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Impact Investing

This category includes articles about people, firms and foundations that invest in social good by investing in social entrepreneurs, social impact or pay-for-success bonds, etc.

Distributive Solar Hopes to Lead Acceleration of Solar Energy Industry

Solar Site Design is an affiliate of our sponsor Clean Energy Advisors.


You can download an audio podcast here or subscribe via iTunes.

Social entrepreneur Erik Melang is excited about opportunities in renewable energy and his attitude is not dampened by the election of a President who has not been friendly to the environment. Erik is the founder of Distributive Solar and is partnering with Solar Site Design to accelerate growth in the renewable energy industry.

Erik is excited to share “the phenomenal opportunity to participate in the new energy economy.” He says, “This transition [to renewable energy] is providing a ground floor opportunity to participate in one of the fastest growing sectors on the globe.”

He shares some numbers to make his point: “In fact solar, wind and [energy efficiency] has provided 1 out of 30 [new] jobs in the US since 2009. Solar alone has provided 1 of 80 jobs.”

The transition from fossil fuel to renewable energy will also bring another big shift to distributed power, he says. “We are and will continue to witness the disruptive effects of transitioning from a fossil fuel driven economy to a renewable energy driven economy. This transition will be distributive, where energy will be produced where it is utilized.”

“We will see an end to the monopoly where utilities control the production and distribution of energy,” he continues. “This transition is underway and we are seeing parabolic growth in energy efficiency, wind and solar across the globe. However we are still in the early stages of this transition and this is where the opportunity lies.”

Most business leaders simply don’t know how well solar can work for them, he says. “The overwhelming majority of commercial enterprises in the US have not been shown how to participate in this opportunity. They have yet to realize that the price of solar has dropped some 70% since 2012 making it viable for their business. We are seeing commercial payback periods on solar installations between three to seven years across the country, return of investments exceeding 15 percent over 25 years with the potential for free electricity for decades.”

Erik points out that making business more energy savvy isn’t all about the environment. “This is about economics (reducing operating expenses), remaining competitive and smart business decisions. It is also about being a leader in the community and positioning your brand as a firm who takes sustainability seriously and doing your part in reducing your carbon footprint.”

Erik Melang, courtesy of Distributive Solar

Erik Melang, courtesy of Distributive Solar

He explains how he sees his role in this opportunity, saying, “All of this to say that Solar Site Design (SSD) and Distributive Solar (SD) are aiming to provide an opportunity for renewable energy advocates and business professionals to enter the solar industry and participate in this transition. SSD has built a platform akin to UBER and Airbnb that brings supply and demand together onto a collaborative platform that drives down the cost of solar and a tool to streamline the entire solar installation value chain.”

“DS is focused on growing the supply of viable solar projects by recruiting, training and supporting motivated individuals to help grow this supply of projects,” he continues. “These solar consultants need not be experts, but merely understand the economics of solar as a smart business decision for building owners. Solar prices have plummeted offering business a chance to lower operating cost by utilizing their rooftops for energy production.”

“The outcome of this will be the realization of the new energy economy that is distributive not only in energy production but in economics. We the people will be the owners of our energy production and realize the benefits. This will provide opportunities for all, not just the few as we’ve seen over the past 2 centuries.”

“The other outcome will be a livable planet. A global transition to Renewable Energy and Energy Efficiency is the only path for climate change mitigation. We believe that action on climate change and economic growth go hand in hand. We have to begin now. We need you and others to join us and change the world. Contact DS and/or SSD to join this revolution by becoming a solar Consultant.”

He highlights that he is looking for people who want to participate in the renewable energy boom. “We are recruiting individuals everyday to join us. It is only the beginning. Look around in your community. Notice that there are very few business enterprises with rooftop solar. This is changing and will continue to change very fast.”

Erik concludes philosophically, “Regardless of who is in the White House, Statehouse or in control of our utilities, solar is past the point of no return. Solar will flourish and be a part of communities because it is the lowest cost alternative. Evidence is mounting and we are seeing peak energy demand in a lot of the developing world, partly because of slower economic growth, but also through energy efficiency and growing RE capacity. This is soon to be followed by energy storage. This all fosters the hope that together we can make a difference and make our mark on the world.”

On Thursday, November 17, 2016 at 2:00 Eastern, Erik and his colleague at Solar Site Design, Jason Loyet, will join me here for a live discussion about about the rapidly growing renewable power industry and the opportunities there. Tune in here then to watch the interview live. Post questions in the comments below or tweet questions before the interview to @devindthorpe.

More about Distributive Solar:

Twitter: @distrsolar

Commercial Solar Origination. Recruiting, training and supporting commercial solar consultants to present the economic, branding and environmental benefits of going solar to commercial business owners.

More about Solar Site Design:

Twitter: @solarsitedesign

Since winning the U.S. Department of Energy’s SunShot Catalyst Award in 2015, Solar Site Design has focused on solving the next chapter of driving down customer acquisition costs for Commercial and Industrial solar energy projects. After a year of software development, we are proud to announce the newest enhancement to our platform: Solar Site Design Commercial Marketplace.

For three years, Solar Site Design has become a leading recruiter and trainer of Nationwide Commercial Originators. Our Originators have deep relationships in their local market and are able to open doors wide open on highly qualified C&I projects. In addition, our Originators are trained on collecting extensive data at the site through our innovative platform available on Android and IOS.

SSD aggregates the project data entered by service professionals (referral agent), connects the projects to networks of contracted fulfillment partners, thereby reducing customer acquisition costs by up to 50%.

Erik’s bio:

Twitter: @espmel

Erik Melang is a Co-Founder of Distributive Solar and oversees the firms Recruiting, training and support of Independent Sales Representatives. Erik previously served as Managing Director of Impact Partners, where he led impact strategies initiatives and renewable energy private equity investments. It is in this role that Erik was drawn to the amazing business opportunity around Commercial Solar Origination. The industry is in the early stages of mass adoption and Commercial Business Owners are realizing the tremendous economic benefits of deploying solar panels on their rooftops. Erik is an Appalachian State MBA with strong desire to learn and teach and is an avid follower of everything solar and all things “Impact.” Erik’s interest include Clean Energy, Fishing, Snow Skiing, Travel , Guitar Pickin’ and is a child adoption advocate.

