Why We Invest in Impact and How You Can Too

Photo by Ruth Hazlewood

Photo by Ruth Hazlewood

We are honoured to have received the MaRS Social Finance "Impact Investor of the Year" award, which "is presented to a Canadian organization or initiative that has created—or demonstrated the potential for creating—positive social or environmental impact through direct investment". We are grateful to our partner and global leader in impact investing, Oikocredit, for supporting our nomination. And we look forward to continuing to work towards sustainable investing. Receiving this award has prompted us to reflect on why we focus on impact investing and how important it is to continue to promote these investment options in Canada.

Impact investments, as opposed to traditional investments, not only focus on achieving strong financial returns, but also on delivering measurable environmental and social benefits. We promote entrepreneurship among women, provide credit to micro and small businesses, and improve access to clean energy, affordable housing and healthcare. Deetken Impact has been successfully investing in triple bottom line (financial, social, environmental) opportunities for the past decade. Our investment funds are designed to promote the achievement of the United Nations Sustainable Development Goals. Specifically, we are helping achieve good health and well-being, quality education, clean and renewable energy, and decent work and economic growth.

Promoting Impact Investing is no small task but it is one we are extremely passionate about. Our mandate is to make impact investing more accessible to both Canadian and international investors alike. And not just accredited and institutional investors as it has been traditionally the case. We want to give everyone an opportunity to better align their investments with their values regardless of their wealth and with no sacrifice to financial returns. That's why financial instruments such as Deetken Impact Bonds, which Canadians can buy from their RRSP and TFSA accounts, are becoming so popular and the preferred option for many individual investors. As Impact Investing becomes more widespread and new investing options emerge, more people can contribute towards making a more sustainable world.  We are excited to be part of this journey.

Deetken Impact at FOROMIC 2017

Plaza San Martin in Buenos Aires, Argentina

Plaza San Martin in Buenos Aires, Argentina

Elegant, precise, controlled, the Tango got the show started at the closing dinner for the 20th InterAmerican Forum on Microenterprise (FOROMIC) in Buenos Aires (Argentina) last night. Halfway through, the curtain was drawn for several minutes before raising to reveal an explosive performance of the Cumbia in honour of Barranquilla (Colombia), the host city for FOROMIC 2018. The enthusiastic applause for the tango gave way to dancing in the aisles as thrilled Colombians shouted “Bravo” in support of the performers.  The marked contrast in seeing performances of the two iconic dance styles in such quick succession kept a smile on my face right through the second half of the show.

Other contrasts in Latin America and the Caribbean (LAC) are less thrilling. By many measures it is the most economically unequal region in the world. From the Rio Grande to Cape Horn the reality behind those measures is evident. Wealth and poverty are neighbours in many cities of the region and, to echo the sentiment expressed at the closing ceremony of FOROMIC 2017, “poverty is expensive”.  Microfinance, the provision of small loans to individuals at the bottom of the economic pyramid, addresses one aspect of those costs, the higher cost of finance. By promoting financial inclusion across the economic spectrum, microfinance companies make it possible for microenterprises to access credit for investment and working capital at a lower cost and in a more secure way than is otherwise available through informal money lending.

Deetken Impact has been supporting financial inclusion in the LAC region with loans to microfinance companies for over a decade. During this time, we have seen a remarkable growth in the industry. Indeed, since the first FOROMIC was held in 1998 the number of microfinance customers in the region has grown from 1.5 million to 20 million.[1] Over 1,200 people attended the event this year and we had the opportunity to meet with dozens of them over 3 days on the 24th floor of the Sheraton hotel overlooking the Plaza de San Martin in Buenos Aires. Over the course of our conversations we met with people representing organizations in Argentina, Bolivia, Colombia, Ecuador, El Salvador, Haiti, Honduras,  Nicaragua, and Peru.

The theme of this year’s FOROMIC was the role that the digital revolution and recent technologies are playing in financial inclusion and entrepreneurial innovation in the region. The theme was explored in the context of technological acceleration, stimulating innovation, regulation, rural production, client-centeredness, smart cities, human talent, small and medium-sized enterprises, and climate finance, among others.  The conversations and panels provided further impetus for Deetken to continue to extend the offering of our Big Data and Machine Learning advisory services to our partners in the region who are offering financial, education, and health services to thousands of people.

The President of Argentina, Mauricio Macri, opened FOROMIC 2017 by highlighting that in Argentina only about 50% of the population has a bank account, and that the majority of those who do have accounts, withdraw their entire paychecks on the first day it is deposited. These observations illustrate the challenge that lies ahead for all of us working to increase financial inclusion as part of the broader effort to reduce the contrast between rich and poor throughout the LAC region.

[1] https://www.economia.gob.ar/argentina-will-host-the-inter-american-forum-on-microenterprise-foromic-annual-meeting-in-2017/

My journey through three impact success stories in Mexico

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On my most recent visit to Pro Mujer Mexico I had the opportunity to meet with three inspiring entrepreneurs and learn up-close how our investments impact real lives.  Pro Mujer is an outstanding microfinance organisation with operations across 5 Central and South American countries and Deetken Impact provides them access to capital to lend to their clients and support their operations in health and education services.


A Naturopathic Practice With Indigenous Roots

My first visit took place in Tezontepec, a small town about 2.5 hours east of Pachuca, home of Pro Mujer’s head office. The road narrows from freeway to rural highways through agricultural lands and eventually the narrow streets of the town centre on a hillside. We pick up Lenin, the head of the office, who also happens to be the loan officer for Marta. You can see that they know each other well, and it isn’t surprising given that Marta has been a client for 10 years and 29 loan cycles. 

Marta is an example of the success of Pro Mujer’s programmes. She has gone from selling tortillas to owning a successful business which includes nutrition and spa treatments inspired by their indigenous community.

