Social Impact Funds have a role to play in expanding educational opportunities for children and young adults across the world, especially the developing world. Supporting access to and improving the quality of education can bridge the huge gap in educational supply and demand. Impact investing in education can go a long way in complementing social sector organizations in bringing about sustainable development.
But what is a Social Impact Fund?
Typically, a Social Impact Fund is like a growth partner with limited shelf-life. It invests in early and growth stage companies or organizations in priority sectors like healthcare, education, livelihood etc. The fund is focused on investing in sustainable and innovative business models that work with the lower income group. The promoter of the Impact Fund could be a not-for-profit or a foundation that supports and nurtures socio-economic inclusion through targeted grants.
In India, although existent in practice, it is only under the Alternative Investment Funds (AIF) Regulations that Social Impact Funds were formally recognized. SEBI enacted the AIF Regulations, which included ‘social venture funds’, in 2012. AIFs are funds established in India for the purpose of pooling capital from Indian and foreign investors for investing as per a pre-decided social impact policy. India is considered a breeding ground for impact investing due to the enormous size of its demography and the unfulfilled demands for social and economic services. The reduced public investment in priority sectors has allowed the growth of the private entrepreneurial space. While there has been no apparent dearth of private capital to spurt social innovations, the emergence of dedicated social investment funds is a rightful recognition of the importance of social impact funds to India’s economy and job creation.
While there are various Social Impact Funds, here we bring you ones that support education.
A global community, Acumen raises charitable donations to invest in companies, leaders, and ideas to serve low-income population. They invest in education sector with a focus on education services, skills development or vocational training for low-income customers.
Unitus group has positively impacted more than 20 million families living at the base of the economic pyramid through support and investments in various organizations. Out of 53 investments made by Unitus around the world, 39 are made in India – one has been made in the education sector: Hippocampus (HLC), which runs pre-schools and after-school programs in rural Karnataka.
3. Michael & Susan Dell Foundation (MSDF)
Partnered with more than 650 organizations from around the world, MSDF works to improve health and educational outcomes for children worldwide. Each year, the foundation helps millions of low-income students globally attend high-quality schools and earn university degrees, supports lakhs of classrooms globally with high-quality tools, technology, and resources to deliver effective instructions.
Aavishkaar is an innovator in early-stage investing. Founded in 2001 with a vision to catalyse development in India's underserved regions, it identifies capable entrepreneurs, provides them with capital, supplements it with a nurturing environment and helps build sustainable enterprises.
5. Rural Technology and Business Incubator (RTBI)
RTBI supports entrepreneurs in building ventures to promote livelihoods, education, healthcare, agriculture, connectivity and financial inclusion in India’s rural areas. Conceived by the Indian Institute of Technology Madras (IIT-M), it provides an incubation system suitable to entrepreneurs at any phase in their venture.
6. UnLtd India
UnLtd India offers social entrepreneurs a complete ecosystem of seed funding, advisory services, incubation support and co-working space to launch their ventures. They have supported 200+ social entrepreneurs who are addressing pressing socio-economic problems across 13 different sectors in the country.
7. Centre for Innovation, Incubation and Entrepreneurship (CIIE)
Apart from incubating and investing in various Indian ventures, CIIE has taken up several initiatives to strengthen India’s entrepreneurial ecosystem. Through its Bharat Inclusion Initiative, CIIE provides ambitious entrepreneurs the domain knowledge, training, financial support, mentorship and market access they need to bring inclusive, for-profit businesses to life.
8. LGT Venture Philanthropy (LGTVP)
Founded by The Liechtenstein Global Trust's CEO H.S.H. Prince Max von und zu Liechtenstein in 2007, LGT Venture Philanthropy deploys philanthropic growth capital to organizations and companies with effective, innovative and scalable solutions to social and environmental challenges. It was founded with the mission to improve the quality of life of disadvantaged people, contribute to healthy ecosystems and build resilient, inclusive and prosperous communities.
9. India Education Outcomes Fund (IEOF)
Social Finance, one of the world's leading impact financing platforms, has in 2018 announced the launch of two funds - India Education Outcomes Fund (IEOF) and India Impact Fund - of USD 1 billion each for India. The purpose of the first fund is to bring funds on scale to the best education service providers, with a sharp focus on improving learning and skilling outcomes. The second fund will catalyze debt for impact in housing, health and education.
Impact investing in educational companies or organizations with appropriate scale, scope and focus can go a long way in complementing social sector organizations in bringing about sustainable development. Education creates opportunities. Investing in education is among the most powerful ways to provide such opportunities to the world’s poor which is why impact investors are taking the lead in investing in education.