Jason Loyet, courtesy of Solar Site Design

Jason Loyet, courtesy of Solar Site Design

Jason’s bio:

Twitter: @jasonloyet

Jason Loyet is an accomplished solar industry entrepreneur, having founded and built three solar companies since 2005. His first company solved bottlenecks in importing solar equipment and streamlined mainline distribution to solar installers. In 2009, he founded and built a $3 million company that provided wholesale solar supply, sales and marketing services to electrical and roofing contractors throughout the United States. In 2013, Mr. Loyet leveraged the powerful capabilities of mobile phones to build an easy way for traditional contractors to add a revenue source to their bottom line by playing an active role in the solar industry. Hence, Solar Site Design was born. Solar Site Design is a collaborative, cloud-based platform that connects highly-qualified solar project referrals to leading solar companies to drive down customer acquisition costs. Our proprietary business process is designed to reduce the solar industry’s customer acquisition costs by up to 50%. Solar Site Design was chosen as a winner of the U.S. Department of Energy’s SunShot Catalyst Program in May of 2015. Prior to entering the solar industry, Mr. Loyet founded, developed and sold two software companies; a video-streaming service and a photo-sharing platform.

Never miss another interview! Join Devin here!

Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

 

Next Economy: Election Aftermath

By Garvin Jabusch

If you believe in the continuing evolution of the economy towards innovation-driven sustainability and economic coexistence with our fragile earth systems, then this has been a rough week.

So, what happened? We can cite a number of likely reasons behind Trump’s victory, but here are the ones that stood out to us.

  • First, people are extremely angry about the ever-widening economic and social inequality and inequity they have been experiencing the last couple decades, and they can see that the main beneficiaries of this inequality are never held accountable (only one banker jailed after 2008, for example).
  • Second, half of the nation – or 47% of the electorate anyway – has been convinced by an ideology that claims the best way to fight inequality is to pass policies that actually cause more inequality. Jane Mayer’s book Dark Money does an excellent job of explaining how this happened.

Unfortunately, this ideology has negative implications for the Next Economy. Next Economics at its core reflects the ongoing process of de-risking the global economy of its most serious long-term threats, those being the worst outcomes of climate change, resource scarcity, and widening inequality. The risk of inequality itself has now driven an election result that will slow progress on managing all real systemic risks.

We’ve always said that U.S. political risk is one of the scariest things about managing for the Next Economy, because so much policy and business is driven by the owners of legacy economy energies, utilities, transportation and so on. “The next president has questioned the science of climate change, vowed to withdraw from the Paris agreement on global warming and pledging to stimulate production of coal, the dirtiest fossil fuel,” is how Bloomberg put it. Meanwhile, many of the world’s leading institutions (the World Economic Forum at Davos, for one) still cite climate change and the erosion of social cohesion as the most dangerous and pressing economic risks confronting the world. The global economy can, must and will rise to meet these challenges.

The transition to an economy based on businesses that are more efficient, less risky, and more profitable remains inevitable; and the realities of the global economy’s exposure to climate and social risks remain the same. Much of the world still understands this, and a Trump presidency will set back U.S. technological and political progress behind the rest of the world, at least temporarily. As Michael Liebreich of Bloomberg New Energy Finance tweeted, “So this is interesting. I will continue to inform decision-makers about the world’s unstoppable transition to clean energy and transport.” Our economic evolution continues, but which nations and regions benefit first and most by taking advantage of the most incredible advances may now be an open question.

Critically as well, America’s most economically powerful states – led by New York and California – will continue to support sustainable technology and renewable energies in pursuit of greater economic growth. Indeed, we did see some bright spots the other night: Florida solar advocates celebrated a major win as voters rejected a utility-backed amendment to limit solar energy development. It is unlikely that wind energy in America will suffer much either: “Seventy percent of U.S. turbines are in low-income rural areas,” according to Bloomberg, saying, “Wind Is the New Corn for Struggling Farmers.” In fact, the five states generating the largest fraction of their electricity from wind all voted for Trump. The economic, health and other benefits of clean, renewable energies are winning despite political rhetoric.

We need to continue investing in the zero-risk economy, and we still stand to earn outsize returns as the Next Economy gains market share away from the legacy economy. The investment decisions affecting climate change we make collectively and globally in the next few years will reverberate for centuries and affect billions of people. A Trump presidency does nothing to change that.

In the long run, economics drive the future and policy follows, not the other way around. Coal isn’t in terminal decline for any reason other than it is no longer economically competitive; solar isn’t the fastest-growing energy source in the world because of the Paris Accords, but because it is incredibly economically competitive. No administration can change that. They can only make it more or less timely.

The road ahead may not be as smooth as we once imagined, but we still got this.

Garvin Jabusch is cofounder and chief investment officer of Green Alpha®Advisors, LLC. He is co-manager of the Shelton Green Alpha Fund (NEXTX), of the Green Alpha Next Economy Index, and of the Sierra Club Green Alpha Portfolio. He also authors the Sierra Club’s economics blog, “Green Alpha’s Next Economy.”

Your Guide To Impact Investing

This post was originally produced for Forbes.

For more than four years, I’ve been covering impact investing as a regular Forbes contributor and have written hundreds of pieces about the space. Here’s the thing: most impact investments are only open to wealthy people. This is a guide to impact investing for everyone else, the 98 percent of the population who don’t meet the criteria for investing with the wealthy.

Shall we pause for just a moment to define impact investing?

The term impact investing, I’ve realized, is new enough that even professional investors aren’t yet familiar with it, let alone the typical investor. Impact investing refers to the idea of investing in businesses that will cause a social benefit. Most liken it to philanthropy but with the added benefit of a financial return. An easy example is to consider my 2013 article about Vital Capital, which invested in a community Agribusiness, moderate income housing and a medical center in Angola. Charities also engage in providing food, housing and health care in Angola, but Vital Capital invests in those activities—earning high returns along the way.

The Securities and Exchange Commission requires that investors in certain investments be “accredited.” Although that word connotes a skill or knowledge-based screening, it is a simple test of income and/or assets. Investors with consistent personal income above $200,000 per year or a net worth, excluding a primary residence, of $1 million are considered accredited.

