Boosting Impact: Why Foundations Should Invest in Venture Funds

Boosting Impact: Why Foundations Should Invest in Education Venture Funds
Authored by: Matt Greenfield & Tom Vander Ark
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In “Boosting Impact: Why Foundations Should Invest in Education Venture Funds” authors Matt Greenfield, Rethink Education, and Tom Vander Ark argue that foundations should invest in for-profit companies and education venture funds to increase impact. The goal of this paper is to accelerate and scale innovative products and services–key to creating next-generation learning opportunities for students worldwide.  Specifically, they recommend:

• Investing a portion of the endowment in impact-oriented, dedicated education venture funds seeking market rate returns often called mission-related investments (MRIs); and

• Investing a portion of annual distributions to accelerate the growth of individual companies through expenditure responsibility grants or program-related investments (PRIs) with clear charitable intent and potentially mitigated return expectations.

The paper shares five recommendations to boost impact:

1. Embrace entrepreneurship. New tools and models often reframe old debates and intractable problems. Impact investing may yield significant public benefit, though it may be different in time and place than grantmaking. Don’t apply philanthropic guidelines to mission-related investments.

2. For direct-investment, hire experienced professionals and plan on a mix of failure (maybe a third will require significant follow on) and success with some significant follow-on investing (maybe a third will fail).

3. Encourage links between program and investing staff. Create incentive systems that encourage collaboration.

4. Support R&D, including basic research in learning sciences, support prizes and pull mechanisms to build smart demand, and support advocacy that promotes a vision of personalized learning for students and teachers.

5. Invest in education venture funds with experienced managers and a commitment to impact. Support associations of innovators and investors.

Download “Boosting Impact: Why Foundations Should Invest in Education Venture Funds“