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#Dealflow: Follow the Money
UK tax relief funds start to flow to social enterprises. Social Finance UK made its first investment from its Bright Futures Social Investment Tax Relief Fund, which has raised £1.5 million ($1.9 million) from 40 taxpayers since 2015. The £260,000 ($324,000) loan to Ability Tec, a manufacturing company, will help it train and hire disabled workers. People with disabilities are more than twice as likely to be unemployed as non-disabled people in the U.K. Bright Futures leverages a 30 percent tax deduction for individual taxpayers who make social investments. The fund, required by law to invest in social enterprises and charities, is expected to deliver returns of five to 10 percent. Another tax relief fund, backed by UBS Wealth Management, raised £1.3 million last year.
Connecticut backs indoor farming venture to create jobs – and grow food. The state’s economic development department invested $3 million in Four Season Farm LLC, a 10-acre indoor hydroponic farm expecting to produce millions of pounds of tomatoes. The agriculture venture is expected to create 40 jobs over two years and enable local produce to compete with imported and out-of-state products. The state funding will be used for machinery and facilities to grow tomatoes, which typically require warmer outdoor growing temperatures than Connecticut provides.
World Bank commits $130 million for digital payments in Pakistan. The World Bank is backing projects to build access to credit and digital payment infrastructure for households and small businesses. The move is part of the government’s 2015 National Financial Inclusion Strategy. Only 10 percent of Pakistani households have a bank account; one-third of adults are borrowers, but only three percent get credit from financial institutions. The Pakistan Microfinance Investment Company, the Central Directorate of National Savings, and the State Bank will manage the projects.
#Signals: Ahead of the Curve
Italy moves to catch up to France in green bonds. A recent study of how to spur private investment in environmental and climate change initiatives recommended Italy establish a national green bond development committee. Green bonds hit a record high in 2016, rising to $81 billion, and France just issued its first green bond—the largest ever, owing to strong investor interest. “Strengthening the environmental dimension of finance is essential to deliver our goals for sustainable development and climate change,” said Italy’s Minister of the Environment, Gian Luca Galletti. The European Commission is also beefing up its sustainable finance strategy.
Can software and social impact learn to speak the same language? Tableau, a maker of data-analysis and -visualization software, tells employees who volunteer to help nonprofits to “shut your mouth and listen.” Many Silicon Valley companies try to help social-impact organizations by donating products or technical assistance. But techie types and mission-driven groups have often had trouble connecting, as ImpactAlpha found at this week’s Data on Purpose/Do Good Data conference at Stanford University.
MoneyGram acquisition helps Alibaba Group go global, but will it lower remittance fees? Globally, more than $580 billion is remitted by migrants to their home countries, 75 percent to developing countries. Alibaba Group’s acquisition of MoneyGram—the second-largest money transfer service worldwide—may help bring the expensive transfers world into the era of mobile and online money. The acquisition gives Alibaba’s online payments processor, Ant Financial, access to MoneyGram’s 200-plus international markets. Ant Financial is known for its smartphone app One, and online payment service AliPay, which processes 58 percent of China’s online payments. Fees are high in the remittance world, averaging 7.4 percent on each transaction.
Needed: Agents of Impact to drive corporate sustainability. Corporate sustainability initiatives have exceptionally low success rates. New research from Bain & Company found that of 300 companies pushing for sustainability shifts internally, only two percent achieve or exceed the goals they set out to. The question is how hard they really tried. Among the reasons the initiatives failed: lack of allocated resources or accountability, competing business priorities, and insufficient employee incentives. The Aspen Institute’s First Movers fellowship is helping corporate sustainability managers and executives become more effective change agents.
#2030: Long-Termism
Are development experts tackling the wrong problems? No. 1 among the 2030 global Sustainable Development Goals is “end poverty in all its forms everywhere.” Efosa Ojomo at the Clayton Christensen Institute for Disruptive Innovation says we’re going about it all wrong. The current emphasis on poverty alleviation, versus prosperity creation, means that “while we might alleviate poverty, we don’t do much else,” Ojomo says.
Compare a failing toilet initiative in India with the booming mobile-money market in Kenya, Ojomo suggests. The government’s Clean India campaign committed to provide toilets to more than 60 million Indian households by 2019. More than two years and 10 million toilets later, few Indians are using the toilets. In Kenya, M-Pesa was adopted by more than 19 million Kenyans because it was a better way to manage payments. And it reduced poverty, to boot. “How might the development community be transformed if we simply asked – how can we best create prosperity in poor countries?” Ojomo asks.
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