It is important to note that many impact investments are effectively open only to institutional investors and people or families of such high net worth that they invest at institutional scale.

This article is not for them. If you are a billionaire impact investor, you can stop reading now.

Great! Now that they’re gone, we can get down to brass tacks.

Chris Georgandellis, who runs Tree Town Investments, a wealth management firm specializing in socially responsible and impact investments, explained to me, “As you are likely aware, the opportunities available to non-accredited individuals to engage in “impact investing” are currently highly limited. So limited, in fact, that I would say from a traditional investing perspective, they are practically non-existent.”

Thankfully, there are a few and that is all you need to start investing.

Georgandellis’s comment begs another question of definitions. What is the difference between socially responsible investing and impact investing? Traditionally, socially responsible investing has been about applying negative screens to portfolios, a movement that began with investors divesting their holdings in companies with operations in South Africa to end apartheid there. Since then, the movement has begun to focus on environmental, social and (corporate) governance or ESG standards for screening good companies.

There are a number of funds and ratings schemes for scoring ESG, including some that give high scores to oil companies, a judgment that some environmentalists would scorn. Relatively few publicly traded companies are operating a business that would qualify as an impact investment. Tesla is an example of a public company I hold as an impact investment.

Some purists would argue, however, that an investment made in the secondary market (buying and selling stocks from other investors rather than upon their issuance from the company) isn’t an impact investment because the company didn’t get the money or use it for good. Given that when a new investor buys shares from an original impact investor the transaction provides liquidity and perhaps a return on investment to the original impact investor, it could be argued that the investment has a positive impact. For purposes of this article, I will include secondary investments as impact investments.

So, the easiest way to become an impact investor is to build a portfolio of publicly traded stocks in companies that do things you like. You might, for instance, build a portfolio of companies in clean-tech and renewable energy.

Increasingly, the line between socially responsible investing traditionally focused on ESG scores and impact investing is blurring. You may conclude that some socially responsible investing funds are doing enough good to qualify for impact investments in your mind.

Garvin Jabusch, co-founder and CIO at Green Alpha Advisors, says, “All a portfolio is in the end is a manager’s vision of what will grow and earn returns in the future. Investors have to look at holdings to ensure they agree with the manager’s vision of that future, both in terms of achieving sustainability and in terms of what they believe is growing and will continue to grow economically.”

Jabusch points to some tools to help investors screen stocks and funds. “Morningstar started publishing sustainability ratings (defined by number of “globes” on a one through five scale, like their stars) based on Sustainalytics data. Fossilfreefunds.org and Deforestationfreefunds.org both came online, and each rate mutual fund on a handful of metrics that we at Green Alpha think are meaningful by our definition of impact.”

One way for ordinary investors like you and me to invest in instruments that are traditionally open only to accredited investors is to invest with a donation through a donor advised fund or DAF. A DAF is an account you open with a public charity like a small (though there is no upper limit on size) private foundation, you get to advise the charity on where to send the charitable funds. You get a tax deduction when you contribute to the DAF, rather than when you make the grant to the ultimate charity. Some charities that manage DAFs, including some community foundations, will allow you to advise them on investments as well. Hence, using a DAF can allow you to make impact investments in instruments that otherwise would be open only to accredited investors. This is because the money isn’t yours and you’ll never get to put it back in your own pocket; the money belongs to the charity that manages the DAF.

Ross Baird, courtesy of Village Capital

Ross Baird, CEO of Village Capital, which manages a fund that invests in social enterprises says that they have accepted investments from ordinary investors via DAFs. While not in fundraising mode now, he notes that in the past they have had a minimum investment threshold of $5,000, a level that is accessible to some ordinary investors.

Cathy Clark, Adjunct Professor at the Duke Fuqua School of Business and Director of CASE i3: Initiative on Impact Investing, says, “My favorite product to recommend to my MBAs is Kiva. You don’t actually get the money back; once you donate the money it becomes charitably designated and cannot come back to you (just like donating to Acumen or a DAF). But you can reinvest the returns over and over and choose the kinds of loans you want to make. And the feedback on where your money is going and who it could be helping is rewarding.”

She likes ImpactAssets, a firm that manages DAFs where 100 percent of the money is invested in impact investments. While donors don’t have to be accredited, the minimum investment amounts are higher than most ordinary investors can afford. Read my past coverage of ImpactAssets here.

Clark also recommends investments via the Calvert Foundation. “There, you can do $25 online or a thousand by mail and earn more return than most bank accounts. Again, you can choose your impact flavor and the risk of loss is near zero because of their clever structure.”

She also recommends RSF, which offers 90 day notes in increments of $1,000 that pay interest at an annual rate set each quarter, currently 0.50 percent. The firm’s website boasts that 100 percent of principle and interest has always been paid in the past. RSF lends the money to small social enterprises that may also receive grant support.

Jennifer Pryce, President and CEO of the Calvert Foundation, adds, “At Calvert Foundation, our Community Investment Note is available starting from $20, the lowest minimum investment rate in this space. The Community Investment Note is also the only one of its kind that is available through financial advisors and brokerage firms.”

Jenny Kassan, courtesy of Force for Good Fund

Jenny Kassan, attorney and capital raising coach for social enterprises, specializes in helping them raise money via the crowd, including the recently implemented Regulation Crowdfunding that allows small businesses to issue securities via FINRA-registered portals.

She says, “There are more and more opportunities that open impact investing to everyone. There is a very new platform that aggregates opportunities in one place called Investibule. This site has all kinds of offerings such as zero-interest Kiva loans, offerings under the new federal crowdfunding exemption, state-registered public offerings, donation-based crowdfunding, and more. You can search for opportunities in your area, by type of business, by type of investment, etc.”

She says the number of securities offerings under all securities exemptions from registration should increase, due to the recent implementation of new rules from the SEC that changed intra-state crowdfunding restrictions and increased the amount issuers can raise under certain circumstances. The result will be a rapidly growing set of investment opportunities for ordinary investors.

Kassan herself is raising a fund to invest in social enterprises, she calls the Force for Good Fund. The minimum investment is just $1,000. She raising money on a site called Wefunder, which has become the most popular platform for ordinary investors to find startup investments, including impact investments.

