Greetings, Agents of Impact!
Podcast: Returns on Investment
Visa Foundation’s Graham Macmillan doubles down on small and micro businesses – run by women (podcast). A parade of philanthropic foundations will report this week on their journeys toward aligning their assets with their missions, as the biennial Mission Investors Exchange gets underway online. ImpactAlpha will check in on the Nathan Cummings Foundation, the Rockefeller Brothers Fund, Heron Foundation and others that have been working for years to point more of their endowment assets, in addition to grants, toward social impact. As a new foundation without a legacy approach to unwind, the Visa Foundation has moved quickly to deploy all the tools in its toolbox. “It was clear to me that in the 21st century, for a corporate foundation with $400 million in assets to not consider how to optimize those assets, to utilize those assets fully, would be a lost opportunity,” Visa’s Graham Macmillan says in an interview for ImpactAlpha’s Returns on Investment podcast. (Disclosure: The Visa Foundation is a sponsor of ImpactAlpha’s ‘Capital on the Frontier‘ series.)
Macmillan arrived last June with a mandate to expand the foundation’s small and micro-enterprise strategy, with a focus on women. Such businesses account for more than 90% of businesses worldwide and more than half of global employment – and suffer from a $300 billion annual deficit in credit and financing. Then COVID hit. “The strategy we had thought of made a lot of sense,” Macmillan says. “If we put women at the center of the recovery, the recovery will be more durable and inclusive.” Last month, Visa Foundation committed to invest $140 million over five years with fund managers and other intermediaries generating positive social and financial returns for small and micro businesses, on top of $60 million in grants to non-governmental organizations, and $10 million for immediate COVID relief efforts. Small businesses, he said, “need viable institutions that will be there to support them when they get up, when they raise their hands and say, ‘I’m ready to go.’”
Read on and listen in, to, “Visa Foundation’s Graham Macmillan doubles down on small and micro businesses – run by women,” by David Bank on ImpactAlpha. Catch up on all of ImpactAlpha’s podcasts, including our weekly Impact Briefing.
- “Amplifying Impact.” The opening plenary of Mission Investors Exchange’s conference features two medical doctors who also are foundation presidents, Dr. Rajiv Shah of the Rockefeller Foundation and Dr. Robert Ross of the California Endowment, along with Ford Foundation’s Darren Walker, California Wellness Foundation’s Judy Belk and Social Finance’s Tracy Palandjian. Former Georgia gubernatorial candidate Stacey Abrams joins the conference later Monday (here’s the full schedule).
- Have your say. MIE and the Sorenson Impact Center are gathering insights into the effect of COVID-19 on impact investing. Take the five-minute survey.
Dealflow: Follow the Money
Responsible investing robo-advisor Motif shuts down, and Folio and Charles Schawb divvy it up. Motif Investing was early to offer impact investing solutions for everyday investors, allowing individuals with as little as $300 to invest to build stock portfolios around social and environmental themes. It soon offered its robo-investing platform to financial advisors, too. The company is shutting down after 10 years in business and transferring its retail accounts to Folio Investments. Motif’s technology and team will be acquired by Charles Schwab, helping the brokerage compete with the likes of Fidelity, which recently invested in impact investing platform Ethic.
- Promising start. Motif reportedly managed about $850 million in assets. It had raised more than $125 million in venture capital, securing backing from Ignition Partners, JPMorgan Chase, Goldman Sachs’ growth-stage venture fund GS Growth, Norwest Venture Partners and others. Former SEC Chairman Arthur Levitt and Ellevest’s Sallie Krawcheck sat on the board. Just last year, Motif partnered with Goldman on customized exchange-traded funds.
- Tough going. Everyday investors, underserved by the impact investing sector, seemed like a promising market demographic for impact-focused robo-advisors. But Motif and its peers struggled to attract customers. Last year, Swell shuttered and OpenInvest pivoted its strategy to focus on financial advisors rather than retail customers (see, “Retail platforms for sustainable investing struggle to differentiate themselves – and to attract customers”).
- Read on.
Strella Biotechnology raises $3.3 million to fight food waste. The female-led, Philadelphia-based startup uses sensors to detect ripeness and predict shelf-life for packaged fruits. Strella’s seed round was backed by the venture arm of Yamaha Motors, Catapult Ventures, billionaire Mark Cuban, Red & Blue Ventures and Union Labs.
