{"id":87295,"date":"2017-02-27T12:00:12","date_gmt":"2017-02-27T12:00:12","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=87295"},"modified":"2017-02-21T15:31:33","modified_gmt":"2017-02-21T15:31:33","slug":"impact-investing-and-venture-philanthropys-role-in-sowing-the-seeds-of-financial-opportunity","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2017\/02\/impact-investing-and-venture-philanthropys-role-in-sowing-the-seeds-of-financial-opportunity\/","title":{"rendered":"Impact Investing and Venture Philanthropy\u2019s Role in Sowing the Seeds of Financial Opportunity"},"content":{"rendered":"

Gates and other venture philanthropist\u2019s have \u2018pioneered\u2019 and \u2018seeded\u2019 new education markets through direct funding and by shaping \u2018education reform\u2019 policies. Charter schools are an essential component of this mission\u2026 allowing impact investors to be the drivers of the education reform industry\u2019s final mission: to fully dismantle public education by way of \u201canywhere, anytime learning\u201d and \u201cpersonalized\u201d technologies.<\/em><\/p>\n

17 Feb 2017 – <\/em>In the late 19th\u00a0century many U.S. industrialists \u2013 Andrew Carnegie, John Pierpont Morgan, John D. Rockefeller and others \u2013 who amassed immense wealth through the exploitation and degradation of workers (including children), began to establish philanthropic trusts and foundations. Oil monopolist John D. Rockefeller (senior) described this social mission as a divinely inspired \u201cbusiness of benevolence.\u201d Accordingly, historian Benjamin J. Soskis reports that Rockefeller declared in 1906:<\/p>\n

I believe that the power of making money is a gift from God\u2026 I believe it is my duty to go on making money and still more money, and to use the money I make for the good of my fellow man according to the dictates of my conscience.<\/p>\n

As such, philanthropists of this time channeled charitable gifts to civil society and aid-based organizations charged with facilitating the cultural reproduction of American values derived from the Protestant ethics that sustain U.S. capitalism: individualism, self-reliance, hard work, meritocracy, discipline and obedience. In terms of the benevolent role of philanthropists during this period, Soskis frames it this way:<\/p>\n

This conflation of the obligations of business and businessman was encouraged by the concept of stewardship, the dominant means by which Americans understood the responsibilities of wealth in the nineteenth century. By the dictates of stewardship, men could not claim ultimate ownership over their possessions, but held them only as trustees for some higher authority\u2014in the concept\u2019s Protestant manifestation\u2026 By bridging the realms of accumulation and redistribution, stewardship linked provisional property rights with the responsibilities that attended those rights. Stewardship provided a bridge between the imperatives of service and self-interest, a causeway over which proponents of corporate philanthropy would make their unsteady way in the decades to come.<\/p>\n

Through this doctrine of divine providence, these charitable \u201cCaptains of Industry\u201d advanced everything from universal public education, immigrant assimilation and poverty mitigation to the arts, public health and science and medical research. Naturally, this giving came with a social engineering agenda. For example, as documented in my article \u201cThe Despotic Origins of Public Secondary Education<\/a>,\u201d their financial and political support for universal public education was intended to bolster U.S. hegemony, by furthering U.S. industrial capitalism\u2019s imperialist pursuits as tied to the nation\u2019s foundational structures of heteropatriarchy, white supremacy and settler colonialism. Relatedly, the article goes on to document how:<\/p>\n

At the turn of the 20th\u00a0century, capitalism\u2019s proclivity for crisis was fomenting rebellion within the U.S. through massive labor strikes, struggles for universal suffrage and relief from poverty as a major depression gripped the nation due to\u00a0overproduction. In response, the nation\u2019s political and economic elite significantly expanded U.S. pursuits of overseas markets for American goods and investment capital\u2026 [rationalizing] U.S. military intervention.\u00a0These events required the intensification of the social control apparatus of U.S. nationalism \u2013 well oiled by its highly effective and profitable role in the conquest of North America \u2013 as a means [in part] to deflect attention towards an external \u201cthreat.\u201d<\/p>\n

Thus, this tycoon driven endeavor served the ideological and practical social mission of cultivating greater social cohesion (i.e. social control) when the nation\u2019s undemocratic design was increasingly unambiguous and insurrection was presenting a clear and present danger to its foundational social order.<\/p>\n

