The biggest news to come out of the impact investment world lately is, without a doubt, the decision from the Ford Foundation to put over $1 billion of its $12 billion endowment toward mission-related investments. Meanwhile, there are plenty of interesting investing experiments brewing in various pockets of the foundation world.
A case in point is a recent round of funding from a mix of lenders and foundations to creatively fund retrofitting of vulnerable homes to be more climate resilient. Arranged by nonprofit investment manager the Calvert Foundation, the $8 million round of financing comes from the MacArthur Foundation, Libra Foundation, Pi Investments, and MetLife, and will go to a for-profit benefit company to shore up its first 1,000 homes in coastal states.
The company, New York-based MyStrongHome, has a pretty clever model. If you live in an eligible area, they’ll come check out your house and then send over a contractor, mainly to upgrade the roof to meet stronger resiliency standards. The company then works with insurers to arrange for lower premiums as a result of the improvements, and that savings covers the cost of the new roof.
The company was a response to Hurricane Sandy, which caused about $68.9 billion in damage, making it the second-costliest storm in U.S. history. Sandy damaged or destroyed around 650,000 housing units in New York and New Jersey. With climate change intensifying weather events, coastal areas in particular are bracing for impact, and foundations have been drawn to the issue.
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In the aftermath of Sandy, former Rockefeller Foundation staffer Margot Brandenburg launched MyStrongHome with backing from Rockefeller, Prudential and Nathan Cummings Foundation. Rockefeller and NCF have both been active, especially the former, in the impact investing space. MyStrongHome has a goal of addressing a market of 1.6 million homes across six coastal states, and the $8 million round of funding should prove its business model starting in South Carolina, Louisiana, and Alabama.
The investor behind the funding, the Calvert Foundation, is a name that pops up frequently surrounding a variety of impact investment projects. It’s known for its Community Investment Note, which allows anyone to invest in nonprofits and social enterprises for as little as $20.
Calvert has also partnered with MacArthur in the past, including on a $100 million effort to mobilize impact investing in Chicago, along with the Chicago Community Trust. MacArthur was one of the earliest big foundations to seriously explore impact investing. Calvert has also teamed up with Ford and other lenders to support investment in Appalachia.
Impact investing continues to pick up steam, as more foundations realize the limits of only using their annual payouts to serve their goals, and the importance of making financing available to underserved communities. One of the more compelling things to watch as this field matures is how these schemes take shape, using smaller sums to jujitsu larger flows of money into areas where they’re needed.