PCV Releases Five-Year Impact Report

Pacific Community Ventures

Pacific Community Ventures (PCV) is a private, for-profit, venture capital fund that invests in high potential companies across diverse industries based in California’s low and moderate income communities. PCV has fueled the recovery since the end of the Great Recession five years ago. PCV has created 1,297 jobs for working people in underserved communities and empowered 867 companies across 25 states. The small business owners in PCV’s network saw a 12% job growth. PCV also worked at a national and international level with policymakers and investors in 148 countries to build impact investing markets and drive more private capital toward social good and underserved communities.

Download the report here.

PCV Publishes a Report on Domestic Impact Investing Policy in the U.S.

Pacific Community Ventures

Pacific Community Ventures (PCV) has released the report “Financing Social Innovation: Analyzing Domestic Impact Investing Policy in the United States.” This report offers a view into the intersection of federal policy and impact investing in the U.S. It includes a look at both historic and present ways policy leverages private dollars for social and environmental impact, and offers a set of criteria for evaluating new impact investing policy proposals going forward.

Download the report here.

Excell Partners to Manage $2M Investment in Minority and Women-Owned Start-Ups

Excell PartnersGovernor Andrew M. Cuomo announced that New York State is launching a $2 million MWBE Investment Fund to provide seed financing to certified minority- and women-owned business enterprises.
“The launch of this first-of-its-kind investment fund will help further increase opportunities for minority and women-owned businesses in New York and help this vitally important part of this state’s economy grow,” Governor Cuomo said. “Under this administration, great strides have been made to support these businesses and encourage diversity in the private sector, and this new fund will go a long way toward making those gains permanent and building a brighter future for New York.”
This fund will be managed by Rochester-based Excell Partners, one of the eight venture capital firms that make up New York State’s Innovate NY Fund, L.P. CDVCA serves as the General Partner for the Innovate NY Fund, a $45 million seed stage business equity fund that supports innovation, job creation, and high growth entrepreneurship throughout New York State.
Read more.

CDFI Fund Appropriations Update

This week, the House Appropriations Committee approved the FY ’15 Financial Services and General Government (FSGG) Appropriations bill. The Committee’s bill includes $230 million for the CDFI Fund – an increase of $4 million over current year funding and $5.1 million over the President’s budget request. As the chart below shows, the House bill sets aside $177 million for the Fund’s Financial Assistance (FA) and Technical Assistance (TA) grant programs, and those set-asides are provided in bill language. In addition, $15 million is set aside for the Native American CDFI Initiative, $18 million for the Bank Enterprise Awards (BEA) program, and $20 million for CDFI Fund administrative expenses. The House Appropriations Committee did not include funds for the Healthy Food Financing Initiative (HFFI) or authority for the CDFI Bond Program, as requested by the President.

This past Tuesday, June 24th, the Senate Financial Services and General Government (FSGG) Appropriations Subcommittee approved its FY ’15 spending bill. While the bill has not been released to the public, Senator Udall (D-NM), who Chairs the Subcommittee, spoke during the mark-up about his commitment to “target resources to boost job creation and community development,” including $230 million for the CDFI Fund in the spending bill, along with $1 billion in CDFI Fund Bond authority. A press release issued by the Appropriations Committee reported some–but not all–of the CDFI Fund set-asides, including $1 million to promote CDFI expansion into underserved areas, $35 million for HFFI, and $18 million for BEA. Additional information on the Senate’s FSGG Appropriations bill is embargoed until the bill goes to the full Appropriations Committee–a move initially planned for Thursday, but which is now postponed indefinitely, along with action on several other Appropriations bills, including the Labor, HHS bill and the Energy and Water bill.

