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#Featured: ImpactAlpha Original

Notes from Underground: Boosting livelihoods in the informal economy. The vast underground economy around the world is characterized by below-the-radar flows of money, tax evasion, and poor labor conditions. Less obvious are the sector’s important lessons for self-regulation, new income streams and inclusive financial innovation.

Rather than force food vendors, taxi drivers and small farmers to join the formal economy, new business models are emerging to help informal entrepreneurs self-organize, get loans and improve their supply chains.

Keep reading Jessica Pothering’s dispatch from this week’s Global Entrepreneurship Congress in Johannesburg.

#Dealflow: Follow the Money

SOCAP spins out of MissionHUB under new investor group. The 10th anniversary gathering of SOCAP in San Francisco in October will convene under new ownership. An investment group led by Robert J. Caruso of Kantian Social Ventures, has acquired a majority stake in the Social Capital Markets conference. SOCAP is spinning out of MissionHUB LLC, which remains a minority owner and co-founders Rosa Lee Harden and Kevin Jones and the core event team will remain on board. The new investor group includes “mission-aligned impact investors”; John Morris of V2V Associates helped pull the deal together. The new structure is intended to “allow SOCAP to independently ramp up its efforts” to build the impact investing market and reach mainstream audiences. The first effort under the new owners will be the launch of “The Good Capital Project,” in New York in June, an 18-month effort “to drive greater collaboration and accelerate capital flows into purpose-driven investments.”

Beneficial Returns launches with loan to Interrupcion Fair Trade. The new loan fund was launched by Ted Levinson, formerly at RSF Social Finance, to help social enterprises gain access to debt and credit. Its first investment is a $500,000 loan to Interrupcion Fair Trade, based in Brooklyn, N.Y., which imports organic and fair trade produce from small farms in Latin America. Interrupcion plans to use the loan to build a cooling and packing facility for blueberries in Chile. Beneficial Returns provides loans of $75,000 to $500,000 for ventures needing facilities or equipment capital and offers investors a two-percent annual return. It’s backed by the Swift, Skees, Younger and Tides foundations. “I think equity for ‘deep’ social enterprises is a crock,” Levinson tells ImpactAlpha. “Debt is the appropriate vehicle.”

Bremer Bank helps Habitat for Humanity boost home ownership in Twin Cities. The St. Paul, Minn., community bank agreed to purchase and service 500 below-market mortgages approved by Habitat for Humanity’s local chapter. Twin Cities Habitat’s impact 2020 strategic plan aims to help 500 working-class families—mostly people of color—become homeowners by 2020 with the help of the chapter's $90 million Home Loan Fund that offers 30-year fixed, below-market-rate mortgages. Bremer Bank, a $10 billion regional bank, agreed to buy all 500 mortgages as Habitat’s sole banking partner for the fund.

Fluxx raises $16 million for software to manage foundation grants. Fluxx’s software helps philanthropies manage their grant disbursements and bids for funding. Clients include the Ford, MacArthur and Knight foundations. The Series B round was led by Canvas Ventures, with backing from Kresge Foundation and Felicis Ventures. Fluxx will use the funding to develop its platform, which caters to endowments of as little as $1 million to $10 billion.

See all of ImpactAlpha’s recent #dealflow.

#Signals: Ahead of the Curve

BlackRock asks companies to report climate risks. BlackRock, the world’s largest asset manager, put corporate boards on notice that it expects them “to have demonstrable fluency in how climate risk affects the business” and how management is managing that risk. Specifically, the world’s largest asset manager is encouraging companies, “in due course,” to follow the recommendations of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures, launched in December by Michael Bloomberg and Mark Carney, governor of the Bank of England. BlackRock is following State Street’s lead in demanding transparency in climate risk exposure from portfolio businesses. The $5.1 trillion investment firm has come under fire for voting against environmental resolutions at shareholder meetings. BlackRock says it prefers private meetings. "We can't micromanage," BlackRock’s Michelle Edkins told Reuters.

Lenders seek to green the shipping industry with promise of savings. Ships, which carry 90 percent of global trade, are heavy polluters. The 15 biggest vessels emit more nitrogen and sulphur than all the world’s cars combined. Inefficient vessels cost the shipping industry $70 billion per year, but owners have little incentive to invest in upgrades. Tens of billions of dollars in retrofit loans are needed to green the sector. The Sustainable Shipping Initiative has designed a product to share savings between owners and charter firms. The European Investment Bank has earmarked €250 million ($282 million) for loans to the over-indebted.

Berkeley offers impact investing academic research prize. The University of California, Berkeley’s Haas Business School is cultivating academic rigor in impact investing. The school’s Center for Responsible Business is accepting proposals until April 3 for its Investment for Impact Research Prize. Topics can range from green bonds to microfinance to venture philanthropy. The $5,000 prize winner will be announced in September.

#2030: Long-Termism

It’s time to step up progress on universal education. Progress toward universal education (Sustainable Development Goal No. 4) is the biggest driver of all the other goals as well. If everyone in the world completed secondary school by 2030, poverty would be eliminated 10 years earlier than currently forecast. The International Commission on Financing Global Education Opportunity reported the vision could be achieved within a generation if education in all countries improves as fast as the fastest-improving quartile of countries.

Suffice to say, that is not yet happening. A new report from UNESCO warns if current trends continue “universal primary completion will be achieved in 2042, universal lower secondary completion in 2059 and universal upper secondary completion in 2084.” No low-income countries are currently projected to meet the universal education target. “We need to get our act together to accelerate educational attainment in an unprecedented manner,” writes economist Jeffrey Sachs, a special advisor to the U.N.

The education commission report proposes “the largest expansion of educational opportunity in history” and the financial investment required to achieve it. The plan calls for low and middle-income countries to raise their spending on education from $1 trillion in 2015 to $2.7 trillion by 2030, or from 4 to 5.8 percent of GDP. International sources, including foreign aid, would play only a small part in total education financing, but would still need to rise from an estimated $16 billion per year today to $89 billion per year by 2030.

Onward! Please send any news and comments to editor@impactalpha.com.