To achieve these aims on a more structural level, Prussian inspired common schools<\/a> established in the 19th\u00a0century served as the model for the establishment of compulsory secondary education in early 20th\u00a0century America. According to these altruistic \u201cstewards\u201d of the public good, mass public education needed to be standardized, vocational and efficient as a means to serve their larger \u201csocial mission\u201d of preparing students for their future roles in the 20th\u00a0century industrial workforce. This philanthropic agenda was made explicit in 1914 when the National Education Association passed a resolution that read<\/a>, in part:<\/p>\n

We view with alarm the activity of the Carnegie and Rockefeller Foundations\u2014agencies not in any way responsible to the people\u2014in their efforts to control the policies of our State educational institutions, to fashion after their conception and to standardize our courses of study, and to surround the institutions with conditions which menace true academic freedom and defeat the primary purpose of democracy as heretofore preserved inviolate in our common schools, normal schools, and universities.<\/p>\n

Fast forward to the 1990\u2019s when \u201cventure philanthropy\u201d emerged, shifting the social mission of philanthropy to focus on neoliberal structural adjustment programs, which dictate austerity measures in the service of elite financial investors. Since philanthropic foundations are established and controlled by billionaires whose wealth and power is derived from human exploitation and environmental degradation, this modern pursuit should not come as a surprise. The personal interests of this opulent minority are directly tied to today\u2019s financialized economy as investors and as members of politically influential networks that oversee global financial markets. As such, in the 21st\u00a0century venture philanthropists have focused their efforts on constructing new financial markets through what is referred to as \u201cmission investing,\u201d \u201csocial impact investing,\u201d or just \u201cimpact investing.\u201d Impact investing is a continuation of the sixty-year colonizing mission of the IMF, World Bank, World Trade Organization, \u201cTroika\u201d and the United States government; yet with a \u201cfriendlier,\u201d but more duplicitous methodology.<\/p>\n

To get a sense of the benevolent framing of this imperious global project, one only has to read its beneficiaries\u2019 promotional materials, such as the Monitor Institute\u2019s 2009 publication, \u201cInvesting for Social & Environmental Impact: A Design for Catalyzing an Emerging Industry:\u201d<\/p>\n

The New Yorker moving into her first home, the student in Tanzania studying under electric light, the small-business owner in Cambodia expanding her payroll\u2014none of these people would recognize one another as co-participants in the same emerging industry. Neither, perhaps, would the commercial banker placing debt in the Acquisition Fund, the high-net-worth individuals investing in E+Co, or the German worker whose pension fund invested in microfinance through Blue Orchard. Yet these are all examples of the proliferation of activity occurring as a new industry of impact investing emerges. This industry, which involves making investments that generate social and environmental value as well as financial return, has the potential to complement philanthropy and government intervention as a potent force for addressing global challenges at scale.<\/p>\n

The Monitor Institute claims to be \u201ca social enterprise that surfaces and spreads best practices in public problem solving and pioneers next practices \u2013 breakthrough approaches to addressing social and environmental challenges.\u201d Monitor is a subsidiary of Deloitte Touche Tohmatsu Limited, a leading multinational financial institution that provides audit, assurance, tax, consulting, advisory, actuarial, corporate finance, and legal services to \u201cselect clients.\u201d In its publication, the Monitor Institute goes on to highlight the \u201copportunities\u201d associated with impact investing:<\/p>\n

Growing interest among capital providers, with a growing set of ultra-wealthy investors seeking diversification and a different approach. Even in the economic climate in 2008, there was interest in putting capital to work. In particular, much of the interest in impact investing is being driven by a growing set of investors who have recently become very wealthy and are seeking a new approach to money management that enables them to also \u201cmake a difference.\u201d<\/p>\n

This promotional material was published as the world was reeling from the 2008 financial crisis, when predatory investors and banks responsible for inflicting mass suffering were escaping prosecution and instead profiting from government bailouts. It is clear that under the global domain of the state-finance nexus, there is still a need to remind us of their altruistic intent. Yet, one gets a sense that their coded narrative has an emerging boldness, as if they are dropping the pretense of accountability, and instead taking on a more Orwellian \u201cdoublethink\u201d approach to propagandizing.<\/p>\n