Technology Credit Union commits $1 billion in home solar investments. The San Jose, Calif.-based credit union is partnering with residential solar lender SunPower to finance homeowners’ switch to solar power.
Australia’s Investing in Women initiative launches COVID relief fund. The Responsive Interventions Supporting Entrepreneurs, or RISE Fund—not to be confused with TPG Growth’s impact-focused RISE Funds—will provide short-term emergency relief funding and longer-term, post-pandemic recovery financing to women-run businesses in Asia.
Series: Walking the Talk
Brent Kessel: Expanding what’s possible with money. The founder and CEO of Abacus Wealth Partners was born and raised in apartheid South Africa, well aware of the country’s inequities. After Kessel immigrated to the U.S., he founded Abacus to help families maximize the positive impact of their resources. He estimates 96% of his family’s own wealth is invested sustainably. “Since I believe in walking my talk, the same investments that our clients own can also be found in my family’s accounts,” Kessel writes in the latest installment in ImpactAlpha’s Walking the Talk series, which features investors who are bringing impact and sustainable investing strategies to their own portfolios (see also, “Matthew Weatherley-White” and “Beth Bafford”). Kessel and his wife Britta, along with their two sons, are focused on climate change, animal welfare, women’s rights, financial empowerment and poverty alleviation. The family’s largest asset is its equity stake in Abacus; Kessel has been selling off small portions to help rising stars in the firm have more opportunity. A glimpse at the rest:
- Direct and indirect private equity. Kessel credits the founding partners of Unitus Equity Fund and Elevar Equity, in whose funds he’s invested, for deepening his involvement in impact investing. Kessel’s highest-risk, highest-impact investments are direct investments in Warc, a regenerative agriculture services company in Sierra Leone and Ghana; Kenyan sanitation company Sanergy; and Katerra, a construction company that reduces time and waste in homebuilding. For diversification: Investments in North Sky Infrastructure Investment Fund, Generation Sustainable Solutions, Better Ventures and other private equity funds.
- Real estate. Kessel targets workforce housing at affordable rents for low-income families with investments in Turner Multifamily Impact Fund and Rose Affordable Housing Preservation Fund. He’s also invested in Vert Global Sustainable Real Estate, a relatively new mutual fund of real estate investment trusts with strong environmental and social benefits.
- Public equities and bonds. The Kessel family tries to own “a highly diversified, index-like basket, but to exclude ‘bad’ companies, own a lot more of ‘good’ companies, and make our voices heard by management when possible.” Managers include Aperio, TIAA-CREF, Calvert, Dimensional, Versus and NuShares. His bond holdings target education, affordable housing, mass transit, water and sanitation.
- Keep reading, “Expanding what’s possible with money,” by Brent Kessel on ImpactAlpha (thanks to Confluence Philanthropy for sharing Kessel’s post).
Agents of Impact: Follow the Talent
Erika Williams, ex- of BJC Healthcare, joins Advantage Capital as vice president of talent… Big Society Capital is on the hunt for a new chief executive officer in London… US SIF Foundation has opened its 2020 survey on U.S. sustainable and impact investing trends. Asset managers and asset owners can participate by contacting email@example.com with the subject line, “Count me” (Bonus: US SIF Foundation will share the report with respondents in November).
Online this week:
- Tuesday, May 12: The Global Impact Tech Alliance is holding an “Impact VC Ecosystem Post-COVID” webinar… The Global Impact Investing Network and The Predistribution Initiative will explore investor responses to COVID-19.
- Wednesday, May 13 and Thursday May 14: ImpactPHL and 17 Asset Management co-host “Philadelphia Heroes and New Normal Forum” (ImpactAlpha’s Dennis Price moderates “Neighborhood Essentials,” with Philadelphia city planner Anne Fadullon, council member Derek Green and the Economy League’s Jeff Hornstein).
- Thursday, May 14: ClearlySo, Octopus Investments and Paul Hastings are teaming up on an impact investment funds webinar series… Impact Entrepreneur hosts a discussion about artificial intelligence for impact.
Thank you for reading.
–May 11, 2020