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The Brief: The Call: 10x community capital, innovative CDFIs, Dutch impact fund of funds, Africa’s cold chain, COVID bridge-financing, flood of climate-risk warnings



Greetings, Agents of Impact!

Hop on The Call. Today’s Agents of Impact Call No. 17 will explore ways to increase by 10x or more the recovery capital for small businesses and nonprofits, especially in underserved communities. Calvert Impact Capital’s Beth Bafford, Community Reinvestment Fund’s Patrick Davis and Trufund’s James Bason will detail one such “community recovery vehicle” (see below). Explore strategies for a more inclusive recovery with Bruce Katz of the Nowak Metro Finance Lab at Drexel University, CNote’s Cat Berman, Southern Bancorp’s Darrin Williams, MacArthur Foundation’s Debra Schwartz and Impact Investing Alliance’s Fran Seegull, today at 10am PT / 1pm ET / 6pm London. Zoom right in.

  • Keep the conversation going. Share your thoughts before, during or after today’s call on ImpactAlpha’s #community-capital Slack channel. Not yet on Slack? Sign up and click “channel browser” in the left column.

Featured: ImpactAlpha Original

Innovative CDFIs scale up to help underserved communities move from relief to recovery. Community development financial institutions are an overnight sensation 30 years in the making. As the depth of the COVID crisis becomes clear, CDFIs are “having a moment” as a financial lifeline for small businesses and nonprofits in low-income, rural and minority communities. But if the crisis has shown the importance of CDFIs, it has also exposed their fragility. Many – like their borrowers – are strapped for capital, even as they demonstrate the strong financial performance, and social impact, of their lending and business support. Many CDFIs were heroic in mobilizing quickly to process Paycheck Protection Program loans for thousands of small businesses outside traditional banking channels. The network of community banks, credit unions and other CDFIs, built over decades, will be even more crucial in providing financing as many of those businesses seek to revamp their businesses in order to re-open and recover.

ImpactAlpha’s Agents of Impact Call No. 17 will explore new financial structures to make that possible. A “Community Recovery Vehicle” under development by Minneapolis-based Community Reinvestment Fund and Calvert Impact Capital in Bethesda, Md., both CDFIs themselves, would provide a common pool to buy loans from local CDFIs to increase their liquidity and expand their ability to make new loans. “CDFIs are extremely important pipes, but very tiny pipes,” Calvert Impact Capital’s Beth Bafford told ImpactAlpha. “How do you most effectively activate these pipes? How do you create infrastructure that plays to everyone’s strengths?” Accion Chicago and Community Reinvestment Fund pilot-tested a $100 million recovery product in Chicago in March and are looking to scale up a $1 billion national COVID-19 impact fund and platform.

Dealflow: Follow the Money

Wire Group raises €25 million for Netherlands-based impact fund of funds. The impact advisor launched its first fund last year after 10 years helping European family offices develop impact investing strategies and doing individual deals (see, Wire Group’s new impact fund-of-funds offers global footprint for Dutch family offices). Wire Group’s fund is looking to raise €60 million to invest in other impact funds.

  • Needed impact. The company says COVID has spotlighted the need to amplify impact investing. “Ecosystems all over the world are under extreme pressure,” said Wire Group’s Ronald Janse. “Investing in the well-being of people and nature is not a luxury, but a necessity. Being solely financially driven is no longer appropriate to the present time.”
  • Check it out.

InspiraFarms raises Series B round for off-grid food refrigeration. The U.K.-based company makes solar-powered cold rooms to help farmers in East and Southern Africa with unreliable access to electricity prevent food spoilage. Clean-energy focused venture investor KawiSafi Ventures and Untapped joined repeat investors Energy Access Ventures and PYMWYMIC in the round.

REDF and Open Road Alliance commit $1 million for U.S. COVID bridge financing. REDF Impact Investing Fund, a debt investor for social enterprises, is Open Road Alliance’s first U.S. partner for providing relief funding for businesses affected by the pandemic. The organizations expect to provide five to 10 loans of $100,000 to $250,000.

Signals: Ahead of the Curve

Realizing the risks of ignoring shareholder climate resolution. Massive flooding in Michigan threatened to release chemicals from a Dow complex in Midland, where Saran Wrap, Agent Orange and other products have been produced for years, and an adjacent Superfund site. It’s the kind of nightmare scenario that imperils public health as well as corporate value. Investor groups have been sounding the alarm as global warming increases the frequency of severe weather events. “This should be a warning sign,” says As You Sow’s Lila Holzman.

  • Risk reporting. The group last year filed a resolution asking Dow (then DowDuPont) to report public health risks of “expanding their petrochemical operations in areas increasingly prone to climate change-induced storms, flooding, and sea level rise.” The vote didn’t garner much support, but the unfolding crisis could elevate the issue at Chevron and Exxon, which face similar resolutions at their annual shareholder meetings next week. More than half of shareholders voted in favor of flood-risk reporting at Phillips 66 in early May.
  • Chemical risk. During Hurricane Harvey, oil refineries and chemical plants released roughly two million pounds of hazardous pollutants. Almost 40 new petrochemical projects are now underway, most in the flood-prone Gulf region, according to the Environmental Integrity Project, as oil and gas companies look to petrochemicals to prop up demand for oil and gas. Exxon alone is spending $20 billion on chemical and other expansion projects as part of its “Growing the Gulf” initiative.
  • Fossil fuel funding. As You Sow chalked up a symbolic win on Tuesday when half of JPMorgan Chase shareholders supported its resolution asking the bank, the world’s biggest fossil fuel financier, to disclose how it will reduce the climate impact of its lending. Former Exxon chief and longtime Chase director Lee Raymond was re-elected to the bank’s board despite a concerted investor effort to oust him.
  • BlackRock in the hot seat. At its general meeting today, shareholders will weigh in on some high-profile proposals. As You Sow is asking BlackRock to detail how it plans to implement the Business Roundtable’s statement of corporate purpose, which envisions a stakeholder economy. Another wants the $7 trillion asset manager to explain its climate-related proxy voting record. Despite BlackRock’s Larry Fink’s pronouncements on climate risk, the company backed just six of 52 such resolutions last year, according to the Interfaith Center on Corporate Responsibility.
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Agents of Impact: Follow the Talent

Lucas Turner-Owens will transition from his role managing the Boston Ujima Fund to pursue a Master’s degree (see, Boston Ujima Project is rebalancing risk, returns and power in local impact investing)… Citi launched a sustainable finance group to work across its global banking, capital markets and advisory groups… The Environmental Integrity Project is recruiting law clerks to support its environmental protection work… Integrated Capital Investing’s Jen Astone is hosting “13 Strategies for Action” for foundation program officers, trustees, donors, and investors May 27.

Thank you for reading.

–May 21, 2020

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