Impact investing was spawned from two Rockefeller Foundation convened meetings in 2007 where the attendees \u2013 leaders of finance, philanthropy and neoliberal development \u2013 were tasked with building the structural framework for an efficient worldwide social and environmental impact investment industry. Attendees agreed to create a global network of leading impact investors, a standardized framework for assessing social and environmental impact and to initiate a working group of investors that would focus on financing a sustainable market-based agricultural industry in sub-Saharan Africa. These efforts led to the establishment of the Global Impact Investment Network (GIIN) in 2009, as a tax-exempt non-profit organization based in the United States.<\/p>\n

According to GIIN:<\/p>\n

Impact investing challenges the long-held views that social and environmental issues should be addressed only by philanthropic donations, and that market investments should focus exclusively on achieving financial returns.\u201d With that purpose in mind, GIIN\u2019s primary mission is to build \u201ccritical market infrastructure and supports activities, education, and research that help accelerate the development of the impact investing field.<\/p>\n

GIIN is well positioned to do just that since its membership<\/a> is comprised of the luminaries of global finance and philanthropic foundations, including (but not limited to): The Bill & Melinda Gates Foundation, Goldman Sachs, J.P.Morgan Chase, Morgan Stanley, Prudential Financial, Teachers Insurance and Annuity Association \u2013 College Retirement Equities Fund (TIAA-CREF), Zurich Insurance Group, Ford Foundation, Deutsche Bank, International Finance Corporation, Root Capital, UBS Financial Services and the Inter-American Development Bank Group (long-term IMF\/World Bank partner responsible for structural adjustment and austerity throughout Latin America).<\/p>\n

As briefly documented earlier, GIIN\u2019s founding member, the Rockefeller Foundation, along with the Rockefeller family, have a dark history of leveraging their wealth and power in the service of U.S hegemony, both domestically and internationally. In line with the legacy of John D. Rockefeller Senior, the Rockefeller Foundation went on to become an influential founding member of the \u201cWashington Consensus<\/a>\u201d and has since been an aggressive supporter of the IMF and World Bank\u2019s draconian policies and practices. The Rockefeller family and its foundation were also early activists and funders of eugenics based population control efforts in the U.S. and abroad via forced sterilization of \u201cinferior\u201d populations (Black, Brown and disabled people). As Edwin Black documented in his 2003 San Francisco Chronicle<\/em> article \u201cEugenics and the Nazis \u2014 The California Connection,\u201d \u201cEugenics would have been so much bizarre parlor talk had it not been for extensive financing by corporate philanthropies, specifically the Carnegie Institution, the Rockefeller Foundation and the Harriman railroad fortune.\u201d According to Black, \u201cthe Rockefeller Foundation helped found the German eugenics program and even funded the program that Josef Mengele worked in before he went to Auschwitz.\u201d<\/p>\n

Two of GIIN\u2019s other founding members include the Bill and Melinda Gates Foundation and the United States Agency for International Development (USAID).<\/p>\n

According to Andy Beckett of The Guardian<\/em>, the Gates Foundation is known for being \u201ctop-down, technocratic, applying the language of engineering to social problems.\u201d Beckett goes on to claim how critics of the Gates Foundation and its form of \u201cphilanthrocapitalism\u201d loathe how it plays god with its \u201ccreations.\u201d Following this model, the Gates foundation is notorious for many nefarious activities across the planet. Accordingly, Andy Beckett of The Guardian<\/em> went on to report:<\/p>\n

In 2007 an extensive investigation by the Los Angeles Times found that the [Gates Foundation] charity, via its trust, invests in \u2018companies that contribute to the human suffering in health, housing and social welfare that the foundation is trying to alleviate.\u2019 The [Gates] foundation did not challenge the thrust of the articles, which included allegations that it invested in an oil company responsible for causing health problems by burning off its unwanted gas, in an African country in which the foundation was active in trying to improve the population\u2019s health. But the charity decided after a brief review not to change its investment policy.<\/p>\n

A Gates Foundation spokesperson replied to the Los Angeles Times<\/em> investigation by glibly stating:<\/p>\n

The stories you told of people who are suffering touched us all. But it is naive to suggest that an individual stockholder can stop that suffering. Changes in our investment practices would have little or no impact on these issues.<\/p>\n