 

Senate Indian Affairs Committee Convenes a Hearing on Economic Development

On Thursday, June 25th, the Senate Indian Affairs Committee, chaired by Senator Jon Tester (D-MT), held an oversight hearing on “Economic Development: Encouraging Investment in Indian Country.”  Dennis Nolan, Acting Director of the CDFI Fund, testified at the hearing, as did Gerald Sherman, Vice Chair of the Native CDFI Network. Much of the testimony offered and questions posed by the Senators in attendance, including Senators Tester (D-MT), Barrasso (R-WY), Crapo (R-ID), Heitkamp (D-ND), and Begich (D-AK), focused on how the CDFI Fund and programs administered by the Fund could be fully utilized to reach and serve Native communities and Native CDFIs.  A complete list of the witnesses and copies of their written statement can be found on the Indian Affairs Committee website (www.indian.senate.gov) along with a video of the hearing.

 

Calvert Foundation Launches the Ours to Own Campaign

The Calvert Foundation announced the launch of its Ours to Own Campaign in Denver this week at a meeting of the Clinton Global Initiative America (CGI America). The campaign’s mission is to leverage the collective power of individuals to make small investments that will support local businesses and redevelopment efforts in their communities. The Calvert Foundation has committed to launch Ours to Own platforms in 5 cities by 2015 – starting with Denver and the Twin Cities, where they will partner with the Urban Land Conservancy, the Community Reinvestment Fund, and the Colorado Enterprise Fund. Additional information on the campaign can be found on the Calvert Foundation website. www.calvertfoundation.org

Impacting Investing Roundtable and Report

The White House hosted a roundtable on impact investing in Washington, D.C. this week where the Administration announced plans to encourage impact investing by eliminating barriers and promoting investments in high-impact business sectors and underserved communities. In addition, a core group of  investors announced their commitments to  make $1.5 billion in targeted impact investments as partners in this public-private venture. Moreover, the National Advisory Board (NAB) released a report of policy recommendations designed to promote impact investing as part of the community development financing landscape. The report, Private Capital, Public Good:  How Smart Federal Policy Can Galvanize Impact Investing and Why It’s Urgent  is available on NAB’s website (www.nabimpactinvesting.org)

Transform
 Finance
 Investor
 Network
 Launches
 with Pledge of $556M at
 White
 House 
Event



Washington
 DC,
 June 
25, 
2014

Transform
 Finance
 Investor
 Network
 Launches
 With
 Pledge
 of
 $556 million “Transformative”
 Investments 
at
 White 
House
Event

A
 group 
of 
leading
 private
 sector 
investors,
 at
 a 
high‐level 
roundtable
 on 
impact
 investing 
convened
 by
 the
 White
House,
  has
pledged
 $556
 million 
to
 a
 range 
of
 social
 investments
 using 
a
 novel
 investment
 approach
 centered 
on 
social 
justice 
and
community 
value
 creation.

On
 June
 25,
 2014, 
the 
White 
House
 hosted
 a
round table
 on 
impact 
investing, 
during
 which
 some 
20
 new
 private 
sector
commitments 
were
 made 
to 
drive
 more
 than
 $1.5 
billion 
into 
investments 
that
 intentionally
 generate 
measurable
 social
 or
environmental 
impact

 as 
well
 as 
financial
 return.

The 
group
 of 
investors 
convened 
by 
the 
Transform
 Finance
 Investor
 Network,
 concerned 
about 
a
 trend
 in
 impact 
investing 
that
stops 
short
 of
 truly
 transformative 
impact,
 pledged 
to 
invest
 in
 alignment
 with 
the 
transformative
 finance
 principles
 of:

(1) 
engaging
 communities 
in 
the
 design,
 governance,
 and 
ownership 
of
 projects
 (2)
 creating 
more 
value 
for
 c ommunities
 than 
is
extracted 
by 
investors
 (3) 
fairly 
allocating
 risks
 and
 rewards
 between 
investors, 
entrepreneurs,
 and 
communities

The 
group 
of 
Transform 
Finance
 Investor
 Network
 investors 
includes 
Pi 
Investments,
 Blue
 Haven
 Initiative,
 New
 Belgium
Family
 Foundation,
  ReInventure
 Capital, 
and
 The
 Working
 World.
 These
 members 
will
 invest
 across
 asset
 classes,
 geographies,
and
 verticals.