Marta became interested in these therapies from her husband who practices in the same field.  Their house was too small to use as a full-time practice. Funding from Pro Mujer has not only allowed her to buy the land and construct a building but also for her and her daughter to earn diplomas in naturopathic medicine.  She is a specialist in medicines and her daughter in massage. Loans then allowed her to expand her services and broaden the range of products that she offers. This includes a greenhouse for medicinal plants and a special sweat lodge used in combination with other therapies.

Marta, her family, and business

Marta, her family, and business

As her business includes the use of traditional plants and techniques I am hopeful that it can help in the preservation of the region’s indigenous knowledge. What’s next for Marta? We’ll soon see as she has a  proactive personality, continuously looking to expand her knowledge and business.


The Neighbourhood Home Cooking Canteen

We have returned to Pachuca, an industrial city two hours east of Mexico City, and we visit Pro Mujer entrepreneur Maria de los Angeles in a sprawling part of the city outside the historic centre.  Here Maria has created Cocina Economica which means “Affordable Kitchen”. It provides popular Mexican food at low cost, yet it still includes table service so workers from the neighborhood and the school across the road can rest their legs.  

Maria had no experience managing a restaurant or a kitchen but the opportunity to rent a spot across from the busy school was too good to pass up. She opened it originally as a breakfast spot and teachers would come every day.  The teachers were followed by school staff and then more people from the area. Her loans have helped her set up her business, have cash to pay the rent up front, and slowly add tables and chairs.  

Maria has been a PM client for 3 years and 6 months and her Pro Mujer loan officer, Fabiola, has been there along her side during her journey. Before Pro Mujer, Maria took care of children and the house she lives in.  She was also selling goods via catalogue, which is a common starting point for many women in Pachuca. Maria’s loan group is now at 16 members and they are on their 12th loan cycle.  Maria finds everyone in the group to be very responsible and also very supportive of each other. 

Maria, her friend Ibis, and Pro Mujer loan officer, Fabiola

Maria, her friend Ibis, and Pro Mujer loan officer, Fabiola

These days, Cocina Economica gets quite busy and sometimes her friend Ibis, her son and daughter all help out. Despite the success, Maria is ambitious: she has heard that another similar sized restaurant is available and she may be soon taking on both businesses.


A Boost To The Little Corner Store

Back on the road and 475 winding and beautiful kilometers to the south we arrive in Oaxaca, an area recently affected by two powerful earthquakes. Oaxaca is among the most culturally rich locations in Mexico, its cobblestone streets and colourful colonial buildings are striking to an outsider like me. Despite its beauty, Oaxaca has significant poverty. Here I meet Maria-Elena and her daughters. 

The bold Maria-Elena and daughters Ibis and Geysi in their "bodega"

The bold Maria-Elena and daughters Ibis and Geysi in their "bodega"

Maria –Elena has been a client for 1.5 years and is into her 5th loan cycle. Before opening her store, she was a street vendor and then worked in a cookie bakery. Her daughters Ibis and Geysi, one of whom has now graduated university, previously sold these cookies from the same factory, going store-to-store.  Her store has grown from a fruit and vegetable kiosk to offering personal care products, meat, cheese and milk.  Loans have helped her to sell these higher value products and build out the store with shelving, counters and appliances. 

Her daughters, Geysi and Ibis proudly tell me their mother is in the “leading lending group” in the city. I’m thinking this healthy competition drives even more excellence from Pro Mujer clients. They are all a force: bright, charismatic and full of confidence. As I leave, I thank them for their warm hospitality and they boldly tell me that they will come visit me at my home in Canada.  I, of course, gladly extend the invitation to my new associates.

Highlights from the Caribbean Renewable Energy Forum 2017

Fernando Alvarado, CEO of the Caribbean Basin Sustainable Energy Fund

Fernando Alvarado, CEO of the Caribbean Basin Sustainable Energy Fund

Last week, we had the opportunity to attend the 9th annual Caribbean Renewal Energy Forum (CREF) in Miami, Florida. The event has grown rapidly in importance during the last couple of years, and it focuses on the emerging trends in renewable energy across this region. Among the keynote speakers during the opening ceremony, we heard from the honorable Jennifer McIntyre, Canada’s Ambassador for Climate Change. She emphasized the historical immigration links between Canada and many of the Caribbean nations, and the joint commitment to combat climate change through sustainable energy practices.

Deetken Impact was invited to the Conference by one of our partners in the region, the Caribbean Basin Sustainable Energy Fund (CABEF), whose geographical mandate includes not only the small and large Caribbean islands, but also the Central American countries that share the Caribbean basin. Fernando Alvarado, CEO of CABEF, was a keynote speaker and a panelist in the topic of how to unlock private and public sector financing for renewable energy projects.

After such a strong and devastating hurricane season, the discussion also focused on the destruction and reconstruction needed across the Caribbean. Despite all the challenges, there is cautious optimism that the recent events will force policy makers, utilities, and community leaders to plan for a more resilient and sustainable energy framework. Some of the frequently heard topics included microgrids, inter-island grid connectivity, resiliency alternatives, and energy storage.

It is noteworthy to mention the large delegation of Canadian companies present in this year’s CREF: over 40 companies, which were by far the largest contingent from outside of the Caribbean. Canada had the largest meeting facilities, and plenty of networking activities organized by Trade Commissioners from Global Affairs Canada. Given the unique challenges and opportunities across the Caribbean basin, we expect that the Deetken Impact Fund will continue to support projects in renewable energy, a key impact sector for our Fund.

Measuring the Impact of our Investments

Photo by  Denys Nevozhai  on  Unsplash

Sharing our quest to measure the social and environmental benefits of our investments

Effective measurement of the social and environmental benefits of our investments is a significant challenge for all impact investors. In fact, more than one article has referred to impact measurement as the “quest for the holy grail". At Deetken Impact, we are continuously refining and improving our approach so that we can report richer and more meaningful information to our investors.

This is a snapshot of our journey to measure and report our impact. We hope that by sharing it we can support other impact investors who are tackling the same challenge, and learn from those who are developing and refining their own methodologies.


