Q3 – 2016: HIP Impact Rated Government Issuers

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The HIP (Human Impact + Profit) Ratings for municipal government issuers – cities, counties, states — focus on the Health, Wealth, Earth, and Equality outcomes. Governments with higher HIP Ratings generally have healthier citizens with access to the resources they need to live a high quality of life. Across the HIP pillars, this is measured in several ways: in Health, lower obesity rates and higher health care coverage; in Wealth, more affordable and livable communities; in Earth, the type and intensity of commuting to work; and in Equality, the share of ethnic and gender entrepreneurs and business owners.

Figure 1 displays the correlation between HIP Ratings and Median Household Income for our universe of rated cities. The correlation is intuitive – higher income cities generally have citizens who have been more educated, are physically healthier, with less crime.

Analyzing the share of women owned businesses versus median household income reveals new opportunities for impact investing. The cities of Detroit, Memphis, and Baltimore, all in the low income range in Figure 2, are leaders in the percentage of businesses owned by women. In Detroit, more than 62% of businesses are women-owned – significantly higher than the 50% representation that most cities struggle to attain, and the national average of 30%. Figure 2 is compelling as more female business owners exist in cities with lower median incomes. One possibility for this trend is that women are more empowered to be entrepreneurial in lower income communities where families benefit most from the supplementary income. Thus, more targeted gender-lens investing can help these women entrepreneurs access the capital they need to be successful to grow and scale.

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