Greetings, ImpactAlpha readers!
Ring out the old, ring in the new. We kicked off the week with a few lines from Tennyson’s “Ring out, wild bells.” We’ll close out the year with another verse, below (here’s the rest). But we couldn’t ring out the year without one more Agents of Impact conference call; yesterday’s was stellar. Big thanks to the many agents who participated in the call, and especially our Special Agents: Impact America Fund’s Kesha Cash talked about the impact alpha in inclusive prosperity. Enterprise Community Partners’ Rachel Reilly laid out the Opportunity Zone opportunity. Bank of America’s Jackie VanderBrug said gender alpha is for real. Stanford’s Alicia Seiger has high hopes, paradoxically, for climate risk. And Caprock Group’s Matthew Weatherley-White felt a shift in the energy, and perhaps the capital, this year. We’ll have a full report, and an audio replay, when we come back on Monday, January 7.
The theme of the call, the week and indeed, the year, is “impact alpha.” To be clear, the dividends from such outperformance can be realized in social impact as well as in financial returns; strategic players who make higher-risk, longer-term or lower-return investments are critical drivers of system-change. But the welcome focus on the drivers of alpha in impact signals a more assertive stance and increased confidence that social impact may indeed survive the growing popularity of impact investing. Our regular roundtable of Brian Walsh and Imogen Rose-Smith, along with your hardworking editor, took up Tideline’s recent “The Alpha in Impact” report in, “Can impact be a driver, not a drag, on returns?” our final podcast of the year. (Check out the rundown of the year’s Top 10 Returns on Investment podcasts, below).
The Impact Alpha is also the name of my column, in which I dispensed more than 25 straight weeks of deadline wisdom before sputtering out. Careful readers will be familiar with what resonated for me, from a minister’s call for moral as well as economic revival to the young people who aren’t waiting for permission to lead the reGeneration. If big winners want to be changemakers, I say, hold them to it. I trust nobody will be terribly surprised by my hope that the 2030 goals can light a path to the post-Trump era. (“Connecting the dots and charting the narrative, every week” rounded up the first-half columns.)
ImpactAlpha, of course, also refers to our growing media platform. As you well know, we are on a quest to prove out a viable business model in a challenging media environment. Thank you, thank you, thank you to all the subscribers who jumped in as we took the plunge into paid subscriptions. We know it requires, uh, behavior change to pay for content. We hope you take some pride of ownership in lmpactAlpha’s success so far. If you want, as we do, for ImpactAlpha to do even more and better next year, please consider paying it forward and give the gift of impact – in the form of ImpactAlpha subscriptions – to your friends, family, team and partners (our subscriber-only gift rates starts as low as $219 – 45% off). If you want to know more about the business, have a listen to our podcast on ImpactAlpha itself, check out the short documentary series about the first cohort of The Information Accelerator, featuring ImpactAlpha, or drop me a note at [email protected].
Big thanks to all our contributors, partners, sponsors and supporters, and especially to the small but mighty ImpactAlpha team. And deep thanks to all of you, Agents of Impact, who are working so hard, as Tennyson says, to…
Ring out false pride in place and blood,
The civic slander and the spite;
Ring in the love of truth and right,
Ring in the common love of good.
Best of ImpactAlpha
The Big Five ImpactAlpha originals. Bigger names, bigger money, bigger news. The $100 billion (trillion?) Opportunity Zone story and billion-dollar impact funds from the private equity giants grabbed the most eyeballs this year. The five most-read stories of the year:
- “Early movers are getting a jump on opportunity zones – and the future of community investing.” A tweak to the tax code set off a race between rival approaches to investing in some of America’s poorest neighborhoods. Read.
- “Rise Fund’s Impact Multiple of Money: A conversation with TPG Growth’s Bill McGlashan.” Demonstrating how to “underwrite positive externalities,” McGlashan says, may be the Rise Fund’s biggest impact. Read.
- “TPG Growth’s Rise Fund touts ‘impact’ in bid for Abraaj health fund.” Whether and how a new fund manager will carry out the fund’s ambitious impact strategy is key to the future of the Sustainable Development Goals. Read.
- “Real estate funds move into opportunity zones, raising concerns about displacement.” A flood of real estate investing could drive negative impacts, including rising housing costs and the displacement of local residents and businesses. Read.
- “What we know about KKR’s $1 billion Global Impact Fund.” The arrival to impact investing of private equity players means larger raises, bigger tickets, and a broader range of possible exits. Read.
Convening the conversations
ImpactAlpha has become the watering hole where impact investors hash it out, stakeholders stake their claims and thought leaders seek to lead. Co-produced series with Living Cities, Village Capital, Acumen, and the Global Impact Investment Network, along with ImpactAlpha’s own Impact Voices, charted the development of a market.
What’s Next, co-produced with the Global Impact Investing Network, tackled impact investing’s search for identity. In the kick-off post, the GIIN’s Amit Bouri called on impact investors to make their impact intentions known, hold themselves accountable and collaborate and co-invest with others. Among the responses:
- Marisa Drew of Credit Suisse: Define the challenge;
- Tim Macready of Australian superannuation fund Christian Super: Set firm goals;
- Marilou van Golstein Brouwers of Triodos Investment Management: Establish a theory of change);
- Matt Onek of Mission Investors Exchange: Be accountable to impact;
- Chris Jurgens and McKenzie Smith of Omidyar Network: Segment the market; and
- Tony Burdon of DFID: All hands on deck.