Early Days

When we first began to invest in impact back in 2007, our approach was straightforward. We focused on qualitative information and anecdotal evidence to help our investors understand why our portfolio companies were so different from mainstream investments. e would describe how one of our investees, a financial institution in Honduras, for instance, offered its clients preventative health screening services in addition to business loans, and that for many of its clients living in rural areas this was the only time they were able to see a medical professional.


Impact Measurement 1.0

Several years ago, we took a major step forward to formalize our approach with the deployment of a customized social impact measurement and evaluation tool focused on microfinance and SME lending. For the first time, we could quantitatively compare the impact of different investments in our portfolio. This was tremendously valuable as a decision-making tool for Deetken Impact.


Impact Measurement 2.0

We recently undertook a complete refresh of our impact measurement methodology, which was motivated by several factors:

1.       Our investment mandate had broadened over time to include businesses outside of the financial services space, such as renewable energy projects.

2.       We noticed that some information we were collecting from our investee companies was more meaningful than other information. We wanted to streamline our data requests to make ongoing reporting quicker and easier for our partners.

We wanted to align our approach with international frameworks including the Sustainable Development Goals and IRIS, an initiative of the Global Impact Investing Network. We viewed this alignment as an important way to support the impact investing ecosystem while ensuring that our impact measurement and reporting was as understandable and transparent as possible for our investors.


Step 1 - Defining our Impact Goals

The first step in our refreshed approach was to carefully define our impact goals. It was important to us to align these goals with the Sustainable Development Goals (SDGs), a global agenda to end poverty, protect the planet and ensure that all people enjoy peace and prosperity by 2030. The SDGs comprise 17 core goals that range from ending hunger to stemming climate change.

We are strong supporters of the SDGs as a useful framework to communicate and align impact objectives across a broad group of stakeholders including governments, NGOs and non-profits as well as investors.

One of the funds we manage, the Deetken Impact Fund, makes investments in financial institutions, renewable energy projects and social enterprises. These investments drive impact outcomes which are well-aligned with the SDGs, as shown below.

Deetken Impact Fund – Impact Goals

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Step 2 - Developing our Impact Thesis

We wanted to be clear about how and what impact is generated by our investments. Like the thesis statement of an academic research paper, this statement anchors our analysis and is ultimately what we seek to measure.

To share an example, this is the impact thesis for the Deetken Impact Fund:

“The Fund acts as a partner and steward for our portfolio companies, each of which has been carefully selected for its contribution to one of our four impact goals. Where appropriate, we provide these companies with customized business advice and technology transfer designed to foster sustainable and durable business growth. By helping to grow this group of impactful businesses, the Fund drives increased business activity such as lending to micro and small enterprise, installation of new renewable energy capacity or greater outreach of health care services for low income women.”

Deetken Impact Fund - Our Impact Thesis



Step 3 - Defining our Measurement Framework

We had two primary objectives for our measurement framework: we wanted it to be streamlined and user-friendly, and we wanted it to be aligned with IRIS.

IRIS is a catalogue of generally-accepted performance metrics that leading impact investors use to measure the social and environmental performance of their investments. Where the SDGs set big, broad goals for long-term change, IRIS provides metrics for measuring more specific, near-term results. We “cross-walked” our SDG targets and IRIS metrics to translate our goals into something that could be tracked and measured. Through this process, we selected a concise set metrics for each of our investment sectors.

Importantly, most of our selected metrics are quantitative and can be “rolled up” from the investee company level to the aggregate portfolio level for the purposes of consolidated reporting to investors.


Step 4 - Measuring our Impact

So how does all this work in practice?

We use our selected metrics to conduct an impact screening of each portfolio company candidate. The candidate metrics are assessed by Deetken Impact on a relative basis alongside the metrics of comparable companies. For ongoing monitoring purposes, our selected metrics are informed by data which can be readily provided by investee companies on an ongoing, consistent basis.

Deetken Impact Fund – How We Measure Impact

(1) We support the UN's 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs). The SDGs comprise 17 goals that range from ending hunger to stemming climate change. The DIF targets 4 goals within this set: SDG3, SDG4, SDG7, and SDG8.  (2) IRIS is a catalogue of generally-accepted performance metrics that leading impact investors use to measure the social and environmental performance of their investments.  (3) While loan acceleration is an important protection, we rarely view this approach as an appropriate remedy. We take price in our reputation for highly constructive negotiations with portfolio companies, in which we focus on solutions that preserve our capital while maintaining the stability of our investee's business. 

(1) We support the UN's 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs). The SDGs comprise 17 goals that range from ending hunger to stemming climate change. The DIF targets 4 goals within this set: SDG3, SDG4, SDG7, and SDG8.

(2) IRIS is a catalogue of generally-accepted performance metrics that leading impact investors use to measure the social and environmental performance of their investments.

(3) While loan acceleration is an important protection, we rarely view this approach as an appropriate remedy. We take price in our reputation for highly constructive negotiations with portfolio companies, in which we focus on solutions that preserve our capital while maintaining the stability of our investee's business. 


Impact Measurement 3.0… and Beyond

As for many impact investors, impact measurement is a balancing act between our desire to deeply understand the nature of our impact and the ability of our investee partners to track and report on meaningful metrics.  One way to think about impact measurement is as a spectrum from the most practical to the most rigorous approach, as illustrated below.

Impact Measurement Spectrum


At this stage, we have made good progress towards measuring the outputs and outcomes of our investment portfolio. However, we remain keenly interested in deeper measurement of social impact and have been actively working with some of our investees to develop tools for assessing causal relationships between our investments and our impact goals. For instance, we recently worked to implement the Progress out of Poverty Index (PPI) methodology at one of our portfolio companies in Mexico. PPI is an innovative way to evaluate a sample of clients before and after they receive services by the organization by using straightforward but revealing questions to track how living standards may have improved. The objective is to understand, from a longitudinal perspective, the impact of our activities on client incomes, lifestyle and overall well-being.

Effective impact measurement will always be one of our most challenging responsibilities. But we believe that by sharing best practices and continuously working to gather better and more meaningful impact data, it needn’t be as daunting as King Arthur’s quest.

