Supercharging Place-Based Impact Investing
We recently examined how a family office can approach the risk / return / impact continuum across its entire portfolio. Building on that conversation, we explore how a foundation's renewed effort at understanding and driving its impact led it to focus on place-based innovation.
In this webinar, we hear how Gary Community Investments (GCI) uses its newly minted tool, the Transformative Impact Grid (TIGR) to supercharge its allocations. Matt Barry and Luis Duarte from CGI will discuss the genesis of TIGR, how it supports more deep-impact investments, how it spawned an in-house innovation hub and led to a revamped innovation strategy with three components aimed singly at supporting the well-being of Colorado's low-income children and their families.
Unpacking Finance-First and Impact-First Strategies
The conversation on the trade-off between financial returns and impact seems tired as much as it remains underexplored. How do some in the Transform Finance community think through it?
In this webinar, Greg Neichin of Ceniarth joins the Transform Finance Investor Network to explore their approach to the risk/return/impact continuum. Greg reviews the strategies ranging from responsible asset management to impact-driven capital preservation and programmatic investing. Aner Ben Ami of Candide Group provides a context for this approach vis a vis that of other family offices and impact investors.
Investing in Activists as For-Profit and Non-Profit Entrepreneurs
There is an inspiring trend in the current political environment: more activists are turning to entrepreneurship, and more investors are willing to support efforts to create a stronger civic environment through enterprise. This trend has important implications for who gets funded, how power gets built in communities, and how enterprises can be a tool for transformative social change.
Joining the Transform Finance Investor Network in this webinar are Julie Menter of New Media Ventures, the first seed fund and national network of angel investors supporting media and tech startups that disrupt politics and catalyze progressive change, and Sarah Williams of Propel Capital, an investor in New Media Ventures.
Democratized Tech and Distributed Ownership
as an Exit Strategy
In this webinar, the Transform Finance Investor Network discusses real-world examples of technology platforms that are ripe for a transition to cooperative ownership — from young startups to the "Buy Twitter" initiative. We also discuss examples of platform cooperative investment term sheets, describing how investors can begin to think about supporting platform cooperativism and how existing investments can get liquidity for portfolio companies that may not be ideal candidates for future financings or big liquidity exits. Leading this discussion are Jason Wiener, a lawyer focusing on mission-driven business models and co-founder of Colorado Cooperative Developers, and Nathan Schneider, Scholar-in-Residence of Media Studies at the University of Colorado, Boulder, and leader in the platform cooperativism movement.
The Movement for Black Lives Economic Platform: The Role of Investors
The lack of racial justice in the United States is one of the most crucial issues for social justice investors to tackle. The Movement for Black Lives released last year a comprehensive platform that includes an economic plank that discusses various opportunities for the economic development of black communities. This webinar is led by Cathy Albisa, Director of the National Economic and Social Rights Initiative, and Rashad Jamal Buni of the Black Youth Project.
Affordable Housing Without Government Subsidies
In the current political climate, even less support can be expected from the government to drive the agenda of social change through investments. Affordable housing is one area that has historically relied on governmental support via tax advantages, and it is poised to worsen. The affordable housing crisis is not going away, even if the federal government decides to ignore it. Is there room between government-subsidized and market rate housing for impact investments to provide solutions? In this webinar, Sibley Simon, President of New Way Homes, presents a compelling model for addressing these challenges.
Muni Bonds and Social Justice Part II: What Can Investors Do?
We explored recently with Activest the intersection of racial justice and municipal bond finance, looking specifically at how to marshal progressive capital to incentivize and fund policy reforms at the municipal level. In this follow-on webinar, we will explore further how investors can engage with municipal bond finance from a social justice perspective. HIP Investor explains how they use impact metrics can form a basis for further accountability and impact management for the expected results of muni bonds. After which Neighborly will show how local investors can use municipal bonds to fund and support various improvements in local governments and nonprofits, spurring more civic engagement as well as recapitalizing communities.
Tech Platform Cooperatives, Food, and the Sharing Economy
Home cooks – largely immigrants and at-home parents from communities of color – are generally cut off from the food industry, or exploited by it. Tech platforms can offer an alternative entry point.
With this webinar we explore the topic of platform cooperativism, or the shared ownership of tech platforms so far dominated by VC investors, by looking at Josephine, a food and labor justice organization that empowers home cooks to sell meals to their neighbors and communities. The company offers software tools, an online marketplace, training and education, as well as other cook benefits, with a focus on cooks excluded or marginalized from professional opportunities.
Municipal Bonds and Racial Justice
Municipal bonds are largely overlooked as a high impact investment strategy. Yet there can be no doubt of the interplay between the way US cities are financed and the social justice outcomes that get driven. As a $3.7 trillion market, it is hardly one that ought to be overlooked, in particular in light of the precarious state of municipal finance for many cities.
Activest is a new project looking at marshalling progressive capital to incentivize and fund policy reforms at the municipal level. Founders, Ryan Bowers and Micah Gilmer, spoke about the group's insight into how cities' social policies and practices are predictive of financial risk and social outcomes.