The Gates Foundation is the largest funder of research in genetic engineering on the planet and is one of the world\u2019s major donors to agricultural research and development. In line with GIIN\u2019s objectives, most of the Gates Foundation\u2019s focus in these areas target the continent of Africa. A 2014 report by the biodiversity and small farmer advocacy organization GRAIN found that the Gates Foundation was indeed living up to its colonizing character, with the claim: \u201cThe Gates Foundation fights hunger in the South by giving money to the North.\u201d GRAIN went on to report:<\/p>\n

\u2026 the Gates Foundation is promoting an imported model of industrial agriculture based on the high-tech seeds and chemicals sold by US corporations\u2026 the foundation is fixated on the work of scientists in centralised labs and that it chooses to ignore the knowledge and biodiversity that Africa\u2019s small farmers have developed and maintained over generations. Some also charge that the Gates Foundation is using its money to impose a policy agenda on Africa, accusing the foundation of direct intervention on highly controversial issues like seed laws and GMOs.<\/p>\n

As reported in The Guardian,<\/em> GRAIN co-founder Henk Hobbelink revealed, \u201cThe bulk of [Gates Foundation] grants for agriculture are given to organisations in the US and Europe\u201d while the \u201coverwhelming majority of its funding goes to hi-tech scientific outfits, not to supporting the solutions that the farmers themselves are developing on the ground. Africa\u2019s farmers are cast as recipients, mere consumers of knowledge and technology from others.\u201d GRAIN went on to report how Gates \u201calso funds initiatives and agribusiness companies operating in Africa to develop private markets for seeds and fertilisers through support to \u2018agro-dealers.\u2019\u201d<\/p>\n

GIIN\u2019s other co-founder USAID, has a stated mission that \u201c\u2026carries out U.S. foreign policy by promoting broad-scale human progress at the same time it expands stable, free societies, creates markets and trade partners for the United States, and fosters good will abroad.\u201d As documented by Teresa Meade in her book, A History of Modern Latin America: 1800 to The <\/em>Present, USAID\u2019s practices in promoting \u201chuman progress\u201d and \u201cfree societies\u201d infamously include undermining popular liberation movements throughout the globe by engaging in torture, murder, spying and paramilitary terrorism campaigns in order to advance U.S. imperial interests. According to Meade USAID public safety officer Dan Mitrione, who trained police throughout Latin America in the art of surveillance and torture in the 1970\u2019s, is known to have stated during his regular lesson plan, \u201cThe precise pain, in the precise place, in the precise amount, for the desired effect.\u201d<\/p>\n

As documented in a 2010 joint report put out by banking giant JP Morgan and the Rockefeller Foundation titled \u201cImpact Investments: An emerging asset class,\u201d \u201cIncreasingly, entrants to the impact investment market believe they need not sacrifice financial return in exchange for social impact.\u201d Under the premise of \u201cdoing good while doing well,\u201d this report points out that impact investment attracts a wide variety of investors who invest \u201cacross the capital structure, across regions and business sectors, and with a range of impact objectives.\u201d These include diversified financial institutions, pension funds, philanthropic foundations, insurance companies, development finance institutions, specialized financial institutions, fund managers, high net worth individual investors and large-scale family offices (private firms that manage just about everything for the wealthiest families). Impact investments often fall within traditional asset classes \u2013 private equity\/venture capital, debt, and fixed income securities (mortgage-backed securities, municipal bonds, and business loans).<\/p>\n

Generally, most individual and institutional investors are hesitant to take on risks associated with untested \u201cseed\u201d and early-stage ventures, often preferring later-stage ventures; especially in what the Unitas Seed Fund refers to as the \u201cchallenging segments of society.\u201d For this reason, according to a 2013 article in the Stanford Social Innovation Review <\/em>titled \u201cClosing the Pioneer Gap,\u201d venture philanthropy plays a crucial role in closing the so called \u201cpioneer gap\u201d through financing \u201cpioneer firms to develop, validate and establish new business models, and even build entirely new markets.\u201d When summarizing a 2012 Monitor Deloitte report titled \u201cFrom Blueprint to Scale: The Case for Philanthropy in Impact Investing,\u201d Vinay Nair of the The Guardian<\/em> wrote, \u201cwithout philanthropy\u2026 many developing-world businesses serving the poor would never have been able to move towards a point of sustainability or scalability\u2026 philanthropy-backed capital can step in and help progress enterprises from earlier stages to where they are capable of attracting growth capital and better delivering social outcomes to the poor.\u201d In this report, the authors note how venture philanthropic funding \u201cdoes not have to be deployed in isolation from investment capital.\u201d Instead they can \u201c\u2018layer\u2019 grants with capital to create hybrid models that target high-risk situations\u201d or use \u201cgrants to deliver much-needed capacity building (or technical assistance) to overcome the inherent disadvantages of the bottom of the wealth pyramid (details to follow) business environment, alongside a return-capital investment model. As the report \u201cFrom Blueprint to Scale: The Case for Philanthropy in Impact Investing\u201d points out, \u201ceven where funding ultimately flows through as a grant to the pioneer firm or a nonprofit, funders could deploy complementary mission investing strategies.\u201d<\/p>\n