- Enjoy the full series.
Measure Better, co-produced with Acumen, sought to put customers at the center of impact measurement. In the series opener, Sasha Dichter and Tom Adams say Acumen’s “Lean Data” methodology gives voice even to customers in remote locations. We spoke to practitioners and thought leaders:
- Alnoor Ebrahim of Fletcher School at Tufts University: Use data to course correct.
- Jed Emerson: Customer’s voice improves data quality.
- Jessica Kiessel of Omidyar Network: Customer data simplifies complexity.
- Chiara Kovarik and Laura Birx of the Gates Foundation: Evaluation can be fast and innovative.
- Martina Castro and Sara Taylor at CDC Group: Deep impact data delivers business value.
- Clara Barby, who leads the Impact Management Project: Customer data mitigates risks.
- Scan the full series.
NEW: Three community feedback tools for impact investors. Too many impact investors park customer insight at the door for projects in poor communities. Oxford Saïd’s Gayle Peterson says understanding what consumers really want is critical for breakthrough products and services for any demographic. Read “Three community feedback tools for impact investors” by Gayle Peterson, in Stanford Social Innovation Review’s series on the power of feedback.
Investing in Racial Equity, co-produced with Living Cities, shared insights about the deployment of capital to close racial wealth gaps and create opportunities in America’s cities.
- Apply a racial lens, and other lessons from Living Cities’ impact investments.
- Adapt to changing needs, and other lessons from Living Cities’ Pay for Success investments.
- Ask the right questions to guide investments in closing racial wealth gaps.
- Check out the full series.
New Revivalists, an ImpactAlpha series co-produced with Village Capital, profiled two-dozen people, places and policies reviving entrepreneurship — and the American Dream. A sampling:
- Daryn Dodson is helping investors’ tackle biases to unlock hidden value.
- Carmen Rojas is building a 21st-century economy that works for working people.
- Bryce Butler is quarterbacking capital into Louisville’s neighborhood economies.
- Margaret Bradley is turning Philadelphia institutions into impact investors.
- Bryce Roberts and Tim O’Reilly help startups raise revenues, not rounds.
- Andrea Chen is helping local entrepreneurs rise with New Orleans’ revival.
Impact Voices. Learn from doers is the motto of ImpactAlpha’s ongoing Impact Voices series. Practitioners and experts tuned the ImpactAlpha community into key issues, trends and practices with more than 50 op-eds and other contributions in 2018. The five most-read:
- “Foundations collaborate on catalytic financing to accelerate climate action,” by Packard Foundation’s Susan Phinney Silver and MacArthur Foundation’s Debra Schwartz. Read.
- “What applications from 141 fund managers show about emerging opportunity zones activities,” by Kresge Foundation’s Rip Rapson. Read.
- “What’s Next: Building a trusted identity for the impact investing movement,” by the Global Impact Investing Network’s Amit Bouri. Read.
- “The undervalued social impact of community banks in local economies,” by The Banc Funds Company’s Charles Moore. Read.
- “Why impact data and transparency are keys to the success of opportunity zones,” by U.S. Impact Investing Alliance’s Fran Seegull. Read.
Featured Agents of Impact
Each week, ImpactAlpha highlights Agents of Impact who are making things happen, have something to say and other Agents should know about. We’ve featured investors like Kesha Cash, who is finding value in startups servicing underrepresented and underestimated communities; activists like Victoria Barrett, who with 20 other teenagers is suing the federal government to adopt a climate recovery plan for the next generation; and entrepreneurs and executives like Paul Polman, the outgoing CEO of Unilever who demonstrated that sustainable practices can drive financial value as well.
You heard it here first
The Returns on Investment podcast crew is closing in on its 75th episode. The regular roundtable – resident curmudgeon Imogen Rose-Smith, designated blue-sky optimist David Bank and host Brian Walsh – and special guests knocked down two-dozen episodes on all things impact investing. We highlighted the top five podcasts of the first half of 2018 last summer. For the countdown to the New Year, here are the top five episodes from second half.
- “Beware cures for ‘impact-washing’ that may be worse than the disease.” Creating barriers to entry to impact investing and setting up some people or organizations as gatekeepers could be more harmful than any damage from a few bad actors. (listen)
- “Institutional Shift: Impact investing on the hot seat at global pension funds.” ImpactAlpha’s David Bank and Equilibrium Capital’s Dave Chen take stock of pension funds and other large institutional investors. (listen)
- “Getting to Yes: Would-be impact investors start to run out of excuses.” What will it take for investors to make the big bets on a better future? (listen)
- “Global energy access is an impact investment even curmudgeons can love.” Lower-than-expected risk. Higher-than-expected impact. (listen)
- “The Conduit: Doing good while dating and drinking well.” It’s easy to mock high-minded talk of ending poverty that takes place over a Michelin-starred meal. Embrace the irony. (listen)
>>Give the gift of impact. Give ImpactAlpha to partners still skeptical about the return on impact; to classmates and colleagues who need to get up to speed; to your parents, so they’ll know what exactly it is you do – and why. Our subscriber-only gift rate starts as low as $219 each – 45% off our regular annual price. Give the gift of impact.
And that’s a wrap for 2018. Here’s to a happy, healthy holiday and high-impact new year. We’ll see you back here Monday, January 7.
— December 21, 2018.