Educational Philanthropy – a Rising Investment Trend
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Educational Philanthropy – a Rising Investment Trend

A growing number of philanthropists recognize the tremendous importance of education, not only for their own success, but also for future generations. Education is thus a primary target among their philanthropic efforts.

Education is fundamental to development and economic growth. It is also seen as the main driver of long-term social impact. Asia's rapid development coupled with the esteemed position that education holds within Asian cultures has enabled the region to post economic growth rates exceeding the global average over the past five decades. It is therefore not surprising that education is the cause that receives the most donations in terms of value from the region's philanthropists. Many affluent Asians are looking at ways to use their often self-made wealth to give back to society and create beneficial long-term change. They view educational giving as a means to help others climb out of poverty. "A younger generation of 'millennial' philanthropists sees the transformational impact of education not only in their own success, but for generations to come," said Francesco de Ferrari, Head of Private Banking Asia Pacific and CEO Southeast Asia at Credit Suisse as he opened the bank's annual Credit Suisse Philanthropists Forum in Singapore.

Greater Focus on Measuring the Impact of Educational Philanthropy

The philanthropic landscape is currently undergoing a substantial change, switching away from rewarding academic institutions such as universities with ties to the giver, or granting students with scholarships or bursaries, toward educational projects that target marginalized and deprived communities. "As the philanthropy sector navigates the changing landscape, I hope we don't lose sight of the vision of giving, which is to give every person an equal opportunity to succeed in life," the Singaporean Minister of Education, Ng Chee Meng told the audience of the Forum. Philanthropists are increasingly focusing on areas beyond physical infrastructure such as a school library or science lab to the training of educators, the strengthening of the vocational skills of disadvantaged students or even the development of curricula. Tech-savvy younger givers also push for the use of key performance indicators (KPIs) to raise the effectiveness and measurable returns of their sponsored projects. The ChickenSoup Foundation supporting at risk-children in Hong Kong for instance uses various KPIs to measure the absentee rates among the students served.

Working in Close Cooperation With the State and NGOs

As the state traditionally controls education, philanthropists in the educational sphere typically work alongside governments. The givers often focus on unmet educational needs such as early childhood education or infrastructure. In China, the Chen Yet-Sen Family Foundation for instance tackles literacy by building libraries. James Chen, the co-chair of this foundation and Chairman of Wahum Group Holdings, told the Credit Suisse Philanthropists Forum that "for my family, the key for this foundation was to become domain-experts in what we fund… early childhood literacy and cultural reading in schools. The kids were hungry for those books, and that was the light bulb moment – this was potentially a national issue we could tackle." Educational philanthropists also tend to work in close collaboration with non-governmental organizations, local communities and other foundations in order to leverage their expertise, experiences and resources.

Considerable Room for Expansion in Impact Investing

The main goal of impact investments is to make a social or environmental impact while generating financial returns. In the area of education, impact investing can help underprivileged and talented students from low-income countries to obtain loans for advanced education. Credit Suisse launched the first-ever bond focusing on higher education - Higher Education Note - together with Prodigy Finance back in 2014. This financial product provides talented students around the globe with access to higher education, while investors obtain a financial and social return. Two additional bonds have been issued since and their impact is tangible. These three bonds have since enabled more than 2500 students from underprivileged backgrounds in over 70 countries to attend top universities. "As impact investing currently accounts for a small share of overall global education funding of less than one percent, we believe there is considerable room for expansion," de Ferrari concluded.