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The Week in impact investing: Trillions



TGIF, Agents of Impact!

Private capital for public good. It’s hard to overstate the economic carnage: 22 million jobs have been lost in the U.S. alone, and the worst may be yet to come. The crisis is hitting low-income workers hardest, and widening the racial wealth gap. The $349 billion Paycheck Protection Program ran out of funds in less than two weeks, leaving 700,000 small businesses in limbo. The owners of the Ruth’s Chris steakhouse chain received $20 million for two of its restaurants, almost equalling the $25.8 million it spent buying back its own stock last year. A separate tax change slipped into the bailout bill will overwhelmingly benefit millionaires, while costing taxpayers $90 billion this year alone. By Thursday, #BailoutHumansNow was the top trending hashtag on Twitter.

Corporate and philanthropic donations, no matter how well intentioned, can nowhere near fill the gap. A half-dozen foundations raise a $7 million fund for direct cash payments to families hit hard by COVID. A global bank chips in $55 million for hospitals and vulnerable populations. There’s another $10 million here and $25 million there. Even commitments of $130 million from George Soros’ foundation and $250 million from the Bill & Melinda Gates Foundation pale in comparison to the need.

In addition to government and philanthropy, the full power of capital markets will need to be harnessed for the COVID recovery. We’re all impact investors now. From the top down, “universal owners” of some of the world’s biggest pools of institutional capital are seeking to drive a new social contract, a new era of corporate accountability, and a new form of capitalism (see No. 1, below). From the bottom up, a parallel system of community development financial institutions, community funds, local capital providers and fintech lenders have created new capillaries to carry funding to underserved businesses and communities, in the U.S. and around the world (see No. 2). The opportunity now is to turn these new channels into major arteries for effectively deploying vast sums of private capital for public good. There has long been talk of growing impact investing from the billions to the trillions. The time is now.

– David Bank and Amy Cortese

Weekly Briefing. On ImpactAlpha’s weekly podcast, host Brian Walsh talks with David about “universal owners” and with ImpactAlpha’s social media whiz Lyneka Little about Dr. Kizzmekia Corbett, the young, gifted and Black scientist on the verge of a COVID-19 vaccine – and this week’s Agent of Impact. Listen to this week’s Impact Briefing, and follow the podcast on AppleSpotify or wherever you listen.

The Week’s Big 7

1. Calling universal owners. Stewards of capital must become the stewards of a new form of capitalism, writes ImpactAlpha’s David Bank in his column, The Impact Alpha. The COVID recovery provides universal owners investing trillions of dollars in sovereign wealth and pensioner capital “a chance to fulfill their systemic responsibilities.” Four suggestions.

2. Fintech relief channels. The COVID crisis may be fintech’s moment to shine. Non-bank lenders like PayPal, Intuit, Square and Funding Circle have expanded the Paycheck Protection Program’s antiquated channels for distributing urgent loans to small businesses. StreetShares is sharing its online lending tech with local banks. “This is where we see ultimately the value of speed and digital services,” says Jacob Haar of Community Investment Management. Spotlight moment.

3. The ESG premium. Evidence is mounting that investments in sustainable businesses are performing – relatively – well through the COVID crash. Companies that take care of their employees, effectively manage risk, and efficiently use resources are holding up, prompting mainstream investors to build and increase sustainable investment allocations. Learn more.

4. Catastrophe bond catastrophe. The World Bank launched a pandemic bond in 2017 to help avoid a repeat of the crisis West Africa faced during the Ebola outbreak. But even with the scale of the COVID pandemic, bond payoffs to poor countries struggling to combat the virus have yet to be triggered. Investors, meanwhile, are enjoying healthy yields. #ImpactFail.

5. Talent training grounds. More than 2,000 students have participated in the Kellogg School of Management and Morgan Stanley‘s Sustainable Investing Challenge since 2011. Many have gone on to launch impact firms and have helped infuse creative financial structures developed for the competition into mainstream investment theses. The competition will select this year’s winner today. Human capital.