Mission investing associated with impact investments encompasses program related investments (PRIs) and mission-related investments (MRIs), both of which according to David A. Levitt, a non-profit and former KIPP charter school network attorney, are \u201ccharacterized by an intention to create positive social impact as well as some level of financial return.\u201d Impact investing allows \u201cnon-profit\u201d philanthropic foundations to function as investment banks that utilize a full menu of debt and equity financial instruments. These instruments allow foundations to leverage influence over their investee companies\/projects as creditors and\/or as investor owners. Both PRI\u2019s and MRI\u2019s are tax-free investments.<\/p>\n

According to Mission Investors Exchange, PRIs \u201care powerful, versatile tools that foundations use to achieve their philanthropic goals alongside traditional grantmaking.\u201d Similar to grants, PRIs make capital available to nonprofit or for-profit companies that are aligned with a foundation\u2019s philanthropic mission. PRIs are loans and equity investments that are designed to have a social impact while generating below market-rate financial returns.<\/p>\n

An MRI is not part of a foundation\u2019s formal \u201ccharitable\u201d activity and is instead an investment a foundation makes \u2013 as a business \u2013 within financial markets. It is therefore a financial instrument that foundations can use to further their stated mission, while also bringing a market-rate financial return on a risk-adjusted basis. Since MRIs derive from investment assets (cash, fixed income, public equity, private equity, venture capital, and real estate) and are commercial investments, by law they must maximize investor returns. Private foundations invest billions in private and publicly traded companies and financial markets, but the idea of MRI\u2019s is that \u201ccharity\u201d foundations will invest in markets and corporations that are aligned with their legal mission statements.<\/p>\n

When contrasting venture philanthropy\u2019s larger mission with their official propagandized mission, these financial investments further reveal their duplicitous character. Accordingly, the Bill & Melinda Gates Foundation claims to exist \u201cto dramatically improve the quality of life for billions of people.\u201d With that in mind, according to their 2014 tax return, they invested over 40 billion dollars in equities and securities in hundreds of financial markets and companies. Some of these include investments in nations from Canada to Saudi Arabia and Egypt as well as mortgage and student loan financing firms. Others include major corporations such as Comcast, Verizon, Walmart and Dow Chemical as well as major investment banks, including JPMorgan, Morgan Stanley, Barclays, Bank of America, CitiGroup, Lehman Brothers, Wells Fargo, Bear Stearns and Deutsche Bank.<\/p>\n

According to the Bill & Melinda Gates Foundation, their mission \u201cfocuses on improving people\u2019s health\u201d and ensuring \u201cthat all women and children have the nutrition they need to live healthy and productive lives.\u201d Under this banner, the foundation invests in Coca-Cola, Pepsi, the multitude of highly processed Kraft products; and until very recently, McDonald\u2019s, Burger King, Taco Bell, Pizza Hut and KFC. In a 2014 article in Mother Jones<\/em> titled, \u201cHow Bill Gates Is Helping KFC Take Over Africa,\u201d Alex Park reported that USAID and the Gates Foundation fund:<\/p>\n

\u2026 companies to build what development experts call \u2018value chains\u2019\u2014business relationships that link small farmers to sellers of agricultural inputs like fertilizer on one side, and big buyers of corn and soy on the other. Those buyers turn these commodities into feed, and then sell it to large chicken wholesalers who are staking their future growth on supplying KFC\u2019s African expansion.<\/p>\n

