Why Impact Investors Shy Away From Education
Friday, February 22, 2019
By Sarika Bansal
A decade ago, when I was working in the microfinance sector in India, there was a lot of buzz around “doing good and doing well” — in other words, doing good for the world while simultaneously earning money.
My personal dislike for grammatically awkward phrases aside, it was around that time that “socially responsible business” began to explode. Entrepreneurs around the world started looking for ways to turn a profit with a clean(er) conscience, whether by offering financial services to the poor or building a chain of hospitals. This line of thinking culminated in, among other things, a sector known as impact investing.
Until recently, impact investors — who make investments “with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return” — represented a relatively niche market. But the sector has grown quickly, and the most recent report by the Forum for Sustainable and Responsible Investment estimates that in 2018, “sustainable, responsible and impact investing” accounted for $12 trillion in assets under management.
But impact investing has not grown evenly. As the space has matured, investors have begun gravitating toward a few sectors, particularly financial services and energy.
Conversely, only 4 percent of impact investing dollars are spent on education, according to the latest survey by the Global Impact Investing Network (GIIN) — and even less on education in the global south. Just as with financial services and energy, there is tremendous need for new solutions to education.
Photo courtesy of Jonathan Ernst.