Triple Bottom Line Potential of Run-of-River Hydroelectric Power

Run-of-river hydroelectric power, a type of hydroelectric power generation that does not require the storage of significant quantities of water, is a clean, renewable and predictable source of energy. It has great potential not only in countries like Canada where 60% of energy comes from hydroelectric sources, but also in small and remote communities in Latin America that currently lack other sources of energy.

How does it work?

In run-of-river schemes, running water is diverted from a flowing river and guided down a channel which leads to a generating house. From there, the force of the moving water spins a turbine and drives a generator. The water is fed back into the main river further downstream. Unlike the large hydroelectric projects, these systems contain a small dam that can store a limited quantity of water, enough for same-day use; it is not possible to store water for future use. Without a dam to store water, there is no stored power. This means that the capacity factor of run-of-river projects can vary from 40%-80%. When you compare this to the 89-90% capacity of a large hydroelectric power plant, it is easy to understand why these projects have only been viable in rivers with large year-round flow rates.

Mini-hydro systems can be used for independent and stand-alone applications in isolated remote areas or connected to a centralized grid that stores the generated power. While maintenance costs are relatively low compared to other technologies, most of the costs are accrued in the building phase. Connecting the run-of-river system to the centralized grid can get expensive if the energy needs to be transmitted over a far distance. However, when the run-of-river projects are used to power small, isolated communities, the costs are significantly lower and can be an economical source of power.

What happens if flow rates fluctuate? - The potential of a hydro-solar combination

One aspect to take into consideration is how flow rates may be affected in the future by climate change. Periods of drought might cause the system to operate below capacity at certain times of the year. As a result, we are starting to see innovative projects that combine mini-hydropower and photovoltaics (PV) solar generation.  With the cost of solar electricity declining significantly, this innovation has enabled solar PV to emerge as a cost-effective energy source in many regions across the world, including Latin America, even at small scale generation. Since mini-hydropower can counter power outages and help balance loads during periods of peak demand, this is a highly sought-after source of energy, especially in rural, mountainous areas. Coupling mini-hydropower with solar PV can provide a stable supply of electricity.

Some parts of Central America already offer interesting opportunities for this hydro-solar combination. The region of Honduras close to San Pedro Sula and several rural, mountainous parts of Costa Rica are ideally suited for both hydro and solar generation at a small scale. The combined generation capacity of these combined projects normally ranges from 2 MW to up to 15 MW of clean, renewable energy. This is enough to satisfy the electricity needs of small communities of up to 10,000 people. The run-of-river systems currently established in rural communities of Latin America are showing great success.

What is the environmental footprint of run-of-river?

The environmental footprint on surrounding ecosystems, such as fish habitats, is significantly reduced in these run-of river schemes compared to large hydro plants.  Although the impact is not completely eliminated, new technologies are being developed to reduce this impact even further.

In addition, many countries are investing in research and development to make the technology more cost-effective. A large amount of the current research is focused on improving turbines, as they are the most expensive part of the system. However, there are other ways to reduce the costs of these projects such as through the sale of carbon offsets. Carbon offsets are credits for greenhouse gas reductions achieved by one party that can be purchased and used to compensate the emissions of another party. There are several international brokers, online retailers, and trading platforms where you can buy and sell these carbon offsets. These are beneficial to renewable energy producers as the selling of carbon offsets makes their projects more economically viable. At the same time, carbon offsets buyers benefit by using the carbon offsets to mitigate their greenhouse gas emissions.

One example of a successful run-of-river system is in Central Peru, close to the imposing Andes. This small project generates around 10 MW of clean power and, since it started operations four years ago, has displaced a considerable amount of CO2 emissions. The Swedish government buys carbon offsets from the project, which helps generate additional revenue of around $40,000 annually. Part of those funds are reinvested in the community.  This run-of-river system also produces positive environmental side effects beyond providing the community with clean energy; the water from the system flows downstream to irrigate small plots of agricultural land which benefits the local farmers.

As technological breakthroughs for small hydroelectric turbines and solar panels continue to take place and new ways to reduce the environmental footprint even further are implemented, the opportunities to build these combined mini-hydropower and solar projects in Latin America will increase significantly. At Deetken Asset Management Inc., we expect to continue investing in these combined projects, as they will provide the right triple bottom line results we seek: financial, environmental, and social.

Ready to make a DIFference? Deetken Impact Fund teams with Frontfundr to make it easier than ever for Canadians to invest in impact


Deetken Asset Management is excited to announce that Deetken Impact Bonds* are now available on the Frontfundr platform. This means that investors from across Canada can use their savings to benefit communities in Latin America and the Caribbean while earning market-based returns.

Deetken Impact Bonds are used to support a portfolio of exceptional businesses that are committed to our impact goals: decent work and economic growth, affordable and clean energy, good health and well-being and quality education for all. Examples of DIF’s investments include:

  • Financial services NGO in Ecuador, providing loans to help entrepreneurs rebuild after a devastating earthquake
  • Small run-of-river hydro project in Peru, adding clean energy to the grid with minimal adverse environmental impacts
  • Micro and small enterprise lending in Argentina, offering vital health services and business training alongside business loans

Frontfundr is an innovative platform that offers regular investors access to private market opportunities like the Deetken Impact Bonds.

If you’re ready to make a DIFference, check out our campaign on Frontfundr today!

* Deetken Impact Bonds are issued by Deetken Impact Investment Corp., a feeder vehicle for the Deetken Impact Fund. Please be aware that investments of this nature carry risks to your capital as well as potential returns. Please read all investor materials before deciding to invest. You can also learn more about informed investing on InvestRight, a program of the British Columbia Securities Commission (BCSC).

      Written by Alexa Blain, Chief Operating Officer of Deetken Asset Management Inc.

Deetken joins the B Corp Movement

At Deetken Asset Management, we are committed to identifying and supporting companies that generate sustainable returns while making a meaningful, positive contribution to their communities. Pursuing more than one “bottom line” is core to our business model and our investment philosophy.