In Bill and Melinda Gates 2015 annual letter, they claimed \u201c[t]he most dramatic problems caused by climate change are more than 15 years away, but the long-term threat is so serious that the world needs to move much more aggressively \u2014 right now \u2014 to develop energy sources that are cheaper, can deliver on demand, and emit zero carbon dioxide.\u201d Yet, according to their 2014 Form 990, the foundation invests in close to a dozen major oil companies, including Hess, Conoco, Chevron\/Texaco, Phillips, BP and Anadarko Petroleum. The latter two were involved in the Deepwater Horizon oil spill. The Gates Foundation also owns corporate bonds in the oil, natural gas and mining company Kerr-McGee (recently bought by Anadarko), which has a long-time record as an environmental polluter, has fought to undermine Navajo sovereignty and is well known for violating labor and human rights. Warren Buffett, who refers to himself and other venture philanthropists as the \u201cgreat givers,\u201d is also a major investor in the fossil fuel industry and the largest donor of the Gates Foundation.<\/p>\n

The Gates Foundation also invests in numerous coal, mining and fracking companies. According to the human rights organization London Mining Network, one such company named Rio Tinto has distinguished itself with a decades long record of colluding with dictators, violating human and labor rights and \u201cenvironmental devastation\u2026 around the world\u2026 [f]rom Papua New Guinea to Namibia, from the Upper Peninsula of Michigan in the U.S. to Madagascar, and from Cameroon to Indonesia.\u201d Gates also invests in the Brazilian mining company Vale, of which in 2012 Public Eye awarded \u201cthe corporation with the most \u2018contempt for the environment and human rights\u2019 in the world.\u201d<\/p>\n

In response to growing calls for the Gates Foundation to divest from fossil fuel companies, Bill Gates has been dismissive of divestment, claiming that all that matters is what will happen with investments in clean energy, not current investments in dirty energy. To Bill Gates, apparently the future of \u201cclean\u201d and \u201csustainable\u201d energy lies in the nuclear power industry, which is why he is the \u201cchairman of the board\u201d of the nuclear reactor company TerraPower.<\/p>\n

The Gates Foundation states on their K-12 Education webpage, \u201cWe have a passion for America\u2019s public schools\u2014a hunger to make each one of them excellent for every student\u2026 public schools are the best idea this country has had for giving every child an equal opportunity to succeed.\u201d Yet, in the U.S. Gates is well known as the preeminent driver of the privatization and finalization of public education. In effect, Gates and other venture philanthropists have \u201cpioneered\u201d and \u201cseeded\u201d new education markets through direct funding and by shaping \u201ceducation reform\u201d policies. Privately managed charter schools are an essential component of this mission and epitomize the first stage development of impact investing. Having been properly \u201cpioneered\u201d by Gates and others over the past decade, a wider array of \u201ceager\u201d individual and institutional investors are well positioned to step in, as reported in the recent Inside Philanthropy<\/em> article titled \u201cIs Impact Investing About to Turbo-Charge the Charter School Movement?\u201d The article goes on to report:<\/p>\n

As the number of students in charter schools grows\u2026 charter building efforts funded by impact investors are growing along with the market. The reality is that with impact investing, the pace of development can be accelerated beyond what philanthropy has been able to provide for charters. The fact that so many donors from Wall Street back charters would also seem to bode well for efforts to find major private capital to scale such schools.<\/p>\n

By design, charter schools serve as instrumental incubators for \u201cinnovative\u201d digitized curriculum and systems of accountability. This school design is allowing impact investors to be the drivers of the education reform industry\u2019s final mission: to fully dismantle public education by way of \u201canywhere, anytime learning<\/a>\u201d and \u201cpersonalized\u201d technologies. Correspondingly, the Gates Foundation K-12 Education page declares, \u201cAt the heart of learning is the bond between teacher and student.\u201d The foundation\u2019s response to this principled position consists of \u201cCreating personalized learning experiences for students\u201d to help \u201cthem to discover their interests and create a joy of learning.\u201d Just a brief overview of \u201cpersonalized learning<\/a>\u201d exposes the duplicitous nature of this claim and how its core data mining technologies serve as essential infrastructure that links schooling with the militarized surveillance apparatus that is the Internet of Things and Artificial Intelligence<\/a>.<\/p>\n