“This
 is
 a 
novel 
approach
 that
 puts
 capital
 at
 the 
service
 of
 community
 needs.
 We
 hope 
that
 through
 our
 participation 
in
 the
Transform
 Finance
 Investor 
Network,
 we
 can
 help 
build 
a
 vibrant 
community
 of 
sophisticated 
investors
 who
 deeply
 believe 
in
empowerment
 and
 intend 
to 
consider 
and 
prioritize
 community
 benefit
 in 
every
 investment 
we
 make,”
said
 Brendan
 Martin,
President
 of
 The
 Working
 World.

Investments
 may
 span 
from
 debt
 funds 
that
 finance
 conversion 
of
 corporations 
into
 worker‐owned
 cooperatives,
 to 
renewable
energy
 projects 
that
 are 
locally 
owned
 by 
and
 benefit
 indigenous
 communities.

Andrea
 Armeni,
 Executive
 Director
 of 
Transform
 Finance,
 convened
 the 
group,
 which 
has
 grown
 to
 include
 impact
 investment
leaders 
such
 as
 Calvert
 Foundation
 and
 RSF
 Social
 Finance.

“Impact 
investment
 is
 at
 the
 tipping 
point 
to 
scale,
 and 
hence 
it’s
 a 
crucial
 time 
to 
ensure
 community 
accountability 
and
engagement 
becomes
 common
 practice.
We 
appreciate
 the 
White
 House’s
 commitment
 to 
real
 impact,
 and 
look 
forward 
to
engaging
 with 
our
 investor 
peers,
 both
 public
 and 
private, 
to
 put
 the 
transform
 finance 
principles 
into
 action,”
 said
 Morgan
Simon,
 managing 
director 
of
 Pi
 Investments 
and
 founder
 of
 Transform
 Finance.

For 
more 
information
 contact
 Andrea
 Armeni,
 Executive
 Director
 of
 Transform 
Finance,

 at
 (415)
265‐0035
or
andrea@transformfinance.org

Impact Investment Advocates Ring The Closing Bell At The NYSE

Representatives and guests from the U.S. National Advisory Board to the Global Task Force on Social Impact Investment rang the Closing Bell at the New York Stock Exchange (NYSE) today to raise awareness about the role of public and private innovation and entrepreneurship in solving our greatest social and environmental challenges.

“Our society faces challenges that cannot be solved by government and philanthropy alone, spurring innovative approaches that harness the efficiency and discipline of markets. Impact investments deploy private capital for public good and are intentionally designed to deliver social or environmental benefits as well as financial return,” said Tracy Palandjian, CEO of Social Finance U.S. and co-chair of the National Advisory Board. Matt Bannick, Managing Partner of Omidyar Network, co-chairs the National Advisory Board with Palandjian.

For more information, visit www.mysocialgoodnews.com

Bridges Ventures Announces Final Close of Bridges Sustainable Growth Fund III

CDVCA member fund Bridges Venture has successfully completed final close of the Bridges Sustainable Growth Fund III. The fund closed at £125M, surpassing its original target of £100m, and is two-thirds larger than their second £75m fund raised in 2007. The fund will continue Bridges Ventures’ focus on the provision of growth capital to small businesses, while seeking both commercial returns and positive social impact.

Through its new fund, Bridges seeks to build on its extensive track record of investment – the firm recently won “Venture Exit of the Year” in the prestigious British Private Equity Awards 2013 for its partial divestment of The Gym Group. The successful fundraise also speaks to growing interest among investors in sustainable and impact investment. New investors in the fund include the European Investment Fund and the London Pensions Fund Authority.

For more information, visit www.bridgesventures.com.

