Impact investing is red-hot right now, especially in the education space. But while this approach has long fueled the development of new education technology tools, impact investing is being applied to other ed challenges, too. Just recently, we wrote about the growing efforts to mobilize private capital to build charter school facilities. And globally, there's intense interest around impact investing as a way to scale low-cost private schools in developing countries, as we've reported. (See our coverage here and here, and other analysis here and here.)
There's also some new action outside K-12 in the higher ed space, both in the United States and elsewhere. In countries without a student loan infrastructure, impact investing is seen as a crucial way to help students finance higher education. Here in the U.S., the Lumina Foundation is hoping to leverage its first impact investment, announced in May, to advance its mission to increase the proportion of Americans with high-quality degrees and other credentials to 65 percent by 2025. Lumina is turning to social investing as one means to boost postsecondary attainment in the midst of a growing student debt crisis, sky-high tuition costs, and real questions regarding the value of postsecondary degrees for certain groups.
Among other things, these questions have fanned a push to find less expensive paths for credentializing young people for the jobs of the future, and this is one area where Lumina is investing, getting behind a technology platform, Credly, that verifies, shares, and manages digital badges and credentials.
The foundation is also investing in BridgeEdU, an intervention services provider that works to increase college retention and completion rates by targeting first-year college students they deem most at risk for dropping out. As we've reported often, boosting college completion is a huge focus of many higher ed funders these days.
New Profit, a longtime partner of Lumina’s, has also benefited from the foundation’s first-time impact investments, pulling in resources to boost its Learn to Earn Fund. This New Profit fund works to catalyze disruptive innovations in the field, supports policy advocacy that creates better conditions for increasing postsecondary attainment rates, and coordinates directly with employers to create strong job pipelines.
Lumina has also funded—through its Social Innovation Prize—CareerVillage, an online platform where students ask career questions and get real-time answers from individuals in those careers.
Lumina isn’t alone in its interest in impact investing in higher ed, but overall, there's still not all that much happening in this emerging space. Meanwhile, though, the broader conversation about impact investing and education, one still mainly focused on K-12, keeps hurtling forward, and various foundations are involved, including the Gates, Kellogg, Nellie Mae, Prudential, and Dell foundations. Those bullish on ed impact investing, like the team at Rethink Education, believe it will catalyze the development of new tools and models to reframe old debates and support much-needed research and development.
A last point, regarding impact investing specifically in higher education—a new conversation is fast emerging about how colleges and universities can put their endowments to work in investments that advance their missions. This will be very interesting to watch.