Greetings, Agents of Impact!
Zoom right in: Public policy. Private capital. Public good. Rules for the next stage of capitalism are being written into regulations in real-time. On today’s Call, the U.S. Impact Investing Alliance reports from Washington, D.C. to rally Agents of Impact around an ambitious policy agenda. The Alliance sponsors ImpactAlpha’s Policy Corner.
- Supply-side growth. Impact investors are seizing on the strong demand for affordable housing, quality jobs, healthy food and all decarbonized things to drive the supply of needed goods and services. Congress is reconciling supply-side growth policies in the U.S. Innovation and Competition and COMPETES acts.
- Materiality and externalities. The Securities and Exchange Commission is readying new rules for corporate ESG and climate disclosure. How far will they go? At stake: whether companies will have to report all of their climate impacts, including so-called “Scope 3” emissions, or only climate risks that directly affect their bottom lines. Former SEC advisor Satyam Khanna will sketch the next steps.
- Human capital. Institutional asset owners are demanding corporations account for how they invest in their workforces. “As investors, we view human capital as a production input and an asset that really should be invested in and maximized, versus a cost to be minimized,” Cambria Allen Ratzlaff of the Human Capital Management Coalition says on the latest Impact Briefing podcast. SEC rules are due in October.
- Call to action. “Backlash and legal challenges from those with a vested interest in maintaining the status quo are almost certain to follow the SEC’s actions,” says Fran Seegull of the U.S. Impact Investing Alliance. She calls for coordinated messaging that “corporate ESG disclosures will help protect investors by improving their access to clear, comparable and decision-useful information.”
- Zoom right in. Join Seegull, Khanna, Allen Ratzlaff and other Agents of Impact on today’s Call at 10am PT / 1pm ET. Zoom right in (no RSVP required).
Featured: Innovative Finance
From Elon Musk and crypto cashouts, more capital flows in than flows out of donor-advised funds. One account may have gotten Elon Musk’s $5.7 billion gift of Tesla stock. Other accounts have received hundreds of millions of dollars from the Bitcoin bros. Donor-advised funds were key beneficiaries of last year’s soaring value of stock and crypto currencies, as owners of those assets sought to offset their tax bills with charitable donations. DAFs, as they are known, are tax-advantaged vehicles for managing charitable giving. Fidelity Charitable, the largest manager of such funds, took in $330 million in crypto donations last year, a twelve-fold increase from 2020. All told, some $160 billion is held in more than one million DAF accounts. The rub: Donors get an immediate tax write-off, but need not actually give the money away. Such warehousing of DAF capital diverts funds that could feed the hungry, promote literacy, address racial inequality or, in some cases, invest in high-impact ventures. And individual holders of DAFs are not required to report their activities, so we may never know to which groups Elon Musk or the crypto whales eventually give, assuming they do. “Donor-advised funds have taken on an oversized and distorting role in charitable giving,” philanthropy consultant Alan Cantor tells ImpactAlpha.
The bipartisan Accelerating Charitable Efforts, or ACE, Act would require that DAF funds be distributed within 15 years to qualify for an up-front tax break. Another option would allow for 50-year DAFs, with no tax deduction until the funds are given to charities. Of course, donors need not wait for tougher rules to step up their giving. Last year, HalfMyDAF signed up more than 100 donors who committed to distribute half of their DAF funds by year-end. San Francisco-based Possibility Labs requires at least 10% of DAF capital to be disbursed each year, as part of a strategy to shift wealth and power to communities of color. Kataly Foundation anchored Possibility Labs’ new cohort of donors with a $20 million commitment. Possibility Labs is “fundamentally restructuring an outdated philanthropic tool that was ripe for innovation,” says Kataly’s Nwamaka Agbo, and it’s creating an ecosystem “where advisors of color and Black and Brown community leaders can partner on integrated capital strategies for racial justice.”
- Keep reading, “From Elon Musk and crypto cashouts, more capital flows in than flows out of donor-advised funds,” by Amy Cortese on ImpactAlpha.