CDVCA Takes General Partner Role in $45M New York State Fund

CDVCA serves as the General Partner for New York State’s “Innovate NY Fund, L.P.,” an economic development Fund of Funds, consisting of limited partnership investments into eight New York State-focused, early-stage venture funds.   The $45 million fund is a seed stage business equity fund to support innovation, job creation, and high growth entrepreneurship throughout the state. The Innovate NY Fund is supported with $35 million in State funds (allocated from the US Treasury’s SSBCI Program) and $10 million from Goldman Sachs Urban Investment Group, and will leverage up to $450 million in additional private investment.

The purpose of the Innovate NY Fund is to promote technology-led economic growth in the state through targeted investments by regional venture fund managers (the “Seed Funds”) into over 100 seed and early stage companies; and to encourage additional private sector investment across the state.  Unique among state-funded venture capital programs, Innovate NY Fund recognizes that effective statewide growth must include its lower income populations.  The Fund’s investment criteria include a requirement to invest a portion of proceeds in businesses located in lower income communities, or to meaningfully employ individuals from these communities.

New York’s approach has been to collaborate with private investors, which includes Goldman Sachs as a limited partner, and through an effective matching investment requirement for the participating funds.  As part of the Small Business Jobs Act signed into law in September 2010, the State Small Business Credit Initiative (SSBCI) was created under the US Department of the Treasury to provide direct support to states for use in programs designed to increase small businesses’ access to credit.

Empire State Development President, CEO & Commissioner Kenneth Adams has said, “Access to seed money is essential to building the vibrant small businesses that are the foundation of a strong Upstate economy. This program addresses … high growth firms that are the backbone of an innovation economy. With this program, we can make critically needed seed-stage capital available to spur job creation and stimulate our economy from the ground up.”

NY ESD


Bridges Community Ventures Has Big News

The Gym – A UK Dynamo

CDVCA Member Fund Bridges Ventures sold its majority stake in The Gym, a milestone deal for Bridges and its fourth successful realization in just over 12 months, following the exits of The Hoxton (9x multiple), Pure Washrooms (3.4x) and Whelan Refining (4.7x). The Gym – incubated by Bridges from concept stage and now operating from 37 sites across the UK – is a prime example of how strong commercial results and excellent social impact can go hand-in-hand. The sale generated a 50% IRR and 3.7x multiple for investors in Bridges funds, of which a minority was rolled over to retain a 25% stake in The Gym going forward, enabling Bridges investors to benefit from the future growth in the business.

The Vet – Low Cost Veterinary Clinics

Bridges portfolio company The Vet, a low-cost, high quality veterinary services business, has opened the doors of its first clinic in Hengrove, Bristol. With the cost of veterinary services and pet insurance on the increase, The Vet hopes to fill a gap in the market for better, more flexible and fairly-priced veterinary services. Bridges incubated the business and provided funding and working capital through the Bridges Sustainable Growth Fund III and there are plans to roll-out the model to other sites across the UK, mainly located in underserved areas.

G8 Social Impact Investing Forum

Bridges was honored to be part of the G8 Social Impact Investment Forum, hosted by the Cabinet Office on 6th June. The event gave Bridges the opportunity to showcase its Social Sector Funds and, more importantly, to discuss impact investment at the highest level. The event also saw the launch of the G8 Taskforce on Social Impact Investment,  to be led by Sir Ronald Cohen with the aim to build on the leadership of the UK and other G8 countries to turn social impact investment into a powerful global force.

Bridges Backs Bristol’s First Passivhaus

The Bridges Sustainable Property Fund has joined forces with property developers Urbis to build a new, highly sustainable residential development in Bristol’s Bedminster. The project, on the site of a long-abandoned bingo hall, will be built to international Passivhaus standards which requires very high levels of insulation and draft prevention, resulting in very little need for heating.

http://www.bridgesventures.com/news

Call on Your Senators to Support Tax Reform and the NMTC by July 26th

Earlier this month, Senators Max Baucus (D-MT) and Orrin Hatch (R-UT), the Chairman and Ranking Member of the Senate Finance Committee, wrote to their Senate colleagues asking for comments and feedback on tax reform. In the letter, Senators Baucus and Hatch describe the “blank slate” approach they will take in reforming the tax code and the only provisions, credits, or deductions that will be continued after tax reform are those that meet: “(1) help grow the economy, (2) make the tax code fairer, or (3) effectively promote other important policy objectives.”

