to change them,” she writes. In a guest post on ImpactAlpha, Bafford chronicles her journey to align her investment portfolio with her values. ImpactAlpha is featuring impact investors who are “walking the talk” by bringing impact and sustainable investing to their personal portfolios. The COVID crash hasn’t shaken her strategies, Bafford told ImpactAlpha. “I’m even more grateful that I’m exposed to good companies with strong management and governance practices.” More from the journey:
- Impact goals. Bafford uses a matrix that combines efforts from Impact Management Project and BlackRock to match impact goals like “act to avoid harm,” “benefit stakeholders” and “contribute to solutions” with specific asset classes, like cash, equities and fixed income. Bafford transferred her checking and savings accounts to City First Bank, her local community development financial institution. “I love that my money is kept safe and active in our local community through investments in affordable housing and critical community infrastructure,” she says.
- Public and private. Alongside a few sustainable ETFs, Bafford owns Apple (for revolutionizing access to information), Starbucks (workforce benefits), CVS (no longer sells tobacco products), and Hannon Armstrong (sustainable energy). Commitments to a broader set of stakeholders, she says, “tend to be a driver of long-term alpha.” A few angel investments increase Bafford’s “exposure to companies that are more actively contributing to solutions and provides diversification outside of the stock market.”
- Fixed-income impact. Bafford holds Apple’s green bond, three municipal bonds, and the Community Investment Note issued by her employer, Calvert Impact Capital. Similar notes (which Bafford doesn’t yet own) are available from Capital Impact Partners, Reinvestment Fund, LISC and other large community development institutions.
Keep reading, “Making my money work for my kids and their future,” by Beth Bafford of Calvert Impact Capital on ImpactAlpha.
Agents of Impact: Follow the Talent
BlueOrchard’s head of investment solutions Philipp Müller takes over as CEO from Patrick Scheurle on April 1. Maria Teresa Zappia becomes deputy CEO and Daniel Perroud joins the executive management team… Taren Stinebrickner-Kauffman, founder of SumOfUs, becomes president of New Media Ventures… responsAbility Renewable Energy Holding seeks a managing director in Nairobi… Building Markets is hiring a senior director of finance in New York.
i(x) investments’ Trevor Neilson is hosting a video conference for social impact entrepreneurs affected by the coronavirus crisis today at 1pm ET / 10am PT. Also joining: Sarah Bloom Raskin, former deputy treasury secretary of the U.S. Department of the Treasury… Community Credit Lab is hosting a webinar today at 9pm ET / 6pm PT on how to use affordable credit as a tool to support underserved communities during COVID.
Thank you for reading.
–Mar. 23, 2020