That’s why we decided to become a Certified B Corporation.

Certified B Corporations are a new type of company which use the power of business to solve social and environmental problems. B Corp is to business what Fair Trade certification is to coffee or USDA Organic certification to milk.

We are proud to join a growing community of over 2,100 Certified B Corps from 50 countries who have voluntarily chosen to conduct business in a way that creates value for all stakeholders, not just shareholders. In Canada, Certified B Corps include a diverse range of businesses from coffee roasters and sustainable food providers to major banks and media companies.

To become a Certified B Corporation, Deetken Asset Management participated in a rigorous evaluation process. Because most business decisions have the potential for positive impact, our operations were assessed from end to end, from our governance framework to the way we treat our workers to our environmental impact. We achieved a particularly high score on our practice of investing in businesses which have a proven and deliberate strategy to benefit the communities in which they operate, by promoting entrepreneurship or increasing access to renewable energy, affordable housing or education.

“The B Corp movement is a tremendous force for changing the way that the world does business,” said Alexa Blain, Chief Operating Officer of Deetken Asset Management. “The ultimate goal is to encourage companies to grow in a way that creates shared and durable prosperity for all. It’s a natural fit for Deetken to join this collective movement. The assessment process provided us with a new lens on our business, and we look forward to continuing to drive best practices alongside this global community of like-minded companies.”

Using Business as a Force for Good.jpg

For more information on B Corporations, visit www.bcorporation.net.

For more information on Deetken Asset Management, visit www.deetken.com.

Pro Mujer in Argentina

Pro Mujer client posing in her storefront (Argentina). Image courtesy of Pro Mujer .

Pro Mujer client posing in her storefront (Argentina). Image courtesy of Pro Mujer.

Fostering Successful Entrepreneurship among Women through Lending, Training, and Health Promotion

At Deetken Asset Management Inc. (DAMI) we are committed to achieving double (and in some cases triple) bottom line results - delivering strong and stable returns to our investors through investments that have a positive social and environmental impact. Our partners at Pro Mujer share this mission. With over 25 years of micro-lending in five countries (Peru, Bolivia, Nicaragua, Mexico, and Argentina), Pro Mujer is one of Latin America’s leading developmental organizations focused exclusively on women clients. Deetken has been providing much needed capital and technical assistance to support Pro Mujer’s lending activities for over six years, and we consider Pro Mujer International (based in New York City) a strategic partner. 

Each of Pro Mujer’s operations faces its own opportunities and challenges. Argentina’s underserved northern region is no exception, where people face poverty, experience poor health outcomes and have little access to financial opportunities.  The economic depression in the early 2000’s resulted in the closing of many banks and increased unemployment and poverty throughout the country. Since then, Argentina’s economy has been slowly recovering, but the impact is still being felt in the country’s poorest regions. Although the economy has been improving since 2003, it is still difficult for banks and microfinance institutions to borrow capital, which in turn creates strict lending requirements.

There are few microfinance institutions like Pro Mujer in Argentina. Most financial institutions are unwilling to provide loans to those with low incomes, the so-called bottom of the pyramid. There are several reasons for this:

  • The country has high inflation caused by interest rates, a result of a previously closed economy and a history of protectionist policies. This means that outside capital was, and still is, hard to come by. The limited capital and high interest rates heavily contribute to the lack of microfinance organizations.
  • Many of the poor work in the informal sector and are unable to provide physical evidence of their income to qualify for loans. Those who do have the proper documentation typically do not require a large enough loan to meet the minimum requirement for established banks.
  • Unlike Canada, loan interest from an independent financial entity in Argentina is subject to a 21% value-added tax. Rate subsidies and tax deductions are only available to businesses in the formal economy, making it expensive for business in the informal economy to get a loan. For a business to transition from the informal to formal economy, they are subject to a 35% business income tax and immediate retroactive taxes and penalties. This is a deterrent that prevents most informal entrepreneurs from transitioning out of the informal economy.

These dynamics make it very difficult, if not impossible, for many families to escape the poverty trap. This is where Pro Mujer comes in. By providing access to affordable loans for low-income women entrepreneurs, the organization is serving a segment of the population that would otherwise have a very hard time accessing credit. In addition to capital, Pro Mujer offers a comprehensive program focused on helping aspiring women entrepreneurs to build their capacity as business owners while also enabling access for themselves and their families to health care and educational training.

In order to receive a loan through Pro Mujer, women are required to attend training in business management, life-skills, and health care. Health care training includes educational classes on preventative care and nutrition. This approach is not only altruistic: it is good business.  Pro Mujer’s involvement goes beyond the exchange of a loan.  By promoting health, business, and personal competence, Pro Mujer creates the foundation for the success of its clients. The results have shown that this approach works: default rates for loans are extremely low and currently stand at less than 0.5%.

Pro Mujer in Argentina administers the majority of their loans using a group structure that resembles a small corporation. This method has proved to be very beneficial for both Pro Mujer and its clients.

Group Lending

Pro Mujer takes an active role in each investment. One method they have found particularly effective is “group lending.” For a majority of the loans administered in Argentina, the recipients are required to have a working management structure where women are responsible for both their personal success and the success of the group. The management structures reinforce accountability, leadership, risk management, and focused responsibilities.

A lending group consists of four small groups with two representatives in each group: a group leader (la "Jefa del Grupo") and support member. The support member is appointed to the main group and given one of four roles: president, cashier, secretary, or health promoter.

A lending group consists of four small groups with two representatives in each group: a group leader (la "Jefa del Grupo") and support member. The support member is appointed to the main group and given one of four roles: president, cashier, secretary, or health promoter.

The group is required to attend reoccurring sessions that consist of a meeting, educational training, hands on training, and loan disbursements. A Pro Mujer advisor supervises the sessions, providing assistance when needed.