On a basic level, impact investments offer ever evolving financing opportunities to a wide range of nonprofit and commercial enterprises that have a social mission \u2013 or an agenda \u2013\u00a0 that is tied to the power interests of global financialization. As Ekkehard Th\u00fcmler from the Centre for Social Investment at Heidelberg University puts it:<\/p>\n

\u2026 financialized philanthropy replicates the technical architecture of the financial sector so as to perform similar production tasks in similar ways. Although this transformation is still in its early stages and incomplete in important respects, it may ultimately result in the creation of a structural isomorphism that straddles the spheres of finance and philanthropy.<\/p>\n

Private equity is considered to be the most profitable source of investment capital and is the most common asset class within impact investing. It entails the pooling of money from high-net-worth individual investors, charitable trusts and pension funds in order to acquire or buy out private and publicly traded companies for the purpose of restructuring their governance, financing and operations to increase the company\u2019s liquid value so they can eventually sell (\u201cflip\u201d) it for considerable profits. The term \u201ccorporate raider\u201d is attached to private equity and is notorious for leading to massive worker layoffs and reductions in pay and benefits, with one of the most notable being Mitt Romney\u2019s firm Bain Capital; with former Massachusetts governor Deval Patrick now running their impact investment fund.<\/p>\n

According to The Conversation,<\/em> the emerging social impact investment market is estimated to be worth $650 billion by the year 2020. To better facilitate its growth by connecting for-profit social enterprises with financial investors, a network of global social stock exchanges (SSX or SSE) are quickly being established. According to the Stanford Social Innovation Review<\/em>, SSEs are:<\/p>\n

\u2026 trading platforms listing only social businesses. Using SSEs, investors can buy shares in a social business just as investors focused solely on profit would do in the traditional stock market. An investor would come to a SSE to find a social business with a mission according to his or her preference. This is great news for all players in the industry (including governments, multilateral financing institutions, community organizations, development agencies, and social entrepreneurs.<\/p>\n

Countries that currently have SSX\u2019s include the UK (which trades on the ICAP Securities & Derivatives Exchange), Singapore, Brazil, Kenya, Canada, South Africa and the United States. The leading U.S. SSX is called \u201cMission Markets\u201d and has the stated mission \u201cto provide products and services that make it easier to use the power of the capital markets to create a better world\u201d by \u201csupporting a variety of social and environmental sectors, from empowering communities to conserving our natural resources and ecosystems.\u201d<\/p>\n

Generally, SSX\u2019s serve as internet-based platforms that connect investors with social impact industries in sectors considered to be of high social value and not surprisingly infrastructural in nature. According to the \u201cboutique\u201d\u200b financial firm In3 Finance, in order to \u201caddress the world\u2019s most pressing social and financial challenges\u201d in sectors of \u201chigh social value,\u201d the impact investment market provides capital to private enterprises that can most efficiently deliver Bottom of the Pyramid (BoP) services, which most often include water, housing, healthcare, agriculture, energy, environmental, community development, financial services, and education.<\/p>\n

Bottom of the Pyramid (bottom of the wealth pyramid) is a term associated with the \u201cworld economic pyramid,\u201d which was popularized by C. K. Prahalad and Stuart L. Hart in an article and then book titled \u2013 without irony \u2013 The Fortune at the Bottom of the Pyramid<\/em>. In their 2002 article, Prahalad and Hart called on western multinational corporations to expand their colonizing mission by looking \u201cat globalization strategies\u201d that offer \u201ccompanies with the resources and persistence to compete at the bottom of the world economic pyramid\u201d to reap \u201cprospective rewards [that] include growth, profits, and incalculable contributions to humankind.\u201d According to Prahalad and Hart, \u201cCountries that still don\u2019t have the modern infrastructure or products to meet basic human needs are an ideal testing ground for developing environmentally sustainable technologies and products for the entire world.\u201d The pyramid became a popular instrument within the world of global finance in terms of mapping out marketing and investment strategies.<\/p>\n

