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The Week in impact investing: Prototype



TGIF, Agents of Impact! We’re taking a Brief break from our labors for the long U.S. weekend. We’ll be back in your inbox Tuesday, Sept. 8. 

Solution sets. The pandemic rages on. The stimulus has expired. There’s no plan in place. Hey, Agents of Impact love a challenge. As the disruption plays out, the solutions you’ve prototyped are proving invaluable. To get capital out to small businesses and communities facing the COVID crisis’ massive liquidity crunch, New York and California are prototyping “community recovery vehicles” to backstop battle-tested community development financial institutions, or CDFIs (see, “Agent of Impact: Calvert Impact Capital’s Beth Bafford,” below). ImpactAssets, which has prototyped donor-advised funds for impact investing in communities, food security, racial justice and other areas, has seen a 10X jump in such investments this year (No. 5). With the U.S. election fast approaching, impact investors are backing grassroots groups with prototype strategies for protecting voting rights and engaging communities (No. 2). And BlackRock says its prototype public-equities impact fund goes beyond ESG to measurable impact (Eric Rice makes the case; see No. 3). Writ large, impact investing represents a kind of prototype that could prove invaluable as a new economic system emerges. Across asset classes, sectors and geographies, impact investors and entrepreneurs have proven out products and services, models and markets. As legacy investors and policymakers scratch for solutions, they’ll no doubt gain an even greater appreciation for such prototypes.  

– David Bank 

Impact Briefing. On this week’s podcast, host Brian Walsh talks with Amy Cortese about the urgency of small business financing. We hear from Calvert Impact Capital’s Beth Bafford, this week’s Agent of Impact. Plus, the headlines. Tune in – and leave a rating or a review – on Apple, Spotify or wherever you get your podcasts. 

The Week’s Big 6

1. (New) Big Oil is betting its future on plastics. Oops. There’s no “business as usual” for the oil industry after the collapse in demand and prices triggered write-downs, cutbacks and slashed dividends. Big Oil is now pinning its hopes not on renewable energy but on plastics and petrochemicals, according to a report from Carbon Tracker and SYSTEMIQ. It’s not a good look. “The industry is not recognizing the risk” of a growing plastics backlash, author Kingsmill Bond tells ImpactAlpha. The future is not in plastics.

2. Investing in ‘electoral justice.’ The impact of November’s U.S. election arguably dwarfs the impact of all impact investments. In a guest post on ImpactAlpha, Propel Capital’s Sarah Williams calls for using “the social and financial capital we hold as investors to protect our democratic norms in these critical months to come.” There’s a “desire amongst impact investors to elevate voting rights and civic engagement as a priority for racial justice-focused philanthropy,” write Align Impact’s Jenn Kenning, Jesse Simmons and Ishita Shan.

  • New power. Priscilla Chan and Mark Zuckerberg commit $300 million to safe, fair elections. 

3. BlackRock’s case for impact in public equities. “The global need for impact capital is an order of magnitude greater than what could conceivably be provided by the private markets.” In a guest post, Eric Rice makes BlackRock’s case that investments in public equities can drive measurable impact. “A company’s need for capital continues throughout its business lifecycle,” he writes. Impact investors can help companies stay on mission even when markets are skeptical. Hear him out

4. Face-off: Novartis vs Sanofi. The latest installment of Impak Battles, an ImpactAlpha series with impact ratings agency impak, pits Switzerland’s Novartis against France’s Sanofi. Much of the pharmaceutical giants’ work is linked to SDG No. 3: Ensure healthy lives. “Both companies have the potential to become impact leaders if negative impacts are better managed,” says impak. Face-off!

5. 10x’ing impact assets. Clients of San Francisco-based ImpactAssets grew impact investments in communities, food security and racial justice to $170 million in the first six months of 2020—a tenfold increase from the first half of 2019. “Our clients have stepped up with a profound commitment to support critical solutions to the pandemic and provide essential financial support for vulnerable communities, small businesses and impact entrepreneurs,” said ImpactAssets’ Margret Trilli. Learn how.

6. Laggards and few leaders among banks and brands on deforestation. Globally, one football field of rainforest is lost every second. Major brands, banks, forestry and agribusiness corporations are falling short on pledges to end slash and burn practices, according to new research from Rainforest Action Network. Nestle and JBS, the world’s largest processor of fresh beef and pork, at least partially met commitments. Overall, disclosure rates are abysmal. Step it up.

