Impact Esq Vol. 3

Good morning. I’m just back from an inspirational week at the Skoll World Forum with some fresh insights to kick off Spring. Hope you enjoy. Cheers!

Social Enterprise

  • Kentucky Passes Benefit Corporation. Kentucky just became the thirty-second state to pass legislation that permits companies to operate as benefit corporations. Kentucky is following Delaware’s statute, not the model legislation. There are a few notable exceptions: First, 90% of shareholders must approve a conversion. Second, annual rather than biennial, benefit reports are required. Check out the new statute here (14 minutes).
  • CASE Smart Impact Capital. To address the challenges of getting social entrepreneurs ready for funding CASE began development of CASE Smart Impact Capital, a series of online training modules that take the lessons learned from 15 years of work with investors and social entrepreneurs around the world. The modules are designed to be entrepreneur-friendly – straightforward, flexible, and with frameworks and tools that lead to actionable decision making. Not sure whether equity or debt is right for your company? The Calculating Your Funding Gap module walks you through the process of building your cash model and calculating your funding gap, and the Scenario Planning module lets you see the effects of different types of capital on your bottom line. How do you balance business growth and impact evidence when speaking to investors? Our Articulating Strategy to Investors and Motivations of Capital Providers modules give you tools to speak about both dimensions and insight into the right balance you should strike for different audiences. I was speaking with Cathy Clark of CASE at Skoll World Forum last week and she mentioned that the beta test with SOCAP Fellows has been very encouraging. They will be available more broadly in the fall. Learn more at CASE (8 minutes).

Impact Investing

  • Toniic SDG Impact Framework. Toniic Institute, the global action community for impact investors, recently released the first version of the Toniic SDG Impact Theme Framework. The Framework links 11 macro impact investing themes, and 55 subthemes, to the United Nations’ Sustainable Development Goals (SDGs). The goal of the framework, the development of which Toniic will curate as a public good, is to allow impact investors to align their investments with the SDGs and thereby find greater alignment and synergy in global investment opportunities. The Framework was created by Toniic members, and improved by external editors. Toniic invites continued input from the impact investing community and expect to evolve the framework over time. Learn more at Toniic (3 minutes).
  • Oxfam Critique’s Impact Investing. For decades, there was one financial tool for use in combating poverty: a 100 percent loss-making grant made typically to non-profit organizations. The field has evolved to encompass new capital vehicles and innovative business models. The non-profit and for-profit binary condition has also evolved to reveal a much more heterogeneous universe of actors and instruments actively engaged in combating poverty. The financial instruments supporting this movement away from a grants-based approach broadly fall under the term of ‘impact investing’. However, in the quest to attract capital, Oxfam feels that the field has lost its focus on the primacy of the mission. The predominant focus in the literature is on financial return expectations, in particular the quest to prove that market rate returns are achievable in impact investing. However, most enterprises making meaningful contributions to poverty alleviation lack the ability to deliver commercial rates of return. The field has evolved to meet the needs of the investors, and insufficient attention has been paid to the realities and needs of the enterprises themselves. There is a real risk of mission drift as funds—pressured by the lack of deals that can deliver high returns and full impact in a limited time frame—sacrifice intentionality, which is essential to impact investment. Read the full report at Oxfam (26 minutes) and watch a debate from Skoll World Forum on the report here (1 hour 16 minutes).

Shameless Self-Promotion

Vote Please. I just found out that our firm Westaway has been nominated for a Webby (the Oscars of the internet) in the legal category. Our team has put a lot of hard work on the design and coding. We’re in a tight race and are currently in second. If you have a moment, I’d appreciate if you click here and vote for Westaway. Wouldn’t it be cool if a social enterprise law firm won the Webby?

About

Impact Esq is a monthly email summarizing the best articles on social enterprise and impact investing law edited by Kyle Westaway – author of Profit & Purpose and Managing Partner of Westaway. Thanks for being a member of the Impact Esq community. I truly enjoy curating this email every month and love hearing your thoughtful insights. Feel free to shoot me an email with any feedback or suggestions. If you like what you’re reading, I’d be honored if you share it with other social impact attorneys. Have a restful and thoughtful weekend.