6. From climate change to COVID. The global response to climate change offers lessons and stark warnings for the world’s pandemic response, writes Spectrum Impact’s Rehana Nathoo in a guest post on ImpactAlpha. As with climate change, a coordinated, global response is required. “Now is the time for us to act differently than we have in the past.” Hear her out.

7. Creative recovery. Artists and other creatives have been on the front line of the COVID economic collapse. They will be key to an inclusive economic response and recovery, writes Upstart Co-Lab’s Laura Callanan in a guest post on ImpactAlpha. She offers recommendations about how to enable them.

The Week’s Agent of Impact

Agent of Impact: Kizzmekia Corbett, National Institutes of Health. Dr. Kizzmekia Corbett had a jump on COVID-19. The viral immunologist has been studying coronaviruses like SARS and MERS since she arrived at the National Institutes of Health in 2014. Now, as scientific lead on the Coronavirus team at the NIH, she plans to make COVID-19 a preventable disease by fall. Corbett and her team at the NIH’s Vaccine Research Center, working with Seattle biotech company Moderna, launched the world’s first clinical trial of a COVID-19 vaccine last month, just 66 days after Chinese scientists revealed the genetic sequence of the novel coronavirus online (NIH scientists took 20 months to get a SARS vaccine into stage-one clinical trials back in 2003). Corbett stunned CNN’s Anderson Cooper and Sanjay Gupta this week when she said the COVID-19 vaccine could be available for frontline healthcare workers as soon as this fall and for the general population by next spring. Kizzy, as those close to Corbett call her, is 34.

Corbett and her NIH colleague Olubukola Abiona were Meyerhoff Scholars at the University of Maryland, Baltimore County. The program, which puts Black students on research Ph.D. tracks, also supported U.S. Surgeon General Jerome Adams, as well as Darian Cash, a scientist at Moderna who is working with Corbett on the vaccine, which is one of more than 40 viable candidates now in development worldwide. “There’s kind of a general understanding that — and not just for science — diversity is key to productivity,” Corbett told The News of Orange County in her hometown of Hillsborough, N.C. “In order to have diverse ideas you have to have a pool of diverse backgrounds.” Keith Harmon, the Meyerhoff Scholars’ program director, says he’s not surprised Corbett is on the verge of a vaccine. “There is such ability, untapped, unrecognized and un-nurtured among students, all our students, particularly among our underrepresented minority students,” he told NBC News. If we accept that as normal, he added, “you really have to wonder what serious challenges we leave unsolved.” – Dennis Price

The Week’s Dealflow

Green economy. Green Outcomes Fund directs capital to South Africa’s green economy… Renewable Energy Performance Platform backs Tanzania’s first wind farm.

Health and well-being. 54gene closes $15 million to accelerate genomics research in Africa.

Inclusive fintech. Indonesia’s KoinWorks raises $20 million to help small businesses access financing… Impact investing platform OpenInvest raises $10.5 million to go global.

Future of work. Chloe Capital backs three companies addressing a shifting workforce.

Soil wealth. Iowa’s soy farmers to be paid for sustainable soil and water outcomes.

The Week’s Talent

Cal Harris, who worked with the Michael Bloomberg campaign, joins Economic innovation Group as director of communications…  Lenny Mendonca steps down as chief economic and business advisor to California Gov. Gavin Newsom… Depelsha McGruder, ex- of New York Public Radio, joins Ford Foundation as chief operating officer and treasurer.

The Week’s Jobs

Blue Haven Initiative seeks an associate in Cambridge, Mass…  SEAF is hiring three interns in Washington, D.C… Korn Ferry is recruiting candidates for: head of sustainability at Kohlberg & Co.president of the McKnight Foundationpresident of LOCUS Impact Investing; and executive director of the Aspen Network of Development Entrepreneurs.

Sunwealth is hiring for roles in investor development, asset management, accounting and project development in Cambridge, Mass… Opportunity Alabama is looking for a director of portfolio development in Birmingham… Arabesque seeks an ESG research associate / data specialist in Boston.

Thank you for reading. 

–Apr. 17, 2020

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