About Us
Impact4Ed is committed to bridging the capital gap in public education by driving more impact investments into public charter schools.
Impact4Ed is a new initiative launched in 2020 by a group of impact investing experts and charter school advocates. Recognizing that public charter schools are looking for more ways to access private capital and that impact investors are looking for more ways to allocate capital in socially and environmentally companies and projects, the founders of Impact4Ed saw a natural opportunity to bring the two fields together. Impact4Ed is primarily focused on driving more impact investment into U.S. public schools. While traditional district schools are completely funded by federal and local governments, charter schools typically rely on a combination of public and private capital. There is a large and growing opportunity for impact investors that want to support schools and education while earning a market-rate return.
What is impact investing?
Impact investing is defined by the Global Impact Investing Network (GIIN) as “investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.” According to the GIIN, there are currently more than $715 billion in “impact” assets under management, a figure that continues to grow exponentially. Of this total, only about 3% (or $21.5 billion) is specifically focused on the education sector.
Why do charter schools need impact investors?
Historically, state and local governments provided most of the funding for public schools. This is also true for the construction of school buildings, with school districts raising capital through the municipal bond market. Public charter schools, meanwhile, do not receive comparable funding for facilities. Instead, they need to finance their school buildings with low-cost debt. Socially motivated investors, such as foundations, family offices and high-net-worth investors, can play an important role in providing the financing that these charter schools need to continue their operations and improve the educational experience for students. Based on recent trends in the municipal bond market for charter schools, I4E estimates that more than $5 billion will be required to meet the needs of charter schools in the next 5 years.
How does an impact investment in education work?
Impact investments in the education sector generally fall into two categories:
Investments made directly into schools, or
Investments made into intermediaries such as nonprofit funds.
Specifically, these focus on debt such as loans, notes, or fixed income investments where the impact investor is paid interest based on the risk level of the school and the social impact goals of the school. Many of the impact investments are one-off transactions to individual schools. Recently, several financial intermediaries have created funds or pools to allow investors to spread their capital across multiple charter schools.
“Socially motivated investors can use their capital to generate a fair return and a significant impact in the lives of children, especially those that don’t have an option for a quality education.”
What are the current impact investment opportunities in education?
There are currently a limited number of structured opportunities for investors. Below are some of the existing investing opportunities that have supported charter schools. They represent a very small fraction of the total capital available for charter schools. The market may be poised for more structured investment opportunities. These are listed for academic research purposes only and are not solicitations for investments. Please see disclaimer for more information.
Calvert Impact Capital
Low Income Investment Fund
There is one trading platform for some of these investment opportunities:
In 2020, Equitable Facilities Fund (EFF) announced the first verified Social Bonds for primary and secondary education in the U.S. Proceeds from the $204 million in Social Bonds, issued by the Equitable School Revolving Fund (ESRF), will help finance public charter schools that are providing transformative educational opportunities for students, especially in low-income and under-resourced communities. Social Bonds are a new mechanism to help attract impact investments into primary education.
How are the proceeds from these investments used to help schools and improve education?
Each investment is structured differently, but in general the capital from impact investments is used to reduce borrowing costs and to redirect the savings to improve the educational experience and help drive improved educational outcomes. Examples include financing for construction projects and financing technology and broadband, especially in low-income communities.
Where to learn more about impact investing in charter schools
Check out our Learn More page for additional resources, and to access some real world examples and case studies.
Learn More
Impact4Ed brings impact investors and public charter school leaders together to learn more about each other’s interests.
Thought Leadership
We publish articles on trends in the industry and convene experts in the field to discuss impact investing in charter schools.
Read some of these news articles:
Bond Buyer- Why social bonds are key to driving more investment in education
Next Billion-When It Comes to K-12 Education, Where Are the Impact Investors?
Bloomberg – Walton Family Backs Bond-Market Experiment for Charter Schools
Wall Street Journal-Charter Schools Are an Opportunity for Impact Investors
Financial Advisor Magazine – Charter Schools Need Your Investment Help
FundFire – Asset Owners Hungry for ‘Impact’ Fixed Income Find Few Places to Go
Real Vision – Impact Investing: Making the Case for Charter Schools
The Bond Buyer – Charter schools funding exists and matters during coronavirus
The Bond Buyer – Charter schools benefit as access to cheaper financing increases
Case Studies
Some socially motivated groups have started their own funds. One leading example is an Idaho fund started through an investment by the J.A. and Kathryn Albertson Foundation. Read about it here.
In Colorado, a group of local foundations are working together to provide and facilitate affordable facility solutions that increase the number of high quality public charter school seats for underserved Colorado students. Learn more here.
GEO Academies Baton Rouge (coming soon)
Research
We provide a wealth of information on public charter schools and impact investment opportunities. Read some of these research reports:
Impact4Ed, in partnership with the Charter School Facility Center, produced Revolving Loan Funds: 10 Building Blocks for State and Local Charter School Facility Funds as a resource for prospective state and local funds.
Katherine Haley of Oak Rose Group wrote a piece outlining the benefits of Revolving Loan Funds called Creating Revolving Loan Funds: Doing Good with Low-Cost Capital.
In 2019, the Charter School Facility Center partnered with Impact Entrepreneur to produce a call to action for the charter school community with a new report titled: Impact Investing for Charter Schools: Current Strategies Moving Forward. The report makes the case that public charter school investments can and should be included as part of the emerging ‘impact investing’ marketplace, and proposes a set of twenty recommendations for the charter school community (schools, supporters and funders) to better align increasing interests from impact investors with opportunities to support charter schools’ educational missions.
Read the Full Report
Charter School Bond Sector: 2019 Year in Review All-time Record Volume Issued – Equitable Facilities Fund (2019)
Charter School Bond Sector: 2018 Year in Review – Equitable Facilities Fund (2018)
Charter School Bond Issuance History | Local Initiatives Support Corporation (2015)
A Decade of Results: Charter School Loan & Operating PerformancePrepared for the Low Income Investment Fund, The Reinvestment Fund and Raza Development Fund By the Quantitative Economics and Statistics Practice of Ernst & Young LLP May (2011)
Broader Landscape
This initiative is part of a broader discussion about impact investing.
Some resources to frame this work in the greater context of impact investing can be found here:
Global Impact Investor Network’s Roadmap for the Future of Impact Investing: Reshaping Financial Markets | The GIIN
Global Impact Investor Network’s 2020 Annual Impact Investor Survey | The GIIN
Mission Investors Exchange and Urban Institute’s Collaborative PBII Models- Deploying Capital on the Ground Together.pdf (missioninvestors.org)
Mission Investors Exchange and Urban Institute’s Mapping and Assessing Local Capacities and Opportunities for Place-Based Impact Investing (urban.org)
Mission Investors Exchange and Urban Institute’s Place-Based Impact Investing Ecosystems: Building a Collaboration to Boost Your Effectiveness (urban.org)
Mission Investors Exchange and Urban Institute’s Investing Together: Emerging Approaches in Collaborative Place-Based Impact Investing (urban.org)