Stakeholder capitalism or social entrepreneurship has been cultivated in Brazil by the Aspen Institute, The Inter-American Development Bank, The International Finance Corporation, the Catholic Church through the First fund, and Oikocredit (World Council of Churches) going back at least to 2003. Brazil is one of thirty-three member nations of Sir Ronald Cohen’s Global Steering Group for Impact Investment, which was launched in 2017.
Aspen Institute, with assistance from the University of St. Gallen in São Paulo, documented impact investing opportunities in Brazil in 2014, targeting BOP (base of pyramid) favela residents. The report identifies investment potential in the areas of education and healthcare access and banking since Brazil is one of the fifteen countries with the greatest income inequality. Favelas would be seen by venture philanthropists and social entrepreneurs as significant and potentially profitable sources of data if they can be “properly developed” with “evidence-based solutions.” This game of speculation can only proceed once rules are created, consensus is established, players are recruited, and the gameboard is set up. The human capital finance game runs on metrics.
In the coming years, global financiers, will attempt to meld dynamic pricing and mobile payments with biometric digital identity, Internet of Body sensors, and blockchain smart contracts and then weave it all into an expansive spatial web meant to control our social and economic relations in both the material world and, through digital assets, rights and privileges, in the Metaverse, as well. Click here to listen to an interview I did with Bonnie Faulkner of Guns and Butter that goes into more detail about how impact investing connects to digital twins, and mixed reality.
Surely it is twisted to view communities as resource deposits of untapped data, but that is the logic of end-stage capitalism. The infrastructure needed to scale human capital finance profit are ICT (Individual Communication Technology) devices including phones, tablets, and inexpensive computers like chrome books; wearable technologies and biosensors; and 5-6G used in combination with data-dashboards that verify impact data against predictions and success metrics laid out in the terms of the deals. These are all things one finds in recreation centers in the United States now, and given inroads made by the Aspen Institute, Stanford, Harvard and the like, they will very likely become standard issue in the favelas, too. Not because any of it is good for children, but because the children’s data has value, and their compliance has value.
The Metaverse will be populated by compliant avatars. Beyond social impact, the conditioning of the young to cyborg life is going full throttle. Meanwhile for portfolio managers, children’s futures are just tranches of investment – data commodities. It’s only business.
Blended Finance, Impact Subsidies
When structuring deals around “green,” “sustainable,” “social impact” projects, investments from a combination of sources are generally used. This is called blended finance, and concessional or catalytic capital is deployed to grease the skids and advance initiatives that would not normally be considered economically viable – a subsidy of sorts.
This strategy of seeding markets comes with the understanding that an early-stage loss or break-even has the potential create opportunities for greater returns down the line. Concessional or catalytic capital often takes the form of foundation grants or donations from high-net-worth individuals and include allocations of public funds. “Stakeholder capitalism” will require continual infusions of sacrificial up-front money to “de-risk” the many projects now advancing aligned with the “build back better” agenda and the United Nations Sustainable Development Goals (UN SDGs).
In 2015, financiers and development program managers met in Addis Ababa, hosted by Tedros Ghebreyesus, at the time Ethiopia’s Minister of Foreign Affairs, to hammer out how projects aligned with the UN SDGs would be financed. From that gathering came Convergence, an organization tasked with educating investors about blended finance deal flow and gathering intelligence on impact opportunities in the developing world. The World Economic Forum and the OECD sponsored the effort, pulled together by Dalberg Advisors and Global Development Incubator. According to the Convergence website its market-building partners include the governments of Canada, the United States, Switzerland, the Netherlands, and Australia and NORAD, which is strange until you realize that the data analytics that structure social impact markets run through GPS satellite connected sensor networks.
Raul Diego of Silicon Icarus notes in his investigation of education Development Impact Bonds in India that Geneva-based Dalberg prepared the first corporate citizenship rating system in 2007 as the United Nations laid out the groundwork to pull in labor, civil society, business, and governments into a global systems engineering endeavor advanced on behalf of technology, defense, and finance industries under the guise of saving the planet and solving poverty.
Convergence’s members come from the corporate, government, and philanthropic sectors. None of these deals would be possible without public private partnerships and healthy dose of venture philanthropy. The Jack Dorseys of the world, with their crypto-stocked donor advised funds, are poised to deploy their immense wealth to cultivate an ever-expanding of network of “social impact” poverty-management channels through which their capital can be directed only to loop its way back to the digital gold reservoirs at the top. Two years after the UN’s Global Compact Leaders’ Summit was held in Geneva, the Rockefeller Foundation in partnership with JP Morgan and USAID launched GIIN, the Global Impact Investors Network and IRIS, Impact Reporting and Investment Standards. Omidyar Network was among the founding members.
Jack Dorsey Venture Philanthropist
In 2020 Dorsey ramped up his venture philanthropy game with a public commitment to give away $1 billion through Start Small LLC for Covid relief, girls’ health and education, and universal basic income (UBI). Owen Thomas of the San Francisco Chronicle offers valuable insights in a 2018 investigation titled “Where is Jack Dorsey’s Charitable Foundation?” Dorsey talks a big game about giving, but the particulars are murky. The 2015 SEC filing for Square’s IPO mentions plans to move 1,350,000 shares into a Donor Advised Fund (DAFs) with the troubled Silicon Valley Community Foundation. DAFs provide an immediate tax write off for donors and are not subject to the same public disclosure requirements as private foundations are. Dorsey did in fact create a Start Small Foundation that same year with $1 in revenue. 990 documents between 2015 and 2018 indicate no additional funds were placed in the foundation and no distributions were ever made to charity. The foundation is no longer included on the IRS list of tax-exempt organizations.