Dr. Stephanie Gripne, of the Impact Finance Center, is upbeat, too. “The number of impact investing opportunities for ordinary investors expands every day. For ordinary impact investors from community notes, such as Denver’s Ours to Own Notes, to co-ops, such as Poudre Valley Farms, to sustainable real estate investments such as Direct Source Wealth, which utilizes new crowdsource funding laws.

Stephanie Gripne, courtesy of the Impact Finance Center

She also pointed to a campaign on Wefunder, this one for an environmentally minded outdoor sporting goods company called My Trail. The company has also been conducting a direct public offering under Colorado law that allows ordinary investors located in Colorado to participate.

Alon Goren, co-founder of Crowd Invest Summit, is especially excited about impact investing opportunities created by the implementation of Regulation Crowdfunding. “With the new crowdfunding investment rules that allow the average American access to investment opportunities, using sites like Crowdfunder or StartEngine, you can now sift through the thousands of companies, find the ones that align best with your passions, your ideals and your values, and you can now invest, participate, and share in the profits of these companies.”

Mike Norman, co-founder and President of Wefunder, says, “Public market ESG investing is more about not doing bad than doing good. Real impact comes from investing in small companies with a new take on solving problems that the investor thinks are important. Personally, investing in a fund that won’t include guns, alcohol or tobacco doesn’t feel like making an impact to me. I want to find the next Tom’s Shoes or Solar City when they are just getting started. That’s where the solutions to our most pressing challenges will come from, and though it’s also high risk, that’s where you can find high returns are as well.”

In February of 2016, thousands of ordinary investors put money into Elio Motors, a social enterprise that is building a three-wheeled vehicle that gets 84 miles per gallon and costs just $7,200. You can read my coverage here and here.

Elio raised the money on StartEngine giving ordinary investors the opportunity to participate in what was effectively a mini-IPO. The shares are now trading, albeit thinly, with the ticker ELIO.

Ron Miller, courtesy of StartEngine

StartEngine CEO Ron Miller says, “For over 80 years, only wealthy people had the opportunity to direct their investments into businesses and private companies with positive social benefits. Thanks to the JOBS Act, all that has been changed. Now, everyone has a chance to invest in great new companies and technologies that will change the world for the better. Online Public Offerings represent the means by which the true democratization of investment opportunity comes to life.”

Other social ventures are now raising money via StartEngine.

Matthew Weatherley-White, courtesy of the CAPROCK Group.

Matthew Weatherley-White, co-founder and Managing Director, The CAPROCK Group, notes that Community Development Finance Institutions are a good option for conservative impact investing. These special entities are required to meet Federal standards to qualify as CDFIs. You can find a CDFI in your community by visiting the Opportunity Finance Network website, which features a tool for finding a CDFI in your community. While not all CDFI’s accept small deposits or investments, some operate as credit unions and provide robust banking options.

Rod Schwartz, the CEO of ClearlySo, a financial advisory firm for social entrepreneurs in the UK, says, “The idea that impact investing (II) is the preserve of institutions or only the rich is breaking down rapidly, particularly in the UK, where the regime is very much encouraging II.” He notes several examples:

  • Individuals may pretty easily qualify for investment via Ethex, which is a portal into dozens of high impact investments.  The Social Stock Exchange is also working on increasing retail investor engagement
  • Millions of pounds have been invested via Community Share Issues, which support high impact investments in local communities
  • Individuals may invest in Community Development Finance Institutions, and get a tax break—these deposit-like products lend money to the financially excluded
  • There is a bond fund available via Threadneedle, which is an II bond fund

Vincent Bradley, courtesy of FlashFunder

Vincent Bradley, CEO and co-founder of Flashfunders, explains why we are at the very beginning of a long-term trend and impact investment opportunities are so likely to grow in the future. “The next big wave of entrepreneurship globally is going to be impact orientated businesses. As of 2016, Millennials, now numbering 75+ Million have overtaken the Baby Boomer generation as the largest demographic in the U.S. More importantly, millennials care about the social and environmental impact of the products and services they are spending their money on. Moving forward, good business will be impactful business.”

New Course Doesn’t Just Help You Understand Impact Investing, It Helps You Do It

Impact investing is all the rage in philanthropy circles, but most people still don’t really know what it is, let alone how to do it. In order to make impact investing easy for you, I’ve created a new course on Udemy, “Intro to Impact Investing.”

Traditionally, impact investing has been the province of institutional investors and wealthy individuals. That is beginning to change and everyone can now be an impact investor.

In fact, in “Intro to Impact Investing” you will learn how to make your first impact investment with as little as $20.

ad-intro-to-impact-investing

Impact investing is a way you can use your money for good–and get it back with interest! Impact investments come in all forms and while many are tremendously risky, some have almost no risk at all. While some require sophisticated analysis and what investors call “due diligence,” some you can buy on a whim without concern.

Udemy is a platform for online training materials of all sorts. “Intro to Impact Investing” is offered for just $25, but readers can buy lifetime access to the course at 20 percent off using the discount code “DOGOODER” at checkout.

The course can be completed in just 30 minutes. When you finish, you will be ready to make your first impact investment.

Making your first impact investment can be invigorating. Unlike making a donation, the money you invest for impact can come back to you, allowing you to do good with it over and over again.

Impact investments, just like traditional investments, come in all shapes and sizes, each with its own risk and return profile. By completing this course, you can not only be ready to make your first impact investment, but you’ll be equipped to learn more about investing in more complex investments for social impact.

Operation Water Addresses Clean Water Crisis With Scale

With 700 million people on this planet lacking access to clean water, Ryan Phillips-Page, founder of Operation Water, felt that he address water access at scale.

He explains that access to water goes well beyond the need for an adequate supply of clean drinking water. “Almost 1 in 10 people globally lack access to clean drinking water, with women and children disproportionately suffering. The ripple effect of poor health, inadequate hygiene, and lost educational and economic opportunities, traps the most marginalized in a cycle of poverty and disease.”

Operation Water is using innovative financing structures to implement large scale water projects. Ryan says, “We engage governments, utilities and contractors to execute scalable, socially critical water infrastructure projects on a Public-Private Partnership basis, utilizing an innovative funding structure that raises debt at attractive rates from Development Finance Institutions and Export Credit Agencies. From project sourcing to deal execution to construction, the goal is ultimately the provision of sustainable, affordable access to potable water.”

