New impact investing business models are changing education
Industry expert Julia Balandina Jaquier explains how impact investing can introduce a new way of doing business and provide scalable and sustainable investment in education.
How far away are we from mainstreaming impact investment?
There are a lot of encouraging signs. But realistically, we have a long way ahead of us before we can claim that impact investing has become mainstream. What gives me confidence is the growth in the depth and breadth of investment product offering. You have impact-generating investment opportunities across all asset classes and impact themes, with various degrees of risk, return and impact. In addition to impact pioneers, large traditional investment houses are starting to come up with large impact investment funds. They may be shallower in impact, but they are incredibly important – they provide a greater legitimacy to the space, offer a broader variety of opportunities, and, can therefore, cater to more conservative investors. My greatest hope is that the smaller, catalytic and disruptive impact investments made by impact pioneers will be successfully scaled, as this is the only way to reach the targets of the SDGs (Sustainable Development Goals).
Do you have a view as to where impact investing can be most effective when it comes to education?
There is a lot of excitement about using technology to provide affordable, quality education and vocational training. Low-income private schooling in emerging markets, and charter schools in the United States attract a lot of interest. Then, you can look at education more broadly. If you, as an impact investor, want to improve educational outcomes because you believe that education is the real multiplier, you can search for root causes of low educational take-up, which include, for example, lack of electrification or sanitation. Then you may decide to invest in solar home systems or sanitation solutions, as a way of reaching your impact objectives.
Where do you think impact investment can complement philanthropic investment?
I see these sources of capital as very complementary. Impact investing can mobilize new sources of capital to deliver societal impact. Where a business solution can effectively address a societal challenge, it should be funded by impact investment, to free up philanthropic dollars for tougher problems. But grants and concessionary financing are also extremely important in funding the early stages of commercially-viable innovations to reach the proof of concept and mitigate risk.
How does the attitude of millennials towards impact investing compare with those of other demographics?
I believe that millennials have huge potential as impact investors. They think holistically and are not satisfied with the traditional way of separating philanthropic engagements from the way wealth is created and managed. They are also eager to make a difference early on during their lives. Another promising segment is female wealth holders, who are particularly drawn to the notion of aligning their wealth with their values. With the huge generational wealth transfer to millennials and women, the effect on impact investing could be truly transformative.