Dealflow: Battery Tech
Antora Energy raises $50 million for zero-carbon batteries for heavy industry. Nearly 30% of U.S. greenhouse gas emissions come from industry. Sunnyvale, Calif.-based Antora launched in 2018 to decarbonize heavy industry with renewable energy storage. The company says its thermal battery is more affordable, safe, efficient and durable than other storage technologies. How it works: Antora’s battery soaks up clean energy and stores it as heat; the process can be reversed to provide electricity. “Antora makes heat and electricity from solar panels cheaper than burning gas,” said Chris Sacca of Lowercarbon Capital, which led the Series A round with Breakthrough Energy Ventures. Other investors in the round included Shell Ventures, BHP Ventures, Trust Ventures, Fifty Years VC and Impact Science Ventures.
- Low-carbon transition. The funding will help Antora scale up to small commercial installations, the company’s Andrew Ponec told Climate Tech VC. “Those prototypes are a stepping stone toward building real, larger ethanol or chemical plants.” Ponec says the company is structuring energy purchase agreements, like “heat-as-a-service” or “hot-thermal-oil-as-a-service,” with chemical, biodiesel and ethanol producers, as well as food and beverage companies.
- Heat pumps. Norway-based Heaten last month raised €6 million ($6.8 million) from Azolla Ventures, the successor fund to Prime Impact Fund, Shell Ventures and others to commercialize its high-temperature industrial heat pumps.
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Husk Power Systems scores $4.2 million to scale minigrids in India and Africa. The government-owned India Renewable Energy Development Agency made the debt investment in Husk using a line of credit from German development bank KfW. Husk, based in Bihar, India, and Colorado, got its start in 2008 with biomass-based systems that used rice husks and agricultural waste to power off-grid communities in India and Africa. Plummeting costs for solar technology spurred the company to pivot to hybrid biomass-solar systems (for context, see “FMO backs Husk Power System’s minigrid expansion”). Husk aims to bring about 1,300 grids online in India and Africa by 2025.
- Clean energy. The debt financing will finance 140 minigrids in the states of Uttar Pradesh and Bihar. The new investment “demonstrates the government of India’s vision of making microgrids an integral part of its net-zero goal put forward at COP26,” said Husk’s Manoj Sinha.
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Dealflow overflow. Other investment news crossing our desks:
- Germany’s Hy2gen raises €200 million ($226.4 million) to build facilities for producing green hydrogen fuel for sea and ground transportation, aviation and industrial applications.
- Burnt Island Ventures raises $30 million for a fund that will invest in early-stage startups in wastewater and stormwater management.
- An €80 million ($90.6 million) European impact fund will invest up to €3 million, mainly in companies in France, improving access to health and wellbeing.
- New York-based B Corp. Blueland secures $20 million to make cleaning products using eco-friendly and reusable plastic bottles and containers.
Agents of Impact: Follow the Talent
Champions of global health equity and access are mourning the loss of Paul Farmer, co-founder of Partners in Health, who died at age 62. Farmer worked at the intersection of disease and poverty, from tuberculosis and cholera in Haiti, to HIV/AIDS in Rwanda, to Ebola in West Africa. In the COVID era, Farmer adapted Partners in Health’s people-powered community health model to fight the pandemic in his home state of Massachusetts (see, “Agents of Impact: Paul Farmer and Jim Yong Kim“).
CDC Group, the U.K.’s development finance institution originally known as the Colonial Development Corp., rebrands as British International Investment, and appoints four new managing directors, including Amal-Lee Amin as head of climate; Chris Chijiutomi as head of infrastructure equity in Africa and Pakistan; Yasemin Saltuk Lamy as head of asset allocation and capital solutions; and Abhinav Sinha as head of technology and telecoms.
David Gelles joins the climate desk at The New York Times… Dustin Shay, ex- of Village Capital, joins Sorenson Impact Center to lead the center’s new Impact Labs group… Aeris announces the retirement of founding board member Andrew Cooney of 1112 Capital and appoints Sunwealth Power’s Omar Blayton and Sonja Velez of San Francisco Foundation to its board. The company is recruiting a senior associate, an associate, a CDFI data analyst, and a financial institutions rating analyst… ImpactAlpha is hiring a director of subscription growth.
JPMorgan is hiring a sustainable growth associate in San Francisco… Builders Vision is looking for a vice president of ESG in public markets… The Just Economy Institute is accepting applications for its next cohort of JEI fellows… Value for Women seeks a gender and business expert in South Asia… The Michael and Susan Dell Foundation is recruiting a program director of market-based solutions and a U.S. program officer in Austin… Omidyar Network is looking for associates in Redwood City, Calif. or Washington, D.C.
Thank you for your impact.
– Feb. 22, 2022