During the meeting, the group handles all processes, roles, and responsibilities in accordance with the group management structure. Any outstanding issues or concerns are addressed and managed with the guidance of the Pro Mujer advisor, if necessary. Typically, the atmosphere of the meeting is positive and each woman is encouraged to contribute. The group members rotate through the four roles: president, cashier, secretary, and health promoter, providing each woman with a range of experience in leadership and communication. Members of the group receive regular evaluations of their performance in each role, which increases confidence and helps Pro Mujer’s clients to become more invested in the performance of their group.


The lending meeting is then followed by an hour of mandatory training, including a 20-minute microteaching session. This training enhances the professional and personal growth of each group member. Pro Mujer believes that the educational and hands-on training provides the women they serve with the tools to develop as successful business women. Training topics range from business planning and budgeting to empowerment and confidence building. Women learn to develop “Living Plans” which help them adapt to the stresses and complications of raising a family while operating a household and a business.


Argentina provides free public health care, but care is difficult to access outside of an emergency and typically involves long wait times. In addition, preventative care is virtually non-existent despite the high incidences of preventable diseases in women, such as diabetes, obesity, and cervical cancer.

Pro Mujer provides all members and their families with access to life-saving primary health care. This component is important as it provides security to families, alleviating the stress of worrying about their family's health care and allowing Pro Mujer members to focus on building their businesses.

Pro Mujer’s health care program offers a variety of services, including:

  • Preventative and immediate health care, including health screenings with a nurse and follow-up with an onsite doctor
  • Life and incapacity insurance to protect members and their families in the event of a critical illness
  • Health and lifestyle educational training, including on topics such as nutrition and exercise

These services are conveniently offered at Pro Mujer Service Centers, which minimizes the time entrepreneurs are away from business activities. Pro Mujer charges a small service fee to all clients. For many of the women served by Pro Mujer, the health care dimension is one of the biggest draws to the organization.

Looking Forward

The Argentinian government has begun to make changes to meet their goal to improve the economy and reduce the impact of high inflation. In addition, the government realizes the benefit (e.g. generating tax revenue) of easing the transition from the informal to formal economy.  Pro Mujer in Argentina sees this as an opportunity to collaborate with the government and other organizations to help their members take their businesses to the next level. 

Despite the challenges of operating in a complex context, clients of Pro Mujer in Argentina are building businesses and successfully managing their loans. The program is enriching their lives, allowing them to feel empowered, to provide for their families, to contribute to their communities and to set a powerful example for the next generation of business owners.  We are proud that the partnership between Pro Mujer and DAMI is contributing to these important outcomes.

Fundación Covelo and DAMI: Making a Difference in Central America

On October 28th 1998, Hurricane Mitch struck Honduras and caused the worst flooding the country has experienced in close to 100 years.  In addition to claiming thousands of lives and destroying an estimated 35,000 homes, Mitch decimated one of the main markets in Tegucigalpa, the country’s capital.

In the aftermath of the disaster, most lending institutions were reluctant to provide credit to businesses that relied on a market that had been destroyed. How would these businesses repay loans, they asked, without a market to sell their products?  Without these loans, people would not be able to restart their businesses, making the impact of the hurricane even more devastating.

Fortunately, one organization was willing to provide this much needed credit. This was Fundación Covelo (“Covelo”), a pioneer of microfinance in Central America.

Today, Covelo functions as a second level institution and facilitates US$ 31.7 Million in loans to 40 microfinance institutions, which in turn serve close to 300,000 clients in rural Honduras, Nicaragua, Guatemala and El Salvador. Covelo’s support targets low-income, mostly rural households. More than 53% of Covelo’s clients are women.

Covelo has had a catalytic impact on the microfinance sector in Honduras.

The foundation has supported the drafting and approval of regulatory laws for the sector and promoted a new field of study at the national university focused on building a technical career in microfinance.

Through its MFI clients, Covelo provides or supports a range of services that have a social and/or environmental impact. These include, among other areas of focus, providing credit to micro, small and medium enterprises, including rural businesses; supporting social housing; and offering micro-insurance. 

In addition, Covelo is one of the few providers of student loans. It has not only promoted the creation of a specialized institution dedicated to educational loans but has also contributed its own funds to the project, targeting young students in Honduras in need of financial support in order to finish their studies and/or to progress to a higher or more specialized level of studies. Covelo has lent to approximately 800 low income students who have demonstrated high academic achievement.

Covelo is also committed to the generation of clean energy to serve the needs of non-electrified rural homes. An estimated 1.5 million people, approximately 30% of the rural population in Honduras, do not have access to the national electrical grid. The “Sol y Luz” (“Sun and Light”) project enables households to borrow US $ 1,000 to purchase a solar panel to generate electricity.  To date, Sol y Luz has provided electricity to over 750 families in Honduras and Nicaragua. This has allowed these families to extend their study or chore hours. It has also increased their access to radio and television as well as enabled them to charge cell phones and other electronic devices.  In short, Sol y Luz has helped increase productivity and made an enormous contribution to improving the quality of life for its beneficiaries. (Learn more about the Sol y Luz project by watching this video.)

At DAMI, we are very pleased to be in negotiations, together with Inter-American Development Bank, to provide subordinated loans to Covelo. Our contribution will help the Covelo team support the 40 microfinance institutions who with whom they work.

Learn more about Covelo by clicking here.

What can your business do to combat the gender wage gap?

As today is International Women’s Day, here at The Deetken Group, we took some time to reflect on what International Women’s Day means to us as a company.  This brought us to thinking about how we could make a modest contribution to this important campaign. After much internal debate, we decided we wanted to reflect further on the continued disparity in economic outcomes between men and women – the pay gap – and what employers can do address this issue in the workplace.

What is the economic impact of the “pay gap”?

In Canada, women who are working full-time currently earn an average of 73.5% of what their male counterparts earn. This disparity in economic outcomes is not only a serious human rights issue, it also has a negative economic impact.