A June 2020 profile of Dorsey in Vox notes that the grants made through his DAF have largely been handed out through his personal network of friends and business partners rather than a formal review process. At the start of the pandemic, Dorsey sent $1 million to California Governor Gavin Newsom’s public-private partnership distance learning initiative that distributed devices and hot-spots to low-income families to “close the digital divide,” or extend the reach of Silicon Valley’s electronic prison depending on how you look at it. California has seen the some of the harshest lockdowns and testing protocols in the nation. Other donors to the “Closing The Digital Divide Task Force” were: Amazon, Apple, Verizon, Chan Zuckerberg, T-Mobile, AT&T, HP, Zoom, Box, Microsoft, VIPKid, PayPal, John Doerr, Craig Newmark, Gordon Moore, and Scott Cook. The tech / telecom sectors have enacted a mass digital enclosure using health-status geofencing. Online education is a tool to extract value from children being held captive to screens, forced acculturation into the Metaverse.
Dorsey’s fund started with $3.1 billion in assets, and after disbursements it is now valued at $2.7 billion. You can view a Google sheet of the projects Dorsey is funding here. Associacao Projecto Crescer is the third most recent entry with $224,000 allocated on December 7, 2021.
Dorsey also maintains a Donor Advised Fund in the troubled Silicon Valley Community Foundation, the second largest community foundation in the country where an enormous hoard of crypto assets awaits global deployment. Austerity is the precondition that allows private interests to step in to fund “evidence-based” “solutions” that run on data – lots and lots of data. Data, of course, is Dorsey’s business. Over the years, Dorsey, who studied at NYU for a few years, has maintained an ongoing collaboration with Michael Bloomberg, the data analytics “what works” mayor who brought social impact bonds over from the UK. A decade ago, Dorsey was toying with the idea of moving to New York to run for mayor, describing the technocrat Bloomberg as a guiding light and his inspiration.
Source: Washington Post, 2013
Source, Politico 2013
Timeline of Stakeholder Capitalism
A briefing document prepared by The ImPact, a global organization that advises high net-worth families to shift assets into social impact projects, specifically references education and healthcare as target areas for Brazil. ImPact was co-founded by Justin Rockefeller and Liesel Pritzker Simmons. Their Brazilian contact is Fernando Scodro, an NYU graduate whose family made its money in baking and confections. Fernando interned at UNESCO after graduating, worked in international finance for a few years, then turned to managing his family’s assets with a focus on alternative energy and food innovation through Grupo Baoba, which he set up in 2014. Since August 2020 Scodro has been working on a communications plan for Zurich’s Center for Sustainable Finance and Private Wealth run in partnership with Harvard University.
Here are key dates, many drawn from Navigating Impact Investing in Brazil, that show how a culture of social innovation is cultivated over time.
1995 – GIFE Network of Social Investment / Entrepreneurs
2002 – LAVCA Launched, Program of IDB – The Association for Private Capital Investment in Latin America
2001 – United Way Brazil Establishes Office in Sao Pao
2003 – Oikocredit, World Council of Churches Microfinance
2005 – International Finance Corporation – Inclusive Business Models Group
2006 – Impact Hub Sao Paulo Launched
2007 – Inter-American Development Bank – Opportunities for the Majority
2009 – LGT Venture Philanthropy and VOX Fund Established
2012 – MOV Established, First Social Impact Conference Held
2012 – Annie E. Casey Foundation Kids Count Data Pilot Planned for State of Parana
2014 – Mapping The Impact Investing Sector In Brazil – Aspen Institute
2014 – Brazilian Task Force On Social Finance Established
2015 – Brazil Joins Global Steering Group (GSG) Formerly G7 Impact Investment Task Force
2016 – Brazilian Task Force On Social Finance Signs Cooperative Agreement With Ministerio do Desenvolvimento To Lead Creation of National Strategy for Impact Business and Investing – ENIMPACTO
2017 – First Brazilian Philanthropy Forum Promoting Social Impact Held
2018 – Social Finance Impact Business Forum Conference Held
2018 –Task Force for a Latin America Impact Fund of Funds (LIFF), Ronald Cohen
2018 – Data for Good Brazil Movement, UN Sustainable Development Goals Launched
2019 – Softbank Creates First Fund For Technology Investment in Latin America, $5 Billion
2019 – International Seminar of Early Childhood, Boa Vista Blockchain ID Home Visit Pilot
2020 – Convergence Capital Conference Held
2021 – Lightrock Spins Off LGT (Lichtenstein) for Impact Investing, Sao Paulo Office
2021 – United Way Brazil Hosts Collective Impact Finance Conference With Aspen Institute
According to an abvcap (Brazilian Private Equity and Venture Capital Association) report from March 2020, impact investing was still an emerging market with sixty nine active projects focused on ICT (individual communication technology), tech-mediated education and health projects, financial inclusion, housing, and natural resource preservation. Expansion of financial inclusion programs must be understood within the larger context of the United Nation’s Sustainable Development goals, now gaining recognition through the high-profile, corporate branding of Greta Thunberg and Extinction Rebellion. If you want to know more, I did an extensive report in March 2020 right before the pandemic was announced. It can be read or listened to here.