Ryan identifies two big challenges. The first challenge is that of breaking a new trail. “Our vision is ambitious in size and scope; we are charting a path that has not been walked before in terms of social impact water infrastructure development.”

Second, he notes, is the cultural complexity the organization faces. “In addition, across the developing world, a multitude of national, cultural and economic differences creates a complex environment to navigate.”

He acknowledges limitations in their work associated with their efforts to scale solutions up: they can’t help people in small, remote villages. “Since achieving economies of scale is a paramount objective of ours in order to affect the lives of the most people in need at the lowest cost per person, we are limited in our capacity to efficiently provide access to water to smaller villages in remote areas,” he notes.

Ryan remains committed to the solving the challenges and to bringing clean water to as many as possible. “Access to potable water is essential to a suitable quality of life, and thereby a prerequisite to hope, integrity, and opportunity. Delivering clean water solutions to communities in need will result in healthier, more economically productive, and ultimately happier lives,” he concludes.

On Wednesday, October 26, 2016 at 5:00 PM Eastern, Ryan will join me here for a live discussion about the work of operation water. Tune in here then to watch the interview live. Post questions in the comments below or tweet questions before the interview to @devindthorpe.

Ryan Phillips-Page, courtesy of Operation Water

Ryan Phillips-Page, courtesy of Operation Water

More about Operation Water:

Operation Water seeks to deliver clean water solutions to the greatest number of people in need, at the lowest cost per person, by developing scalable infrastructure projects. Major water infrastructure investments build the foundation upon which the most marginalized can escape the cycle of poverty. Providing sustainable access to potable water provides a pathway to mitigating mortality and morbidity while alleviating malnutrition, gender inequality, and disparities in economic opportunity. Drawing on our extensive experience as finance and business development professionals, we resolve to lead the effort to end the global water crisis in the next 30 years, while serving as responsible stewards of capital.

Ryan’s bio:

Prior to founding Operation Water, Ryan was the Founder and Managing Director of RPP Capital Projects and Finance (Pty) Ltd, a company that sources and structures financing solutions for power and water infrastructure projects in Sub-Saharan Africa. In this capacity, he has travelled extensively across Sub-Saharan Africa to meet with Presidents, Ministers, Governors, Director Generals of utilities, and African businessmen to discuss the strategic infrastructure priorities of many African nations. Previously, Ryan served as Director of Facilities and Operations at African Leadership Academy, a world class pan-African boarding high school located in Johannesburg, SouthAfrica. He was African Leadership Foundation’s first staff member and assisted the Founders with networking and fundraising. Prior to moving to South Africa to help launch African Leadership Academy, he served as Vice President of Business Development and Sales at IntellectSpace Corporation, a Seattle-based technology company that serves investment banks, hedge funds, foundations, and law firms. Ryan worked closely with the Founders to develop and execute the Company’s initial sales strategy and successfully built the company’s initial client roster.

Ryan started his career in New York City as an Analyst in the Investment Banking Division of Goldman Sachs Group, Inc. He graduated with honors from Boston College’s Undergraduate Carroll School of Management with a concentration in Finance.

Never miss another interview! Join Devin here!

Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

 

How You Can Invest In (Not Donate) Ending Homelessness

This post was originally produced for Forbes.

It is almost as if the earth shifted a few degrees on its axis and no one noticed. The finance and nonprofit worlds have come together to create a financing model that literally allows investors to earn a positive financial return on programs that lead to reductions in homelessness–and no one seems to care.

Salt Lake County is leading the way with a new financing vehicle known variously as “Pay For Success,” “social impact bonds” or “social impact financing.” While some will quibble over distinctions, I’ll use or quote people using these terms as if they all mean the same thing.

Jeremy Keele, who previously worked for Salt Lake County and now serves as Managing Director for the Sorenson Impact Center at the David Eccles School of Business as the University of Utah, explains how it works.

In social impact financing (SIF), the private sector pays for the capital needs of high-performing, evidence-based nonprofits working on homelessness. If the program is successful, government repays the initial investment. Through models like SIF, government effectively off-loads risk to the private sector and only pays for positive outcomes, which is a win-win for both taxpayers and at-risk individuals and families in our communities.

The financing structure for SIF is upside down from traditional financing, with the investors taking the most risk earning the smallest returns. In fact, they often put money up for the programs on an entirely philanthropic basis, while other investors take less risk and earn higher rewards.

Mayor Ben McAdams of Salt Lake County points out that each participant has a motivation to put the money up that isn’t limited to financial metrics. The senior lenders, taking the least risk, are typically banks that receive Community Reinvestment Act credit with their regulators for lending money for these programs.

Mayor Ben McAdams, courtesy of Salt Lake County

Mayor Ben McAdams, courtesy of Salt Lake County

McAdams says, “The middle tranche is where many impact investors see their loans used. This includes private foundations who make what is known as a Program Related Investment. As social impact investors, they understand the high-risk, lower rate of financial return equation.”

He notes that the folks who take the most risk and are in fact unlikely to receive much if any of their money back in return, let alone receive any return on the investment, are grant makers accustomed to donating money to address these social problems.

Jeramy Lund, also a Managing Director of the Sorenson Impact Center, explains what motivates these grant makers: leverage. “This currently works for those at the bottom of the capital stack because the donors are getting $10 for every $1 they give to do work they care about.” They appreciate that their donations make the rest of the financing possible, significantly amplifying their impact.

Given the peculiar structure of Pay For Success deals, I couldn’t help but ask if it is even possible that this model can scale.

Jeremy Keele, courtesy of the Sorenson Impact Center

Jeremy Keele, courtesy of the Sorenson Impact Center

Keele says it can. “The model is scalable because of the tremendous growth in the impact investing market itself (with an estimated $60 billion in assets currently under management).”

Lund, too, is optimistic. “When you consider that an estimated $358 billion was given to charities in the US in 2015 alone, purposing some of this money from traditional philanthropy – ‘here’s your money, do some good, I hope’ to Pay For Success – ‘here is some money to do A, report back to me on X, Y and Z’ could provide ample scale even if a charitable component needs to remain a part of the transaction.”