Senators have been asked to submit their comments or recommendation letters to the Finance Committee by Friday, July 26th and the submissions will not be made public by the Finance Committee.

It is important that Senators hear from CDFI about the tax provisions that are critical to the community development and economic revitalization efforts in their home states – particularly the impact of the New Markets Tax Credit, the Low Income Housing Tax Credit, and the Historic Tax Credit.

In an effort to encourage Senators to comment on the these tax provisions that help fuel the work of CDFI – the Coalition has drafted language on the New Markets Tax Credit, the Low Income Housing Tax Credit, and the Historic Tax Credit that CDFIs can encourage their Senator(s) to include or reference in comments they submit to the Finance Committee.

Suggested Language for Senators Drafting Tax Reform Comment Letters:

NEW MARKETS TAX CREDIT

The New Markets Tax Credit (NMTC) is an established program that has made significant contributions to local economies in low income urban and rural communities across the country and any tax reform legislation developed by the Senate Finance Committee should include the provisions included in the New Markets Tax Credit Extension Act of 2013 (S. 1133):

1. a permanent, or indefinite authorization of the NMTC;

2. an increase in NMTC credit authority indexed to inflation; and

3. an exemption for NMTC investments from the Alternative Minimum Tax.

Between 2003 and 2011, NMTC investments directly created some 350,000 jobs at a cost to the federal government of $19,500 per job and leveraged $55 billion in capital investment to credit starved businesses in communities with high poverty and unemployment rates.

Of the $55 billion in capital investment made in NMTC qualified businesses between 2003 and 2011, $27 billion was direct NMTC investments and $28 billion from other sources. During the same period, the program cost the federal government $7 billion, translating into a return on investment to the federal government is 8 to 1.

The impact of the NMTC goes beyond direct job creation. NMTC investments promote investment and economic growth in underserved communities. A 2012 report issued by the NMTC Coalition found that the income taxes paid by NMTC financed businesses and generated by the direct and indirect jobs created offset the cost of NMTC to the federal government.

The principal policy objective of NMTC is to increase the flow of private sector capital to communities long overlooked by market forces. The program was authorized in 2000 as part of the Community Renewal Tax Relief Act (P.L. 106-554) and while today’s economy differs significantly from the 2000 economy, the challenge of attracting investment capital to underserved areas persists. This lack of capital stifles entrepreneurs and impedes economic growth leading to urban decay and stagnation in small towns and farming communities, despite opportunities for investment. There is substantial evidence that the NMTC has effectively encouraged private sector investment in underserved low income areas. A 2007 report published by the U.S.

Government Accountability Office (GAO) indicated that 88% of investors surveyed would not have made the investment in the low income community without the Credit. Exempting NMTC investments from the Alternative Minimum Tax will further expand the NMTC investor market bringing in more corporations and smaller regional banks.

The importance of the NMTC is underscored by trends in federal community development spending. According to Congressional Budget Office (CBO), federal community development spending measured as a share of GDP has fallen by 75% since 1980. In many rural and urban communities, NMTC is one of the few financing sources available for community revitalization.

Data from the CDFI Fund, along with the NMTC Coalition’s annual surveys of NMTC activity, shows that 100% of NMTC investments go to economically distressed communities and more than 70% go to communities in extreme distress. The program is reaching communities that far exceed the statutory requirements for poverty and economic distress.

Furthermore, the NMTC accomplishes this at a relatively low cost to the federal government. While the nominal rate on NMTC investments is 39%, there is, in effect, an exit tax for investors at the end of the 7-year compliance period. This tax reduces the cost of NMTC to federal government to 26%.