Hello there. It’s been a while. Sorry for the absence. I’ll continue to publish Impact Esq, but it will likely be on a less frequent basis. Hopefully the content will still be relevant to you. Cheers!
Board Governance from Abroad. From the outside, the education charity More Than Me was a huge success. Disrupting a failing school system in Liberia and winning international accolades. Yet some of the girl students had a secret. Far from being saved from sexual exploitation, they were being raped by the co-founder of the organization. He had a romantic relationship with his American female co-founder Katie Meyler. The assaults went on for years, and she kept him in place even after having reason to suspect his predilections. But he was also shielded from exposure in the community by everything that she had brought: a school, scholarships and, above all, hope. There are very conflicting stories about who knew what, when. But this disturbing story is cautionary tale for any board members far removed from work on the ground in international non-profits. As one board member put it, “There was an ignorance around how badly things could go if the right structures, governance weren’t in place. If we just sat in our beautiful homes in America, got these beautiful phone calls about so-and-so girl… We weren’t really doing the work that it would take to actually protect children.” ProPublica (52 minutes)
Opportunity Zones. Opportunity Zones are a compelling and powerful new tool for investors, asset owners, asset managers and communities that can mobilize capital for economic development in underserved communities, yielding good job creation, affordable and workforce housing development, community improvement and economic growth. Enacted as part of the Tax Cuts and Jobs Act of 2017 (the “Act”), Opportunity Zones are designed to: 1) drive investment to designated underserved areas (Opportunity Zones); 2) by promoting the sale of capital assets and the reinvestment of capital gains proceeds; 3) through certified investment vehicles (Opportunity Funds); 4) into qualified investments, including real estate (Opportunity Businesses); 5) while providing significant tax advantages to investors; and 6) producing beneficial community development and Impact in the designated Opportunity Zones. Womble Bond Dixon (11 minutes)
Patagonia & Politics. In what campaign-finance experts say may be a first, outdoor clothing company Patagonia is endorsing two Senate candidates in the western United States, where protecting the public land in which its customers recreate is a key concern. What Patagonia is doing is different. For as much money as corporate interests have pumped into politics after the Supreme Court’s Citizens United decision in 2010, Patagonia’s pair of endorsements may constitute the first time any corporation has explicitly endorsed a candidate for office, experts say. Many corporations, such as AT&T, ExxonMobil and UPS, have established political action committees that take donations from employees and use it to fill candidates’ coffers. The companies themselves stay mum on their preferred candidates. Washington Post (7 minutes)
Billion Dollar B Corp. On October 11th Allbirds, a B Corp, announced it closed a $50-million round of series C funding at a $1.4 billion valuation. The figure more than triples the company’s value last year, and puts it in the league of the startup world’s so-called unicorns…. Or should we say zebras? Allbirds is the second B Corp certified company to reach the $1B mark after Warby Parker. Quartz (5 minutes)
Investing in Refugees. A growing body of evidence demonstrates that refugees are a smart investment. However, the humanitarian and philanthropic community primarily focus on more on reactive funding for short-term emergencies. Philanthropic capital is neither supporting durable solutions nor directly reaching refugees. The Refugee Investment Network (RIN) has developed an investor’s framework to qualify and track investments over time and to respond to the question: “What is a refugee investment?” This “Refugee Lens” considers ownership, leadership, as well as an organization’s potential for catalytic change within the broadly defined “refugee community.” The Refugee Lens further defines “refugee-supporting” activities—activities that positively affect the lives and well-being of refugees or their hosts through direct products and services, workforce development, or by improving humanitarian capacity. The Refugee Lens similarly defines refugee-supporting loans and investment funds, setting targets for refugee involvement and impact. And just as the lens defines what refugee investments are, it proposes what they are not: for example, refugee-led enterprises that do not consciously attempt to improve the lives of refugees, or corporate responsibility efforts aimed at refugee populations. Refugee Investment Network (32 minutes)
Digital Security at the Bottom of the Pyramid. Around the world, digital lending companies are emerging and growing. They offer digital loans through mobile phone apps. Many of these companies are reaching out to customers at the base of the economic pyramid. Amounts and loan maturities vary from very short-term “nano” loans of a few dollars to medium-term small business loans of a few hundred or some thousands of dollars. All these companies have at least two things in common: they use online and mobile tools to connect with customers, and they use a range of customer data, obtained electronically, in making their credit decisions.The sensitivity of this information gives rise to a series of critical questions for customers: 1) To whom am I giving my data? And who else do they allow to access it? For what purposes? 2) How do the companies protect data so that people who do not have legitimate access cannot use or steal it? 3) What rights and options do I have if something does go wrong? This report by the Center for Financial Inclusion reverse engineers some of the top global apps and shows their vulnerabilities. Center for Financial Inclusion (36 minutes)
Lynn Stout. I’m sad to report that Lynn Stout, Distinguished Professor of Corporate and Business Law at Cornell Law School, succumbed to an aggressive cancer on April 16th. Her passion for delving into complex problems was contagious. Her work ethic was legion. And she put these qualities towards some of the most important questions of our age – why do corporations exist? What should they aim to do? And if we want to enlist companies to tackle societal problems of significance, what are the key principles of law, business and finance that need to be “disrupted” to embrace a new reality? Lynn personally shaped my understanding of whether or not corporations have a duty to maximize shareholder value and her work will live on when I teach the topic to my students at Harvard Law every year. She was a rigorous thinker for good. She will be missed. Linkedin (5 minutes)
Impact Esq is a monthly email summarizing the best articles on social enterprise and impact investing law edited by Kyle Westaway – Managing Partner of Westaway, Lecturer on Law at Harvard Law School and author of Profit & Purpose. If you like what you’re reading please share it with other social impact attorneys. Have a restful and thoughtful weekend.
Photo by Charles Deluvio.