In 2015, the Province of Ontario commissioned Deloitte, a consulting company, to estimate the economic impact of closing the wage gap as part of a report the Gender Wage Gap Strategy Steering Committee prepared for the Minister of Labour and Minister Responsible for Women’s Issues. Deloitte estimated that if women were compensated at the same rate as men based on demographic characteristics (e.g. education level, age, marital status), and experience in the workplace (e.g. job status, occupation, and sector), Ontario’s women would earn an average of $7,200 more per working year. This amounts to $18 billion dollars of forgone earnings in the Province. That’s 2.5% of Ontario’s GDP. Deloitte further estimated that the marginal increase in personal and sales taxes would be $2.6 billion and that government spending on social assistance, tax credits, and child benefits could decrease by $103 million due to increases in families’ incomes.  In other words, closing the pay gap would have clear, positive economic implications for the province.

Beyond this direct measurable impact, there is also a less measurable economic impact. The gender norms that so often influence men and women to make different career choices may prevent the efficient allocation of labour. For example, men enter the STEM (Science, Technology, Engineering and Math) professions and women choose careers in the healthcare or education professions because these seem to be more “gender appropriate”.  Therefore we are left with workers who may be most productive in a role which has been socially deemed as “gender inappropriate” thereby self-selecting into careers to which they are less suited. This represents an additional productivity loss to the entire economy.

Beyond the economic impact, a recent survey of 1,000 Canadians found that the majority of people agree that men and women do not receive equal pay for equal work and are not treated equally in the workplace. The survey also found that two thirds of respondents would be less likely to apply at an employer where they knew that women earned less than men for the same work – so how do we solve this problem?

So, what can we do about it?

The first step to addressing the pay gap is to understand some of its key drivers. The issue is complex and depends on a number of factors, including, among others:  differences in choice of occupation and difference in pay within the same occupation, we consider these below. (It is important to note that regardless of how the pay gap is dissected, a portion always remains attributable to overt discrimination).

Problem: Differences in Choice of Occupation

The difference in choice of occupation explains 15% of the gender wage gap. However, the view that this choice is free of discrimination makes things too simple. A recent report by the Canadian Centre for Policy Alternatives (CCPA) and Oxfam Canada found that, in Canada, jobs that are associated with traditionally unpaid and traditionally female work (e.g. caregiving) are poorly compensated compared to work of similar complexity and physical risk in male-dominated fields. For example, truck drivers (97% of whom are male) make a median annual wage of $45K, while childhood educators (97% of whom are female) make a median annual wage of $25K.

Take a moment to consider the discrepancies in jobs requiring similar education and responsibility, or similar skills, but divided by gender. A New York Times article, drawing on extensive research, notes that the median earnings of information technology managers (mostly men) are 27% higher than human resources managers (mostly women). Janitors (usually men) earn 22% more than maids and housecleaners (usually women).

In addition, as professions shift from being primarily male-dominated to primarily female-dominated, pay tends to decrease. For example, a study undertaken by Professor Levanon of the University of Haifa in Israel, found that between 1950 and 2000, the gender balance of workers in the recreation industry shifted from mostly men to mostly women. During the same period, median wages declined by 57% (after accounting for change in the value of the dollar). Overall, this study found that when women moved into occupations in large numbers, those jobs began paying less, even after controlling for education, work experience, skill, race and geography.

Strategy: Determine the Value of Each Position

To combat this phenomenon, a Harvard Business Review article suggests that managers, with their HR partners, should determine the value each position brings to the organization regardless of who occupies the position. By determining the level of knowledge, responsibility, and value to the organization each job contributes, the risk that women, especially women of colour, be penalized on future salaries based on past pay inequalities is reduced. These determinations can then be tempered by internal equity and the candidate’s experience and skill set.

Problem: Differences Within Occupation

The primary difference cited for the wage gap is that women are more likely to ask for time off or for more flexible hours in order to care for family (usually children, or elderly family members). However, critically, this gap does not disappear when we adjust for hours worked. This is because in many professions, employers consider the value of the work of an employee who is putting in 30 hours a week to be less than half the value of the work of an employee putting in 60 hours per week. This non-linearity disproportionately punishes flexibility and since women are more likely to demand this flexibility, the disparity appears in a gender wage gap. (See this report by Claudia Goldin for more on this.)

Strategy: Reduce the “Pain” of Flexible Hours

Because of the distribution of household labour, women are more likely to request flexible or fewer hours and this request can be met with disproportionately large pay cuts. The pay gap is particularly acute in professions where there is a premium placed on working long hours and being 100% available. (Finance, business consulting, and law are particularly well-known for these work patterns.) However, there are other highly specialized fields that have found ways to cope with these issues. Obstetrics, a field where professionals work in small groups to ensure someone is always available for a delivery, or pharmacy, where practitioners use technology that ensures patient information is highly consistent to enable efficient and consistent handover of work.

Every profession and company is different, but an internal analysis will help to identify strategies to improve the linearity of pay with hours using work management methods and/or technology, among other potential solutions. Allowing this flexibility is not only beneficial for women, men are also increasingly requesting flexibility. Creating these opportunities at your own business may help to ensure you attract and retain the best employees.

Problem: Differences in How Behaviour is Perceived

A few years ago, research suggested that the reason women make less is because they don’t ask for raises and promotions at the same rate as men (in 2003 Linda Babcock published ‘Women Don’t Ask’ covering this topic). However, a 2016 research paper out of the University of Warwick has found that in fact women do not ask for a raise less frequently than men. However, women are less likely to get what they ask for. This is supported by a 2007 paper by Harvard Kennedy School lecturer Hannah Bowles which suggests that both men and women are less likely to want to work with (or hire) women who ask for raises. At the same time, this behaviour from men is not only tolerated but rewarded with higher compensation. This trend is consistent with broader research that suggests women face social and financial repercussions when they behave assertively. 

Strategy: Improving Pay Transparency

A number of countries have started to demand that employers either report earnings by demographic characteristics to the government (e.g. the US) or that employers disclose the differences in pay between their male and female employees and even post the pay gap on their website (e.g. UK).

Improving pay transparency could be achieved by publicizing the formula used to determine salary, or like Whole Foods, making salaries public to all employees. By adding transparency to the pay structure, compensation can be abstracted away from how the assertive behaviour of asking for a raise is perceived and rewarded by managers.

