The Brief | February 25, 2021

The Brief: Surdna’s Don Chen, Indonesia’s women entrepreneurs, social ETF, PRI’s voting record, repricing climate risk, syncing impact management

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Greetings, Agents of Impact! 

Featured: Agents of Impact Podcast

Surdna Foundation’s Don Chen on mobilizing resources and redefining risk. Philanthropic foundations tend to be cautious and slow-moving beasts. One signal of the urgency of the current moment: the billion-dollar Surdna Foundation has boosted its grantmaking budget by about one-third for the next three years. “I went to the board, and we talked about increasing our spending, which Surdna Foundation had never done previously beyond the 5% requirement,” Surdna’s Don Chen says on ImpactAlpha’s Agents of Impact podcast. “We’re able to free up a lot more resources to our grantees and make sure they can weather these various storms.” Chen was referring to the tax-law requirement that foundations distribute a minimum of 5% of their assets each year; most foundations stick close to that minimum.

Chen, who has led New York-based Surdna since 2018, is also taking leadership in mobilizing even larger pools of capital. With Ford Foundation’s Darren Walker, he leads a council of foundation presidents who are starting to invest some of the other 95% of philanthropic assets – the endowments – toward the social missions the foundations seek to champion. Surdna has carved out $100 million for impact investments. The foundation was an early investor, for example, in Kesha Cash’s Impact America Fund. Other small foundations, including the Heron and Nathan Cummings foundations, are also moving their endowments toward “mission,” but few of the biggest foundations have followed suit. “The progress may seem to be rather slow in some areas,” Chen acknowledges. Even in total, philanthropic revenues are tiny in relation to government resources. As important, he says “is to really think about how government can use its resources and leverage additional investors and additional capital to the challenges that are facing all of us.”

Read on and listen to “Surdna Foundation’s Don Chen on mobilizing resources and redefining risk,” with ImpactAlpha’s David Bank.

Dealflow: Follow the Money

Lendable backs Amartha to finance Indonesia’s women-led businesses. The Jakarta-based lending platform supports unbanked women micro-entrepreneurs in Indonesia’s rural areas. It secured $10 million in credit from Nairobi-based Lendable, which lends to inclusive fintech companies in emerging markets. Amartha, which has backed more than 600,000 women entrepreneurs, could eventually tap up to $50 million through the facility. 

  • Fintech evolution. Amartha started as a traditional microfinance institution 11 years ago before evolving to a peer-to-peer model. In Africa, Lendable provided early capital to organizations like Tugende, a motorcycle finance company in Uganda. By prioritizing organizations that disproportionately serve women, Lendable has made itself eligible for funding under the 2X Challenge among global development finance institutions (see, “With billions as bait, development financiers seek to hook private investors on gender-lens investing”). Lendable is backed by Omidyar Network, Acumen’s KawiSafi Ventures and Ceniarth
  • Dig in

Humankind Investments launches ‘social’ ETF. The new exchange traded fund focuses on the “S” of environmental, social and governance, or ESG, investing (see, “Goldman Sachs sees rise of the “S” in ESG investing). The Humankind US Stock ETF (HKND on the NYSE Arca exchange) includes equites from the $100 million asset manager’s own list of the top 1,000 U.S. companies “that promote healthier, safer, more equitable and longer lives.” Check it out

Dealflow overflow. Other investment news crossing our desks:

  • Malta raises $50 million for thermal energy storage. The company spun out of Alphabet’s Moonshot Factory in 2018. Its Series B round is backed by Breakthrough Energy Ventures, Swiss energy firm Proman, and Facebook co-founder Dustin Moskovitz.
  • Fintech venture EarnUp secures $25 million to support struggling homeowners. EarnUp notifies mortgage lenders of at-risk loans to help homeowners get forbearance or refinancing. Acumen channeled COVID relief funding through EarnUp’s “GetAhead” program. EarnUp’s Series B round, which is backed by Bain Capital Ventures, will support the program’s expansion. 
  • Patch raises $4.5 million to channel carbon-offset financing. The company helps businesses calculate their carbon footprints and offers investable projects to offset emissions. Projects includes U.S.-based Charm Industrial, which produces hydrogen from biomass, and Switzerland-based Climeworks, which makes on-site carbon capture tech (see, “Microsoft emerges as a major customer for captured carbon). Andreessen Horowitz led the round. 
  • Render Capital invests $250,000 in mobile dentistry service Kare Mobile. The $15 million regional fund from Access Ventures backed the Louisville, Ky.-based remote dentistry service for underserved communities. Kare Mobile secured funding from Lightship Capital in October. 
  • VC Include selects a cohort of diverse, impact-focused fund managers. The 15 fund managers (who were not named) will participate in a nine-month fellowship designed to accelerate their fundraising and build out their teams. Visa Foundation, UBS, Blue Haven Initiative and the MacArthur Foundation are backing the fellowships.

Signals: Ahead of the Curve

PRI signatories are not walking the talk. The U.N.-backed Principles for Responsible Investment prioritize environmental, social and governance, or ESG, investing. Many PRI signatories, including BlackRock, Vanguard and State Street, however, vote in favor of ESG proposals less often than non-signatories to the principles, according to a Robeco analysis of more than 20 million proxy votes. One recommendation: PRI can encourage signatories to develop joint shareholder engagement policies and agendas.

Short takes. Other research and data points crossing our desks:

  • Countering climate change. The fight to stave off catastrophic global warming over the next decade depends on international cohesion and climate tech innovation, which can also boost global GDP, according to a new report from Kearney. The difference between the best and worst case scenarios: 10.6 billion tons of carbon and $29 trillion in GDP.
  • Repricing climate risk. Mispriced climate risk presents “an opportunity for active alpha generation,” says PGIM in “Weathering Climate Change: Opportunities and Risks in an Altered Investment Landscape.” Only 60% of global chief investment officers surveyed incorporate climate into their investment process. Look out for a gradual or even sudden repricing of assets across equities, debt, and physical assets. “Investors will need to be prepared,” concludes PGIM’s Taimur Hyat
  • Impact management. The Global Reporting Initiative and B Lab are helping companies connect their approaches to impact reporting and assessment tools. The organizations teamed up to publish “Complementary Use and Linkage of the GRI Standards and B Lab’s B Impact Assessment.”

Agents of Impact: Follow the Talent

Greg Wasserman, ex- of Generation Investment Management, and Sean Petersen, ex- of AI Fund, join Wellington Management as climate-focused senior investors… Biju Mohandas, previously with International Finance Corp., joins LeapFrog Investments as a partner and global co-lead for healthcare… Graham Day steps down as chief financial officer of to join Spring Activator as investment director… BlackRock is hiring a director of its impact opportunities fund in New York… Prime Coalition is recruiting a director of impact in Cambridge, Mass.

Thank you for your impact.

– Feb. 25, 2021