McAdams, seeming a bit less optimistic, points out that only time will tell. “There are approximately 50-75 Pay for Success transactions in the pipeline, and once those mature and results are known, it will be possible to determine if the pilot programs are, in fact, scalable.”

Homelessness seems so intractable a problem as to beg the question whether any of this will help.

McAdams acknowledges that homelessness may never go away completely. “There may always be a need for emergency shelter, as when a woman is fleeing a domestic violence scenario and needs refuge. Or when a family is overcome with medical bills and loses their home or apartment. But emergency shelter should be just that, the response to an emergency. The more quickly you help folks move beyond an emergency, the less established the problems that come with homelessness will be.”

Lund says, “One of the benefits of some of the new approaches to treating homelessness is to accept that you can’t use a one size fits all approach and instead apply a specific set of interventions to actually solve for a specific type of homelessness.” He notes that if we can do this for each “type” of homelessness, we have the potential to end it altogether.

Lund notes that a key is to start with people who really understand homelessness, including the root causes.

McAdams identifies some of the key sources of homelessness. “In Salt Lake County we see homelessness because of domestic violence, poverty, untreated mental illness, drug addiction and lack of access to social safety net programs. There is also a lack of affordable housing.”

The Mayor hopes to prevent people from ever needing to end up at the emergency shelter. “By tackling the different circumstances that sent people into crisis in the first place, we remove the one-size-fits-all approach and begin to reorient the system so that we help keep people from ending up at the emergency shelter door.”

He adds, “Our collective impact model assumes that if we are all in harness together and united around the same agenda, goals and outcomes, we’ll have an impact that matches all the time, money and effort that goes into addressing this complex problem.”

Keele agrees, noting that increasingly experts know what needs to be done. “These are not ‘band-aid’ measures — they effectively address the underlying drivers of homelessness, like mental illness, substance use disorders, domestic violence and economic insecurity. What is lacking in most communities is the funding and technical capacity to address the problem systemically.”

Jeramy Lund, courtesy of the Sorenson Impact Center

Jeramy Lund, courtesy of the Sorenson Impact Center

Lund draws parallels between Pay For Success and the venture capital market. “My day job involves funding very risky early stage companies, venture capital, as we know it now, has only been around for about 50 years. But it now has a fairly standard set of contracts, pricing and expectations for the funders and the companies involved. Why couldn’t pay-for-success evolve in a similar fashion where government works with charitable donors, not-for-profits and for-profit funders to achieve social benefits and actually solve problems bigger than how do I send a picture that will disappear after five seconds?”

He adds, hopefully, “It won’t happen overnight, I just hope it will happen and we can solve problems as opposed to treating the symptoms.”

On Monday, October 10, 2016, Mayor McAdams will join me here for a live discussion about the County’s Pay For Success program aimed at reducing homelessness. Tune in here then to watch the interview live. Post questions in the comments below or tweet questions before the interview to @devindthorpe.

Turning Sunlight Into Tax Advantaged Income

Clean Energy Advisors sponsors the Your Mark on the World Center which publishes this site.


You can download an audio podcast here or subscribe via iTunes.

Many people are looking for practical ways to participate in the booming solar energy industry. Clean Energy Advisors, our sponsor, offers a way for accredited investors to participate in solar energy projects.

The Clean Energy Advisors investment model is described in the video below.

We all understand the primary appeal of solar power is that the fuel–sunlight–is free and abundant. CEA uses investors’ capital to fund small utility-scale solar projects. Each project has a contract, typically 25 years, in place to sell solar power. The buyer or “off taker” is obligated to buy all of the power produced during the contract. The off takers are carefully underwritten to assure future cash flows. The off takers are usually utilities who sell the power to commercial and residential customers who otherwise might receive power from nonrenewable sources.

The power purchase agreements or PPAs are structured as fixed rate contracts for the term of the agreements. CEA receives and manages the revenues and then makes quarterly, tax advantaged distributions to investors. Payments made during the first seven years are deemed to be tax free.

Diagram explaining investment thesis

Click to view full size.

On Thursday, September 29, 2016 at 3:00 Eastern, Scott will join me here for a live discussion about the Clean Energy Advisors tax-advantaged model for investing in solar energy. Tune in here then to watch the interview live. Post questions in the comments below or tweet questions before the interview to @devindthorpe.

Scott Hill, courtesy of Clean Energy Advisors

Scott Hill, courtesy of Clean Energy Advisors

More about Clean Energy Advisors:

Twitter: @cleanenergyadv

Clean Energy Advisors (CEA) creates ownership opportunities for investors in utility scale solar energy projects that generate tax-advantaged predictable income, preserve capital, and have positive social and environmental impact.

Scott’s bio:

Twitter: @williamandhill

Scott Hill has over twenty years of entrepreneurial experience including a significant perspective on business start-ups and building successful small businesses. Mr. Hill has been with CEA since April 2014.

His duties include overseeing the firms family office, endowment, foundation, and UHNW client strategies. He has served as a panelist at US based family office conferences and enjoys speaking on impact investing, renewable energy opportunities, and the future of Solar PV worldwide.

Scott is a 1991 graduate of Columbia University and four year member of the football program. He lives near Nashville, TN with his wife and children. He’s also actively involved in his community and church.

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Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

 

Impact Investing Expert Proposes ‘Impact Classes’ To Parallel ‘Asset Classes’

This post was originally produced for Forbes.

To paraphrase the great philosopher Forest Gump, impact investing is like a box of chocolates; you never know what impact you’re going to get.

One of the foremost experts on impact investing, Cathy Clark, Director of CASE i3 at Duke University, is working on that problem. She is focusing on labeling impact into categories that will be recognized by investors and issuers alike.

Sasha Dichter, Chief Innovation Officer at Acumen, sits on the advisory board for CASE i3. Of Clark, he says, “She understands where the field is and where it is going, and her thinking and writing consistently push the field forward.”

Clark says, “Impact Investing is hard to navigate. It covers a lot of activity in different areas done by different people. Yet the interest has never been higher. How can we simplify the field and make it easier for newcomers and experts to find the partners they need and help new investors find the products they want, more efficiently?”

“Getting the terms and categories right for people to customize their own portfolios is an essential building block that seems to be missing right now,” she says.

In light of the challenge, Clark has been working with Tideline to define the problem and start the work on a solution.