Of course, on its own, pay transparency isn’t enough to close the wage gap but, combined with real commitment on the part of the company can encourage open dialogue about what factors determine pay and ensure these factors are merit-based. The evidence for spin off effects of these policies is mixed. They could be negative (reducing company morale) or positive (improving retention) and likely depends on current compensation structure and company culture.

After all that talk, what is Deetken doing?

At Deetken, we work hard to ensure an equitable workplace. We also allow for flexibility for all our employees so they are able to meet the demands of both the workplace and their home lives.

In addition, through Deetken Asset Management Inc. (our financing arm), we are committed to supporting organizations that support women and equality in the workplace. For example, for the past 5 years we have been funding Pro Mujer, an institution that economically empowers female entrepreneurs in Latin America (see our forthcoming “Reflections” piece on Pro Mujer). Pro Mujer is committed to helping women in Latin America to become agents of change by using an integrated approach which extends access to finance, health and educational services.  

With commitment from all of us - both as employers and employees - we can work to close the pay gap and in so doing improve economic prosperity for all residents and a more equal society for ourselves and generations to come.  Of course, it is important to note that the firm-level strategies suggested here do not replace the need for broader policy changes required to lift Canada from its 35th placing on the World Economic Forum gender gap list.  There is much more work to be done.

Deetken reflects on the Responsible Investment Association (RIA) Forum

Last month I attended the RIA Foundation & Endowment Forum in Toronto. The forum was hosted by the Responsible Investment Association (RIA), Canada's membership association for socially and environmentally responsible investment. It focused on responsible and impact investing through the incorporation of environmental, social and governance (ESG) factors.

The event was run exceptionally well with informed and engaging speakers. Discussions surfaced some of the real issues that investors face in adopting an impact focus, including accessing investment vehicles that deliver commercial risk adjusted returns, provide liquidity, and deliver measurable impact.

As investors, these issues are front of mind for us at Deetken. I was encouraged to see that they are directly addressed by the Deetken Impact Fund (DIF), one of Canada's first registered international impact investment funds. I came home feeling even more confident that our approach with the DIF is something innovative and that the Fund is in uniquely positioned to meet the needs of other investors looking to tilt their portfolio towards an impact focus.

Of special note, we were pleased to attend as special guests of our new partner Oikocredit and look forward to the next RIA event in Vancouver in 2017.

Read more about Deetken Asset Management Inc. and the Deetken Impact Fund.

Written by Samir Shah, Managing Partner and Co-founder of The Deetken Group

Oikocredit and The Deetken Group announce exempt market dealing agreement

The Deetken Group (1) and Oikocredit have entered into an Exempt Market Dealing ("EMD") Services agreement to distribute Oikocredit's securities ("Depository Receipts") in several Canadian provinces, including, but not limited to, Ontario, British Columbia and Alberta. The sale of these securities will take place by way of private placements.

"We are pleased with the agreement to help Oikocredit as an Exempt Market Dealer in several Canadian provinces," said Samir Shah, Director of The Deetken Group, "There is a strong alignment between our organizations in terms of our focus on impact investments. Oikocredit is a global leader in this investment category, and The Deetken Group is committed to continue to strengthen commercial bonds with like-minded organizations. We see this agreement as part of our mission to improve access to impact investment products for Canadians."

"We see a lot of demand for impact investments that combat poverty and contribute to sustainability in developing countries," said Eugene Ellmen, Canadian Director for Oikocredit. "This agreement permits us to reach out to accredited investors across Canada to help meet this demand."

The Deetken Group is a management consulting and investment firm based in Vancouver, Canada. With close to a decade of active investing in impact-based organizations, The Deetken Group is a pioneer in the impact investment space in Canada. Through deep financial and strategic analysis, and strong local relationships in the countries we work in, we are able to generate sustainable, long-term returns on our investments.

Oikocredit has over 40 years' experience in funding to partner organizations active in inclusive finance (including microfinance), agriculture and renewable energy. Oikocredit's loans an investments enable people living on low incomes to sustainably improve their living standards. Oikocredit finances more than 780 partners in over 70 countries and its outstanding capital totals € 940 million.

(1) Deetken Asset Management Inc. is registered as an Exempt Market Dealer in the provinces it is distributing Depository Receipts.

For further information:

Deetken Impact Fund closes

Deetken Asset Management Inc. is pleased to announce the first close of the Deetken Impact Fund (or “DIF”) -- - one of Canada’s first registered international impact investment funds.

DIF aims to deliver strong, consistent returns by investing in exceptional businesses that promote entrepreneurship and improve access to basic services, including clean renewable energy, healthcare and affordable housing. 

It has a clear double/triple-bottom line mandate: to have a measurable positive social and/or environmental impact in the communities where it operates as well as yield market-based returns.

The Fund’s geographic focus is Latin America and the Caribbean, where Deetken Asset Management has a strong pipeline of investment opportunities in sustainable mid-sized projects and businesses.

“These mid-sized business, which are financially stable and often fall below the radar for larger funds, have a strong demand for capital combined with a need for customized technical assistance,” said José Lamyin, Chief Investment Officer. “We strongly believe that by investing in and collaborating with these businesses, we are helping to create new opportunities for growth and development in their communities.”

Alexa Blain, Chief Operating Officer, added: “We are tremendously excited to be offering Canadian and international investors the opportunity to invest in a truly unique portfolio of double or triple-bottom line investments. It’s an important step in our commitment to creating high quality impact investment products that are accessible to both large and small investors.”

DIF is domiciled in Canada and managed by Deetken Asset Management Inc., a registered Investment Fund Manager, Portfolio Manager and Exempt Market Dealer with the BC and Alberta Securities Commissions. 

Deetken Asset Management Inc. is a joint venture between The Deetken Group, a Vancouver–based asset management and business advisory firm, and Cooperativa Abaco, Peru’s largest credit union. Together, these founding partners bring decades of experience in impact investments across Latin America and North America.