Study Calls on Impact Investors to Close Educational Attainment Gaps

Innovative impact investments are needed to address gaps in higher education attainment for low-income students, a report commissioned by the Kresge and Lumina foundations argues.

Prepared by Avivar Capital, the report, Driving Postsecondary Success With Impact Investing (executive summary, 10 pages, PDF), found that while the increase in jobs that require postsecondary education, rising educational costs, changing student demographics, and advances in technology are helping to drive educational innovation, there remain gaps in the availability of capital needed to fund such efforts. According to a recent Global Impact Investing Network survey, impact investments in the education sector accounted for only 2 percent of global impact investing assets under management. The report further suggests that foundations can play a catalytic role in ensuring the flow of capital to educational organizations and for interventions designed to boost equitable access to higher education for underserved populations through the provision of "blended capital" (a combination of grants, "patient" or more affordable equity, and/or debt capital).

To that end, the report breaks down the postsecondary education market into four segments — learners, faculty, places of learning, and employers — and highlights capital gaps and impact investing opportunities in each segment across a variety of asset classes and investment strategies.

"Strategic social investing is an opportunity for Lumina to exhibit leadership by catalyzing social investments targeted at increasing attainment and closing achievement gap," said Lumina Foundation president Jamie Merisotis in the report. "We are eager to build this capacity and partner with other funders, investors, and innovators." In 2016, the foundation announced its first round of impact investments in support of its Goal 2025 initiative, a campaign to increase the share of Americans with high-quality degrees, certificates, and other credentials to 60 percent by 2025.

"We're committed to using all available capital tools to help more low-income, underrepresented students enroll in and graduate from college," said Bill Moses, managing director of the education program at the Kresge Foundation, which has committed to deploying $350 million in impact investments by 2020. "This scan helped us understand where to deploy grants, PRIs, and MRIs to advance our programmatic goals. For Kresge, we're most interested in investments to scale solutions that help reach more students. We're actively looking for those kinds of opportunities now."

"Impact Investors Needed to Help Close Persistent Gaps in Higher Education Attainment." Kresge Foundation Press Release 05/30/2017. "Driving Postsecondary Success With Impact Investing." Kresge Foundation and Lumina Foundation Report 05/30/2017.