Dichter notes that Clark is an effective collaborator. “Cathy has a unique knack for partnership, bringing together practitioners and academics to created grounded, thoughtful pieces of work that address gaps in the underlying infrastructure of impact investing – whether market segmentation, impact measurement or new product development.’

Cathy Clark, courtesy of CASE i3

Cathy Clark, courtesy of CASE i3

Of the collaboration with Tideline, Clark says, “Together we interviewed experts across the field to hone in on what makes the field confusing. From this, I’ve developed an analogy that explains the issue a bit more clearly, and we’re started to float a possible solution: the idea of creating ‘impact classes’ to go alongside ‘asset classes’ to help people label and track the kind of impact they expect to achieve with their investment dollars.”

It looks like she’s on to something. “Over 80% of respondents to a recent survey thought it was a good idea,” she reports.

Ben Thornley, Managing Partner of Tideline, says of his work with Clark, “Cathy’s work has been catalytic for the fields of social entrepreneurship and impact investing – and, importantly, translating between the two. Cathy has that unique blend of intense intellectual curiosity and passion for sharing and collaborating on ideas that make her the ideal guide. She dives deep — delivering case studies and other analyses of the highest order — but is also able to communicate complicated findings with tremendous clarity, at multiple levels – for students, CEOs, funders, investors, and policymakers, which is why she is so sought after.”

The collaboration with Tideline yielded a report, which you can download here.

There are two distinct challenges that make the creation of impact classes difficult.

First, she says, “If everyone knew the kind of impact they wanted to achieve, we wouldn’t need a new labeling system.”

Second, she says, “Some providers are doing very well and actually financially benefiting from the lack of clarity as they talk to potential investors.”

This dual set of issues results in both “confusion and real resistance,” Clark explains.

“On the other hand, when you ask some considering a new impact investing,” she continues, “would you want a simple label that communicates the kind of impact you can expect, and allows you to diversify those impact expectations across a portfolio, nearly everyone says yes.”

This suggests a need to address the problem despite the challenges and implies that the key to success may to be to work with the investors to create demand or impact class labeling, she says.

Clark, who co-authored with Thornley and Jed Emerson the definitive book on impact investing–The Impact Investor–acknowledges that creating a simple classification system from the nearly infinite number of ways that people define impact today will be difficult.

She says, “I helped create the B Corp standards and have been a huge supporter of the IRIS metrics. This would not replace those, but would work to simplify them into some common categories. Almost like archetypes. Getting to consensus on this level of simplification will take a lot of time and interaction.”

Clark believes that her vision of providing a classification system would increase impact investing by making it easier.

“If everyone puts a portion their investment dollars to work toward impact and they come away satisfied with the impact–and financial return–they achieve, we will have changed the expectations of the financial system forever. Because if you could make things happen that you believe in and get a financial return, why would you ever want just financial returns again?”

On Thursday, September 1, 2016 at 1:00 Eastern, Clark will join me here for a live discussion to talk about impact classes and the implications for the impact investing industry. Tune in here then to watch the interview live. Post questions in the comments below or tweet questions before the interview to @devindthorpe.

Place-based Education, Entrepreneurship and Investing for an “Impact Economy”

This is a guest post from Laurie Lane-Zucker, the Founder and CEO of the Impact Entrepreneur.

A little over twenty years ago, Dr. John Elder and I coined the term “place-based education” to give a name to the pedagogical model we were developing at The Orion Society with funding from the Geraldine R. Dodge Foundation.

In my introduction to the Orion book, Place-Based Education: Connecting Classrooms and Communities (Sobel, 2004), I frame place-based education in these terms:

“In an increasingly globalized world, there are often pressures for communities and regions to subordinate themselves to the dominant economic models and to devalue their local cultural identity, traditions and history in preference to a flashily marketed homogeneity. Furthermore, at a time when industrial pollution, biodiversity/habitat loss, and aquifer depletion are becoming widespread and acute, such pressures often exacerbate the problems by encouraging unsustainable patterns of consumption and land use, and by weakening familial and community relationships that are deeply tied to the local environment. A process of disintegration occurs as basic connections to the land fray and communities become less resilient and less able to deal with the dislocations that globalization and ecological deterioration bring about. A community’s health — human and more-than-human — suffers.

“Author, farmer and conservationist Wendell Berry describes disconnections that are now familiar to many of us.

We are involved now in a profound failure of imagination. Most of us cannot imagine the wheat beyond the bread, or the farmer beyond the wheat, or the farm beyond the farmer, or the history beyond the farm. Most people cannot imagine the forest and the forest economy that produced their houses and furniture and paper; or the landscapes, the streams and the weather that fill their pitchers and bathtubs and swimming pools with water. Most people appear to assume that when they have paid their money for these things they have entirely met their obligations.

“The path to a sustainable existence must start with a fundamental reimagining of the ethical, economic, political and spiritual foundations upon which society is based, and that this process needs to occur within the context of a deep local knowledge of place. The solutions to many of our ecological problems lie in an approach that celebrates, empowers and nurtures the cultural, artistic, historical and spiritual resources of each local community and region, and champions their ability to bring those resources to bear on the healing of nature and community.

“Schools and other educational institutions can and should play a central role in this process, but for the most part they do not. Indeed, they have often contributed to the problem by educating young people to be, in David Orr’s words, ‘mobile, rootless and autistic toward their places.’ A significant transformation of education might begin with the effort to learn how events and processes close to home relate to regional, national, and global forces and events, leading to a new understanding of ecological stewardship and community. This, I believe, supports the propagation of an enlightened localism — a local/global dialectic that is sensitive to broader ecological and social relationships at the same time as it strengthens and deepens peoples sense of community and land.

“Place-based education might be characterized as the pedagogy of community, the reintegration of the individual into her homeground and the restoration of the essential links between a person and her place. Place-based education challenges the meaning of education by asking seemingly simple questions: Where am I? What is the nature of this place? What sustains this community? It often employs a process of re-storying, whereby students are asked to respond creatively to stories of their homeground so that, in time, they are able to position themselves, imaginatively and actually, within the continuum of nature and culture in that place. The become part of the community, rather than a passive observer of it.”