The Week’s Agent of Impact

Beth Bafford, Calvert Impact Capital. Months before the COVID crisis, Bafford told an interviewer what she most liked about structuring deals and syndicating loans: “It’s both thought provoking at a global level, or a macro level, and very tangible in terms of getting things done and seeing money moving into communities that otherwise wouldn’t have access.” In the shutdown, she has worked both levels, helping design “community recovery vehicles” that are capitalizing small business loans in New York and California and which are under development by a coalition of 13 southeastern states. The macro idea: a $20 billion small business recovery vehicle backed by the Federal Reserve to buy loans and thereby replenish the balance sheets of community development financial institutions, or CDFIs, nationwide (see, “New York’s $100 million loan fund for small businesses is a model for a national fund). “From the beginning, the goal was to create this kind of infrastructure for CDFIs so they can more proactively lend in this moment,” she says.

Bafford has been structuring deals and syndicating loans for more than six years at Calvert, after working on the Affordable Care Act in the Obama administration and a stint at McKinsey. At Duke’s Fuqua School of Business, she says, Cathy Clark helped set her on the path to impact investing (Clark returns the respect, tweeting, “More and more of our students say they are on the @bethbaff career plan”). Bafford kicked off ImpactAlpha’s “Walking the Talk” series, breaking the taboo about talking about personal finances. “If you don’t think or talk about your investments, it is not likely that you’re doing anything to change them,” she writes. “You need to know what you own to own what you own.” In her own active Twitter feed (here’s a concise thread about the New York model), Bafford champions working mothers along with CDFIs. Her lived shutdown experience: infant triplets and their (slightly) older sibling. Bafford’s superpower is laser focus: “If those businesses do not have access to credit, they will not be able to retool, they will not be able to reopen and they will not be able to recover,” she said on ImpactAlpha’s Agents of Impact Call. “How do you think much differently about scale? Because we know the demand is there. The need is there. The pipes are there. But we have to provide the tools to leverage those pipes.” – Amy Cortese and David Bank

  • The details. The California Rebuilding Fund, backstopped by $25 million from the state’s infrastructure and economic development bank, will be managed by Kiva. Hear Bafford explain the model on The Call No. 17, 10x’ing community capital.”
  • Share Bafford’s Agent of Impact story and like it on Instagram

The Week’s Dealflow

Impact tech. Raptor Maps raises $5 million for drone intelligence solar companies… Indonesia’s SIRCLO raises $6 million to help small businesses with online sales… Acumen backs indoor farming startup Kheyti. 

Accelerating impact. Three Latin American social enterprises join IKEA and NESsT accelerator… Angel network of Halcyon incubator backs edtech and solar startups. 

Access to finance. LeapFrog backs $54 million round for affordable insurer PasarPolis… ABC Fund backs INSOTEC to finance Ecuador’s small farmers. 

Retail impact investing. Crowdcube’s secondary market aims to give exits to equity crowdfunding investors… Triodos Bank develops impact bond fund for U.K. retail investors.

Returns on inclusion. Oakland Black Business Fund launches with COVID relief funding… Costco commits $25 million to LISC’s Black Economic Development Fund. 

Fund news. AXA Investment Managers rolls out impact debt-equity fund. 

SDG investing. Blue Like an Orange invests in ‘transitional’ health care in Brazil.

The Week’s Talent

Jean Hynes will replace the retiring Brendan Swords next year as CEO of Wellington Management… Renée Johnson joins Public Private Strategies as a senior advisor… Veris Wealth Partners appoints Richard Chen and Stephanie Cohn Rupp as managing partners to lead the firm’s impact investing strategy. Veris partners Steve Fahrer and Anders Ferguson are retiring… Santhosh Ramdoss, ex- of Skoll Foundation, joins Gary Community Investments as vice president of impact investing… Brian Negendra, ex- of Living Cities, joins Spring Point Partners as associate director of impact investments.

The Week’s Jobs

Skoll Foundation is recruiting a chief operating officer… Nia Impact Capital is hiring a client services and operations manager and a financial analyst in Oakland… The Initiative for a Competitive Inner City seeks an associate in Boston… Unreasonable Group is looking for a press and communications manager in London, New York or Boulder, Colo… The Nature Conservancy has an opening for a director of public advocacy and engagement in Washington, D.C.

Nonprofit Finance Fund is hiring a senior associate of knowledge and communications… Beeck Center is hiring three researchers and one Fritz Fellow… The Sustainable Economies Law Center is looking for a staff attorney and a policy and legislative advocate in Oakland… Care seeks a vice president of impact and innovation in Atlanta.

Thank you for reading.

–Sept. 4, 2020

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