In researching our soon-to-be-released Field Guide study of the Manufacturing Renaissance Council we discovered an illuminating 2011 Brookings Institution white paper, “The Federal Role in Supporting Urban Manufacturing,” co-authored by Joan Byron and Nisha Mistry. The paper focuses exclusively on the emergence of Small Urban Manufacturers (SUMs) as a trend that is transforming the American manufacturing landscape. SUMs are defined as urban manufacturers employing less than 100 people. The authors offer specific suggestions on how federal policy, which has largely failed to serve the needs of these entities, can be retuned to support them.
Capital Institute spoke recently with Steve Waygood, Head of Sustainability Research at Aviva Investors, to learn more about the advocacy work the company— with $433 billion in assets under management—has undertaken to advance the cause of more transparent reporting and management of sustainability risk. We also talked with Waygood about how Aviva Investors has embedded sustainability practices into its own operations, his broad concerns about the flawed methodologies that are currently used to value corporate assets and profitability, and the role both policymakers and the private sector need to play in addressing those flaws.
A recent New York Times article on program-related investing highlighted the $10 million equity stake the Bill & Melinda Gates Foundation took in Liquidia Technologies. Some in the foundation world are concerned that the investment blurred the line between profit-making and charity. We and our Braintrust advisor Stephen Viederman say foundations should blur those lines—as long as they deploy their endowment assets when they do so. We would argue that foundations should use all of the tools available to them to meet their mission and purpose: grants, program-related investments and, most powerfully, their endowment assets.
An Innovative Funder of Sustainable Companies Seeks to Establish its Own Sustainable Business Model
Some people talk about impact investment. Some people dabble with their own surplus funds. Some commit. Sky Lance and Tom Balderston have selflessly committed not just funds, but their full-time professional efforts to lead this important, catalytic initiative that leverages the deal flow and community of Investors' Circle in the impact investment space. I recall encouraging Sky to make the commitment at a conference in Sundance (after dropping and breaking a wine glass almost on Robert Redford's foot—no joke). I told him how important would be the contribution he could make by investing his experience and leadership in this idea. My hope is that all the institutions now growing excited about the potential of impact investment will consider supporting, and investing in, as I do, the Patient Capital Collaborative. Few initiatives have the potential to move the field forward professionally and collectively as does the PCC under Sky and Tom's leadership.—John Fullerton, founding PCC Limited Partner
August 2012 Update—Since we published our profile of Mark Pinsky and the Opportunity Finance Network, Pinsky has continued on at the organization's helm, deepening OFN’s commitment to supporting a stronger CDFI industry. OFN recently kicked off the “Create Jobs USA” program in partnership with Starbucks Coffee. Since its inception the Create Jobs USA fund has provided approximately $80 million to the nations’ CDFIs. The fund is managed by OFN and is comprised of donations made by Starbucks and CitiGroup. The OFN has also launched a Financing Healthy Foods project that focuses on educating CDFIs on how to finance and establish access to healthy, fresh foods in low-income communities. OFN has also started the Green Finance Program, which prioritizes financing energy efficiency renovations or retrofits projects. OFN has also begun offering CDFIs education on capacity-building including technical training, such as education on LEEDS certification standards and peer learning opportunities. A number of member CDFIs now specialize in green investment, and OFN hopes that these organizations will begin to provide insight and support to other network members who wish to develop expertise in financing in this sector.
Community Development Finance Leader Clifford Rosenthal Says CDFIs No Longer in Defensive Posture But Face Longer Term Pressures
July 2012 Update—Since we originally posted our interview with Clifford Rosenthal, the long-time President and CEO of the National Federation of Community Development Credit Unions, the CDFI industry has continued to face considerable challenges. However, it has also moved towards resolving many of its long-standing problems in the past 2 years.
When we spoke with him last, Rosenthal named the need for greater transparency, integration, and standardization as the three primary issues that the industry needed to address. The evolution of the industry rating system CARS™ , originally an extension of the Opportunity Finance Network, reflects progress made in the areas of transparency and standardization. CARS™ has been re-released as an independent entity and relaunched with a larger offering of analytic tools. These new products afford clients a more holistic view of a specific CDFI’s organization, function and proficiency. Many CDFIs have used their first-round CARS™ ratings to re-position their organization, and receive higher ratings in second-round ratings. The CDFI industry has become more standardized as organizations try to reach better CARS™ ratings levels. Issues of efficiency and integration are still being addressed, although integration is taking place within the industry with the establishment of centralized back office services for smaller CDFIs.
A space in the capital markets where the world of investing for profit and the world of investing for desired social and environmental outcomes meet and merge is attracting a growing and diverse group of investors. They are funding sustainable specialty coffee farms in Tanzania, affordable housing projects in New York City, and post-consumer recycled paper manufacturers in San Francisco.
July 2, 2012 update—TIAA-CREF’s Global Social and Community Investments Group was created in 2006, after a survey TIAA-CREF conducted of its clients indicated that the core values that guided their investment-decision-making turned out to be human rights, community investment, and environmental sustainability.
Since we posted the profile of TIAA-CREF’s Global Social and Community Investment Group in June 2010, Amy Muska O’Brien has assumed the role of managing director. Former Director Cherie Santos-Wuest is now Principal Investment Officer Principal Investment Officer for Real Estate for the Connecticut Retirement, Pension and Trust Funds.
The Global Social and Community Group’s Green Building Technology Investment Portfolio, operated in partnership with Good Energies Venture Capital, has been involved in several projects since its formation, including the Meldahl Hydroelectric project in Ohio as well as an investment in energy saving cooling systems. It has also entered into two joint ventures with Jonathan Rose Companies that were completed in late 2011. Both have been widely lauded as successes in retrofit and revitalization practices.—Evan Lozier. Evan is Capital Institute's Summer 2012 intern.
July 9, 2012 Update—Since we posted our profile of More for Mission (M4M) in June 2010, the organization grew to a total membership of 96 foundations. In May 2012 M4M and Program Related Investment Makers Network (PRI) combined to form the Mission Investors Exchange.
The merger of the PRI Makers Network and More for Mission was the end result of a long-standing relationship between the two organizations. PRI and M4M were initially focused on different areas of the mission-investment spectrum. PRI focused primarily on below-market investment while M4M focused on market rate investments. Gradually, conferences hosted by the two began to focus on the entire mission-investment spectrum. Leadership from both organizations realized the parallels between their respective missions, and began to contemplate the possibility of a merger in 2011. These efforts culminated in the formation of Mission Investors Exchange in May 2012.
"Investing for Impact: Case Studies Across Asset Classes" report sheds a light on impact investing asset allocation
Among the formidable challenges facing the further development of the impact investing market is the lack of an accepted framework for assessing deal structures that can be utilized as an asset allocation tool by the full spectrum of impact investors. “Investing for Impact: Case Studies Across Asset Classes,” begins to fill this breach. A joint project of London-based social investment firm Bridges Ventures, strategic advisors The Parthenon Group (with offices in Boston, London, Mumbai and San Francisco), and the New York-based Global Impact Investing Network, “Investing for Impact” follows on the earlier comprehensive studies of the sector published in 2009 by the Monitor Institute (“Investing for Social and Environmental Impact”) and Rockefeller Philanthropy Advisors (“Solutions for Impact Investors”).