A couple years after I wrote these words about place-based education, I became immersed in the newly launched B Corporation and impact investing worlds, as the founder of one of the first, “founding” B Corps and the recipient of some of the first (and, in the case of Mission Markets, the first) impact investments under that new blended value, triple bottom line rubric.

A few years after that, I coined the term “impact entrepreneur” and established a LinkedIn group and, more recently, a consulting company by that name. The virtual global network, now with 12,000 members in 200 countries, has been anything but “place-based”. At least until now. Over the last six months, I and three other (thankfully quite brilliant)team members have been working on plans for a new Impact Entrepreneur Center and replicable model for “place-based economic development.” While inspired by the growing impact entrepreneurship and impact investing movement, it also shares many of the same motivations and principals of place-based education. Here is how we describe this new model in our just-completed Business Plan:

“As the impact (entrepreneurship and investing) movement has risen and begun to coalesce, the ground has become fertile for the next great shift forward. This shift will require the fusion of conscious consumerism, impact investing, social entrepreneurship, new legal frameworks and financial tools, expanded entrepreneurship education, cross-sector collaboration, and the incubation and acceleration of impact enterprises, region by region. Place-based economic development of this kind will both trigger and integrate the creation of positive economic, social and environmental value coincident with the launch, acceleration and development of impact enterprises. The Impact Entrepreneur Center will be one of the world’s first large-scale attempts at this integration, and will help define what an “impact economy” could be and how it might function.”

We believe that in a world of growing social inequities and severe ecological distress, the development of regional, place- based impact economies fueled by triple bottom line contextual thinking and social and environmental innovation will provide the most sensible and practical path toward creating a resilient and prosperous future for local communities as well as global humanity.

Our place-based, impact economymodel, which will be designed to be replicable in other regions around the United States and the world, will be incubated in our home region of Berkshire County, Massachusetts. The IEC, according to our business strategy, “plans to lay the groundwork for the concept of an impact economy in the Berkshires by gathering data and cultivating the thought leadership on this concept; designing, developing and delivering curricula for middle school students to adults (think Place-based Education 2.0) that will enhance the understanding of impact economies and provide technology and tools to grow impact enterprises in Berkshire County (and beyond); and recruiting, retaining and scaling regional enterprises that intend to grow using the triple bottom line approach to business development.”

Place-based education, entrepreneurship and investing is the next wave of the impact movement. The Impact Entrepreneur Center is committed to making that wave tidal and universal.

Laurie Lane-Zucker

Laurie Lane-Zucker

About Laurie Lane-Zucker:

Twitter: @laurieLZ

Laurie Lane-Zucker is Founder and CEO of the Impact Entrepreneur, a global network of entrepreneurs, investors, scholars and students of social and environmental innovation; a consulting company (LLC) that works “between the seams” of the network; and the newly launched nonprofit Impact Entrepreneur Center for Social and Environmental Innovation.

5 Tips For Changing The World With Technology Investments

This post was originally produced for Forbes.

Cecile Blilious is a social venture capitalist in Israel who is out to change the world. She offers five tips to help other investors do the same with investments in technology that offers a social benefit or social technology.

As Co-Founder and Managing Parter, Blilious leads Impact First Investments, which she describes as the “first Israeli investment firm specifically designed to leverage local technology and innovation to create global social impact.” The firm focuses exclusively in investments in Israel that have technology solutions to global social problems.

The fund earns its fees in the traditional manner with a management fee of 2.5 percent annually and a carried interest of 20 percent that entitles management to one-fifth of the profits on the investments. The team today includes five people with a six-member advisory board. The firm is now in the fundraising stage.

Blilious believes that she is herself a social entrepreneur. She says, “By working with Israel’s world class tech developers and social entrepreneurs, Impact First seeks to address the pains of millions of people, in a sustainable, measurable, profitable way.”

Nechemia Peres, Managing Partner and Co-Founder of Pitango Venture Capital, which has committed to invest in Impact First Investments and is hosting the younger firm in its office space, says, “I think they are doing a professional job full with enthusiasm and persistence. In addition to that they combine social investing, Israeli innovation, and a moral code and values–all of which are emerging trends on a global basis. They make a real contribution to humanity.”

Cecile Blilious, courtesy of Impact First Investments

Cecile Blilious, courtesy of Impact First Investments

Blilious offers the following five tips for changing the world through investments in social technology:

  1. Do not sacrifice on talent.
    The team you create to build your company is going to determine your success. Building the right team means finding skilled individuals with the training and experience necessary to address all of the issues your business is going to face. Running a startup requires you to think about the bigger picture, not only in terms of your company growth and market place, but the people you need to execute your plan.
  2. Be profitable with a defined theory of change.
    Create a profitable business, but one with a defined theory of change. A startup that seeks to address a pressing social issue must have the same growth potential and profitability as any other startup company. To succeed as a business that improves people’s lives, you need to operate with a clear, defined theory of change.
  3. Incorporate an intrinsic mission.
    Make sure that achieving your mission is an intrinsic component of your business plan. This means building social change into the DNA of your company, so that with each dollar earned a social improvement is created. A company who does this will not be able to good without making money, and will not be able to make money without doing good. They should come hand-in-hand, not as separate operations.
  4. Build the best board you can.
    Investors are not simply people who provide your company with financial capital. The people who you choose to go into business with can, and should, bring more to the equation than their checkbooks. Your investors and board members should be aligned with your mission and can provide business support. Look for people who have experience in the field and a sincere mission to create good in the world.
  5. Cooperate with international partners.
    If you’re seeking to create change on a global scale, finding the right international partners is a significant piece of the impact puzzle–these are the people that will help your company access new markets and create global impact. Before launching, this requires extensive research and networking. A strong board that is aligned with your mission, and a skilled staff, will go a long way in executing this strategy.

On Thursday, July 21, 2016 at noon Eastern, Blilious will join me here for a live discussion about her five tips for changing the world with impact investments in social technology. Tune in here then to watch the interview live. Post questions in the comments below or tweet questions before the interview to @devindthorpe.

Prior to founding Impact First, Blilious managed a portfolio of Israeli investments for the Noaber Foundation, where she served as a board member and/or as chairperson for several companies. Previously, she served as CEO of several companies, she says.

Remarkably, she is proud of having served as an initiator of the Al-Bawader private equity fund that invested in businesses in the Arab community in Israel.

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