As Prahalad and Hart outline in the following chart, the world economic pyramid is composed of 75 to 100 million prosperous \u201cTier 1 consumers\u201d composed of middle-class and wealthy people in \u201cdeveloped countries\u201d and the few wealthy elites in the \u201cdeveloping world.\u201d Tiers 2 and 3 \u2013 in the middle of the pyramid \u2013 are composed of 1,500- 1,750 million \u201cpoor consumers\u201d in the \u201cdeveloped nations\u201d as well as the middle-classes in \u201cdeveloping countries.\u201d At the bottom of the pyramid in Tier 4 are the four billion poorest \u201cconsumers\u201d whose \u201cannual per capita income \u2014 based on purchasing power parity in U.S. dollars \u2014 is less than $1,500, the minimum considered necessary to sustain a decent life.\u201d Over a billion \u201cconsumers\u201d in Tier 4, \u201croughly one-sixth of humanity\u201d live on less than $1 per day.<\/p>\n

<\/a><\/p>\n

The world economic pyramid and its BoP model is becoming even more relevant as social impact investment markets flourish, because as the Financial Times<\/em> simply points out, BoP \u201ctheory suggests that new business opportunities lie in designing and distributing goods and services for poor communities.\u201d Inherently, the dehumanizing narrative attached to BoP frames the most dispossessed people as being untapped profit generators to be further exploited by the same opulent minority whose wealth and power was built \u2013 and depends \u2013 on their ongoing subjugation.<\/p>\n

In the U.S., the global neoliberal project of the past half century has made significant strides in impoverishing record numbers of people through structural adjustment and austerity policies that center on disinvestment from public programs, services and infrastructure. In doing so, this has created the rationale to transfer traditional public sector responsibilities to venture philanthropists and financial investors who are now applying the BoP model to employ impact investment strategies throughout the country. Guided by the belief that \u201cimpact investing is a powerful model with the potential to build markets and drive change for the people who need it most\u201d (Bill Gates), BoP investment strategies or \u201copportunities\u201d in the U.S. are focusing on: healthcare, education, microfinance, housing, real estate, small business development, natural resources conservation, sustainable agriculture, water and sanitation and clean energy.<\/p>\n

Social Impact Bonds<\/a> (SIB) are one of the most popular instruments of the impact investment industry, which are, in essence. derivatives or swaps (bets). According to the Rockefeller Foundation, which has pioneered SIB\u2019s:<\/p>\n

Sitting at nexus of the Foundation\u2019s work in scaling\u00a0innovation\u00a0and\u00a0impact investing, social impact bonds (SIBs), like \u2018pay-for-success\u2019 projects, represent one component of the rapidly growing field of\u00a0innovative finance<\/a>, aimed at helping state and local governments fund critical social programs through a combination of government initiation, private investment, and non-profit implementation.<\/p>\n

In sum, impact investing is promoted by neoliberal governments and their private sector partners through manipulative marketing storylines intended to convince us that elite financial investors are best positioned to mitigate long-standing social inequities. Never mind the fact that these social conditions are the generators of their wealth and power and result from the financial instruments they employ to allegedly \u201cdo good.\u201d Thus, in the age of financialization and within the ever solidifying state-finance nexus, venture capitalists \u2013 through the veneer of their generous and public spirited foundations \u2013 are the benevolent titans of international development and the arbiters of public, civic and social life. More dramatically, these powerful dynamics enable billionaire foundations to hasten the process by which financial institutions serve as the overlords of all aspects of life on our planet.<\/p>\n

___________________________________<\/p>\n

Tim Scott an educator, critical theorist and social worker who has been a community and union activist and organizer for nearly 20 years. This work has involved holding union leadership and staff positions (lead organizer and field rep); anti-racism work; global justice organizing (\u201canti-globalization movement\u201d) within international networks resisting IMF\/World Bank\/free-trade\/structural adjustment policies; harm reduction advocacy within LGBTQ networks; resisting US\/UN Iraq Sanctions; Single-Payer Health Care organizing; anti-war\/Counter Military Recruitment work; grass-roots media (radio & publication) and being a public education activist.<\/em><\/p>\n

Go to Original \u2013 dissidentvoice.org<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

17 Feb 2017 – In the late 19th century many U.S. industrialists \u2013 Andrew Carnegie, John Pierpont Morgan, John D. Rockefeller and others \u2013 who amassed immense wealth through the exploitation and degradation of workers (including children), began to establish philanthropic trusts and foundations.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[55],"tags":[],"class_list":["post-87295","post","type-post","status-publish","format-standard","hentry","category-capitalism"],"_links":{"self":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/87295","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/comments?post=87295"}],"version-history":[{"count":0,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/87295\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media?parent=87295"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/categories?post=87295"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/tags?post=87295"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}