Impact Investing Digest #5 - 18th March 2024

GREAT CONTENT SOURCES

I thought that as well as sharing my regular curated list of content, I would also begin this edition by flagging some of the best sources of impact investing or sector-related content I rely on:

• General impact investing content: ImpactAlpha, Stanford Social Innovation Review, Paddy Carter of British International Investment, NextBillion , Kevin Starr of Mulago & Laurie J Spengler .
• Broader international development content: ODI Global , Center for Global Development , VoxDev , Devex & International Growth Centre .
• Blended Finance: Convergence Blended Finance .
• Impact Measurement: 60 Decibels , BlueMark , The Good Economy , Acumen & Impact Frontiers .
• Financial Inclusion (Emerging Markets): [99%Tech] (by Alexandre Lazarow ), The faiV (by Timothy Ogden ), CGAP .
• Agriculture (Emerging Markets): ISF Advisors , IDH , Aceli Africa & Gatsby Africa .
• UK Impact Investing: Better Society Capital , Impact Investing Institute , NPC (New Philanthropy Capital) , Pioneers Post & Jamie Broderick .

Many have regular blogs/newsletters or post regular content on this platform, so I'd encourage those with specific interests to sign up themselves - if there are any other great blogs/newsletters people follow that they think I should be keeping an eye on, please do share them in the comments below the article!

ECOSYSTEM NEWS

IA50 2024: ImpactAssets launched the latest edition of their IA50 database of leading private market-focused impact managers. For those looking to source impact-aligned pipeline, it's a very good place to start with 155 impact funds representing $97 billion in AUM. As always, it's a source of real pride to see so many managers from the Ceniarth portfolio present - the full list from our portfolio is available in a recent post I made. We love seeing consistent performance from more mature asset managers in the "Emeritus" category, but also new managers with innovative strategies such as Cross-Border Impact Ventures . I am hopeful we will launch new investment relationships with a number of other fund managers on the list in 2024. Getting into more nuanced detail, ImpactAlpha highlight some important trends of increased focus on impact-linked compensation and nature as an impact theme.

Blended finance mobilisation ratios: building on the previous edition's discussion of Route17 's "mobilizing private capital equation", I very much enjoyed two focused pieces I came across recently. Both in different ways address the fact that we need significant leverage on impact-first capital from private investors, foundations and DFIs if we are to get closer to the investment volumes needed to make a dent in the SDG goals.

• Paddy Carter of British International Investment explores the potential and limitations of using blended finance for secondary transactions - emphasising the need for DFIs to focus both on crowding in new hands-on investors targeting private markets as well as larger (but more passive) institutional asset allocators.
• MOBILIST Global is a flagship Foreign, Commonwealth and Development Office programme focused on mobilising public markets to catalyse new scalable and replicable financial products that support the Global Goals and net-zero transition. Their recent research note focused on the high potential of guarantees to offer "best-in-class mobilisation rates", but laments the current under-utilisation of the tool in developing economies.

IMPACT MEASUREMENT & MANAGEMENT

Smarter public spending on housing solutions: the soaring rates of rough sleeping and homelessness in a country as wealthy as the UK are an indictment of all that has gone wrong in modern society. This is a matter very close to my heart, with both my parents having worked for frontline organisations trying to mitigate this problem in London and Belfast earlier in their careers. Shelter estimate that rough sleeping has increased 27% in the last 12 months and more than doubled since 2010. Over 100,000 households are homeless in temporary accommodation, including 142,490 children. More positively, robust evidence exists on the value for money of public support to transitional housing solutions. Alma Economics have supported Resonance Limited and Big Society Capital to quantify the impact of property funds targeting homelessness. It shows the huge savings created for local and central government versus ongoing spending on temporary provision. Over five funds managed by Resonance, 3,300 people (including 1,607 children) who were at the risk of homelessness were provided with both accommodation and wraparound support services. This is estimated to have saved local and central government over ￡140m in spend on temporary accommodation plus other homelessness costs on healthcare, mental health and criminal justice services. With homelessness rates soaring and many local authorities facing bankruptcy, Big Society Capital is calling for the government to reallocate a larger proportion of its existing spend to further scale initiatives like this which enable taxpayer funds to go much further. With a ￡100m grant from government, it estimates that projected impact over the next ten years could be quadrupled - catalysing an additional ￡650m from investors, which could house 23,750 people and generate ￡1.1bn in public savings on homelessness.

In numbers we trust: Ceniarth has always prided itself in using our platform to discuss inconvenient truths for impact investors, whether it be the reality of trade-offs inherent along the impact/risk/return continuum or specific concerns we see at a sector level. Kevin Starr at Mulago is a fellow impact-first funder and investor who nevers pulls his punches when calling out negative trends in the sector. I loved his recent piece in Stanford Social Innovation Review flagging the danger that "trust-based philanthropy shouldn’t mean blind faith". As Kevin says, as shift to trusting great organisations to continue to scale and evolve their business models is welcome. More unrestricted grant funding and flexible, patient impact-first capital is definitely a good thing. However, such trust should also come with accountability for impact - "trust comes from a shared reality, and a shared reality can only happen when the numbers anchor the stories, and the stories make the numbers sing." On a related note, I enjoyed Segal Family Foundation 's recent article on the benefits of multi-year general operating dollars.

SECTOR-SPECIFIC CONTENT

• Rethinking Financial Inclusion: Amplifying the Voices of Savings Account Clients - so much of the narrative around financial inclusion centres around the provision of responsible credit to those underserved my mainstream providers. However, savings can provide a vital tool in improving financial resilience. 60 Decibels , Accion and Opportunity International explore this theme, with nuanced learnings from the 2023 Microfinance Index.
• Equitable Value Distribution Survey Findings - the Specialty Coffee Association summarise the need for more progress in more equitably sharing value within the coffee value chain. In particular, they note a consistent perception in the industry that producers receive a proportionally low share of coffee’s total value in comparison to the value they create.
• Commodity price volatility and the psychological well-being of farmers - a thought-provoking paper on how commodity price fluctuations have large mental health impacts on Vietnamese farmers.
• Aceli Africa Year 3 Learning Report - Aceli Africa is an innovative programme designed to building the market for agricultural SME finance in Africa. They use a mixture of origination incentives, risk mitigation and technical assistance to support a range of capital providers to increase their lending in the sector. Their recently released 3 year learning report provides some great insights into genuined behaviour change as well as sector trends.
• Why do SMEs matter? Rania Nasir and colleagues at International Growth Centre explore the importance of small and medium-sized enterprises (SMEs) in developing countries, where they are estimated to provide over 70% of jobs and contribute to nearly 35% of GDP. It explores their often crucial role in supplying goods and services to lower-income and rural populations, as well as the essential role they play in job creation - while also considering the trade-offs of lower productivity and lower-quality jobs compared to larger firms.