Mrs Maria Kozloski, Senior Vice President, Innovative Finance reports their Zero Gap Fund leveraged $30 million to catalyze an impressive $1.04 billion from their partners.
The Zero Gap Fund (ZGF or the Fund) was created to address some of the world’s most pressing challenges by investing in innovative financial structures that have the potential to be replicated and scaled to catalyze additional capital. Mrs. Maria Kozloski quotes “Now in its fifth year, I am proud to say that the Fund is fully committed across 12 investments. With $30 million committed, ZGF has mobilized approximately $1.04 billion from partnering investors.”
Launched in 2019 in partnership with the John D. and Catherine T. MacArthur Foundation and its flagship Catalytic Capital Consortium (C3), ZGF deploys flexible, patient and risk tolerant capital to catalyze private investment into strategies that address critical global needs as defined by the United Nations Sustainable Development Goal (UN SDGs).
Across its portfolio, ZGF invests in disruptive technologies and tech enabled companies to address climate change, regenerative agriculture, financial inclusion and access to essential services. The Fund channels impact-focused market opportunities to mainstream investors, reducing traditional market barriers to mobilize private capital at scale
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In 2023, ZGF made two new investments: Blue Forest’s FRB Catalyst Facility and Trailhead Capital Regeneration Fund I. Both investments highlight the importance of collaboration between finance,
science and communities to address the effects of climate change and build resilient ecosystems. The FRB Catalyst Facility leverages a public private partnership instrument developed with Blue Forest to create a revolving investment facility to accelerate and scale the financing of forest restoration projects to reduce wildfire risks. Trailhead Capital Regeneration Fund I is an early-stage venture capital fund that invests in innovative, tech enabled businesses targeting the transformation to regenerative food and agriculture.
The Zero Gap Fund: 2023 State of the Portfolio provides details about the investments, the impact they have achieved and capital that has been mobilized. The report highlights the results to date and demonstrates that climate and access—financial, healthcare, education, agriculture—are
investable themes and drivers for new and unique business opportunities. These pioneering financial solutions lay the groundwork for channeling even greater private capital flows
to investments that deliver positive impact to at-risk people, communities and ecosystems.
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In 2019, the Foundation partnered with the John D. and Catherine T. MacArthur Foundation and
its flagship Catalytic Capital Consortium (C3) to establish the Zero Gap Fund to operationalize
viable instruments by either incubating in the Zero Gap grant portfolio or launching investment
strategies identified elsewhere, that advance the UN SDGs. ZGF has seeded financial innovations to catalyze investment in diverse projects such as forest restoration and fire risk mitigation, women-led sustainable farming, and climate adaptation and resilience. As of year end 2023, the Fund has fully committed $30 million and mobilized approximately $1.04 billion in capital across 12 investments.
Case Study: www.BlueForest.org
The Forest Resilience Bond I (FRB I) uses a public private partnership structure that mobilizes private capital for investments in forest restoration and fire risk mitigation to protect communities and ecosystems on public lands. Wildfires have increased in intensity and severity
globally, devastating communities and ecosystems. In 2023, we saw 55,571 wildfires across the U.S.,
burning over 2.6 million acres of land. Healthy forests are key to reducing wildfire risks, enhancing watershed resilience and providing quality water to surrounding communities. To restore and sustain the forest ecosystems in the U.S., we need an estimated $50 billion* for large-scale forest restoration projects and conservation measures. Blue Forest developed the Forest Resilience Bond
to address this funding gap.
FRB is a conservation finance instrument that aligns the interests of land managers (i.e. U.S. Forest
Service), those who will benefit from well-managed forests, and private investors targeting projects
with a positive environmental impact. Blue Forest establishes contracts with stakeholders like federal, state and local governments, water utilities, private companies, etc., who recognize value from specific restoration projects. Blue Forest identifies an implementation partner then packages restoration contracts together to establish the FRB. Investors channel capital to the FRB which provides upfront funding to implementation partners, who often lack immediate access to the dollars needed to complete forest restoration projects. Principal and interest repayment of the bonds occurs through cost-share contributions by the various parties benefiting from the forest restoration work.
Blue Forest launched the first FRB in 2018 and the second in 2021, financing the protection
of Tahoe National Forest in the North Yuba River watershed. FRB I has returned all investor
capital plus interest in line with expectations, an initial proof point establishing the FRB as a
viable financial structure for restoring the forest ecosystem.