Loan Guarantees as a Tool for Economic Transformation
After Apartheid officially ended in South Africa, economic justice, especially along racial lines, remained a major issue. Even to this day, 72% of adults in Southern Africa are excluded from financial services. Shared Interest identified the use of loan guarantees as a way of facilitating the provision of loans to previously excluded segments of the population. Since 1994, they have issued over $24 million in guarantees, leading to $113 million in loans issued.
Donna Katzin and Casey Cline joined us to speak about the use and the structuring of loan guarantees and shed some light on the specific context of Southern Africa, highlighting how guarantees can be a powerful tool in other regions as well.
Alternative Deal Structures to Maximize Impact: The Fund Perspective
The mismatch between traditional investment structures and what works for many impactful enterprises is fairly clear by now, as Aner Ben Ami documented in his TF blog post last year. This webinar dives deeper into the LP reasons to favor structured exits with a presentation by Aner Ben Ami of Pi Investments. Rodrigo Villar Esquivel of Adobe Capital also present how that fund has focused on alternative deal structures, the lessons learned, and how it plans to incorporate them in the next fund. Adobe Capital is a Latin American impact fund focused on the growth of impactful enterprises with novel, scalable, and profitable business models.
Growing Worker-Owned Coops Through Outside Financing
Among the factors that has held back the growth and proliferation of worker ownership stands out the lack of available financing structures. Dan Fireside, Equal Exchange's Capital Coordinator and a veteran of the industry, guided us through models of outside financing for coops that include outside non-voting shares, worker voting shares, and a combination of debt and retained earnings. With that context, Blake Jones, the celebrated founder of Namaste Solar, presented the company's current private placement of preferred stock to grow this tremendously successful worker-owned coop without losing its commitment to worker ownership and governance .
What is the issue with excessive share buybacks?
We all are aware of the perils of short-termism as an investment approach, and one of its nefarious manifestations is the rising issue of excessive share buybacks.
What are share buybacks and why are they inconsistent with an impact portfolio? And most relevantly - what can asset owners do to counter the public equity trend toward share buybacks?
Over the last few years, share buybacks have increased dramatically as a use of extra cash that could instead be used for capital expenditures and, in particular, for investments in the workforce in the form of training or wage increases. Given rising income inequality, excessive share buybacks looks a lot like part of the problem.
It is not often that Transform Finance and BlackRock are well aligned on an issue. Last year Larry Fink issued a strong call against share buybacks for institutional investors. We reviewed the issue and some potential engagement strategies for our community. The webinar was led by Eli Staub, Deputy Director for Research at the SEIU, who has thought about the relationship between share buybacks and inequality more than pretty much anyone else. If you are interested in joining a nascent initiative around share buybacks, please send an email to email@example.com.
Tying Fund Manager Returns to Impact
How can one ensure a focus on mission for an impact fund? How about tying fund manager compensation to impact metrics?
In a mainstream private equity fund, a general partner's (GP) financial compensation is linked to the fund's financial performance, aligning the GP's own financial incentive with maximizing profits for their limited partners. On the impact investing side, this traditional compensation structure leaves out the incentives to comply with the impact mission. Funds have been experimenting with tying GP compensation to social impact performance, yet these practices are by no means mainstream. So how can one tie fund manager returns to the impact created?
We looked at this issue through the lens of news media companies, which have historically dealt with the tension between mission and market. To mitigate the pressure, principled media companies have developed a number of creative ownership structures that protect editorial independence (i.e., mission) from political and market forces while allowing commercial growth - think of the New York Times's dual-share structure.
But what about the incentives to the investors? An innovator in this area is TFIN member Media Development Investment Fund (MDIF), an impact fund that finances independent media companies around the world. MDIF's new equity fund ties the GP's financial compensation to the fund's mission performance, as well as the financial performance. Harlan Mandel (CEO) and Evan Tachovsky (Impact Officer) discussed how MDIF embedded social impact performance in the equity fund's design and how the framework was adapted from MDIF's general portfolio impact assessment strategy.
Engaging Investors around quality job creation
Will the creation of minimum wage jobs with no benefits really help U.S. workers out of a cycle of poverty? Domestic impact investment is growing fast, with a number of funds focusing on job creation. There is a great case to be made for maximizing impact by investing in quality jobs and helping portfolio companies manage toward better jobs over time. Last year, Transform Finance supported Pi Investments and Huntington Capital (now HCAP Partners) in an effort to develop job quality standards for implementation around sustainable livelihoods, benefits, opportunities for advancement, and opportunities for ownership with a "floor-and-ladder" approach. This work turned into a major initiative to help asset owners and fund managers contribute to the creation of good jobs - not just by investing in best-in-class employers, but focusing on the potential for improvement in job quality that a committed investor can support. In this webinar we reviewed the work that brought together Transform Finance, TFIN founding member Pi Investments, and HCAP Partners, a $90+ million fund focused on job creation. We also reviewed the broader efforts in the job quality standards arena that Transform Finance is involved in as well as other sector-wide initiatives. For background information on this topic you may want to read Morgan Simon's SSIR piece on managing versus measuring impact: http://www.ssireview.org/blog/entry/managing_vs_measuring_impact_investment