Impact Investing for Education

Helping the World’s Youth Reach Their Potential Through Impact Investing in Education

Education is one of the most powerful tools available to reduce inequality and foster a peaceful, prosperous world. According to the 2020 UN Sustainable Development Goals Report, despite decades of progress, approximately 258 million children and young people were not in school globally in 2018, representing about one-fifth of all school aged kids.

There are wide disparities between schools in wealthy communities and those in poorer ones—and the COVID-19 pandemic has only exacerbated those differences. Pandemic-related school closures affected 90% of students worldwide, setting their progress in learning back by months and even years. Remote learning tools like laptops and internet connectivity are out of reach for low-income students. The UN report estimates that 79% of students in wealthy countries will complete their studies on time despite COVID-19, but that only 34% of students in poorer countries will be able to do so. Impact investments in education—that is, investing for both a financial return and progress towards educational goals—is one way of addressing these considerable challenges.

In the U.S. and other developed countries, education is largely funded with taxes rather than private investments, so social impact education investing represents a relatively small, niche area in impact investing. The Global Impact Investing Network (GIIN), in its annual investor survey, found that education related investments only represented a little over 1% of the overall impact investing market in 2019.

Social impact education investing is challenging—it can be difficult to find opportunities that both contribute to better educational outcomes and deliver a competitive return—but worthwhile. Opportunities to make impact investments in education can be found in venture funds that invest in early stage educational technology companies and in social bonds that fund capital improvements and other school investments. If you’re wondering how to become an impact investor, here are a couple of options.  

Venture capital investments in education tech start-ups

Owl Ventures is a venture capital firm that invests in education technology start-ups. Founded in 2014, the fund now manages over $2 billion in assets across multiple funds.  Owl Ventures concentrates primarily on education technology targeted at K-12 students in the United States, but it has made international investments as well. Its success stories include Quizlet, a self-directed learning program that gives students and teachers the tools to create flashcards and interactive study games for any subject. The company’s value has increased by roughly nine times since Owl Ventures invested.   

Social bonds and other fixed income vehicles for impact investing

Owl Ventures is a form of private equity, with all the typical investment characteristics that you would associate with that asset class – long holding periods, high return potential and significant risk. For investors who are looking for education impact investments with lower risk, a fixed term and a defined exit strategy, “social bonds” may be just the ticket.

The concept of “green bonds” which invest in environmentally purposed projects is well established.   Social bonds apply this concept to projects with social benefits, such as affordable housing, healthcare,  or education.  Social bonds are often issued by non-profits.  Like conventional bonds, they pay interest and return principal upon maturity.  There are organizations such as Kestrel Verifiers that certify that a bond offering meets the Social Bond Principles established by the International Capital Markets Association.   School districts and charter schools have used social bonds to finance school facilities, especially in lower-income, under-resourced areas.  For more information on this topic, see this excellent article by Mark Medema, the managing director of the National Alliance for Public Charter Schools.

Investors can buy social bonds directly or invest in funds that hold them.  However, acquiring the bonds directly can be challenging.   The Equitable School Revolving Fund issued $283 million of bonds to fund public charter schools, largely in under-served communities, and was 9x oversubscribed.  One fund option that is more readily available (and more broadly purposed) is the Ecofin Tax-Advantaged Social Impact Fund (TSIFX).  This fund provides capital to fund essential community assets like schools, low-income housing, healthcare facilities, senior living and charter schools. Portfolio managers have experience in sourcing and structuring direct deals, with specific expertise in senior living and charter schools.

Invest for financial returns—and a better education for all

Like all impact investments, education impact strategies should be chosen carefully to make sure they align both with the investor’s values and with his or her portfolio constraints and objectives. Your personal representative at Colorado Capital can help you determine how best to incorporate education impact investing into your strategy. Ask us how to get started today.

Senior Financial Advisor | + posts

An entrepreneur and world traveler, Colorado Capital Management vice president and co-owner Lee Strongwater brings a global perspective to investments and life planning.

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Jason Black, Financial Advisor (CFP)

Jason Black, CFP ®

With a drive to live purposefully and passionately, Jason focuses on helping clients to live in abundance.

Jason is a partner and senior advisor at Colorado Capital Management.  He brings more than 15 years of varied experience working in the financial services industry. He joined CCM after a long search to find the perfect firm that aligned well with his values and mission. Jason is passionate about helping individuals and families live abundant and intentional lives. He is proud to be part of a Certified B Corporation, doing meaningful financial and investment planning for clients, while also focusing on socially responsible business practices and making a positive impact. As a Chartered SRI CounselorSM, Jason has a strong background and keen interest in sustainable investing and enjoys helping clients understand the merits of this approach. Jason is also a Certified Financial Planner™ and has a bachelor’s degree in business administration from the University of Colorado. 

Before joining CCM, Jason worked with Jackson National as a consultant for financial advisors. He helped create meaningful connections with families, creative asset allocation strategies, and tax-advantaged retirement-income solutions. During his tenure there he worked with over four thousand financial advisors across the country, was recognized multiple times as consultant of the year, and also managed a team of twenty-five individuals. 

Jason is happily married to his wife, Bridget, of thirteen years, who he met while in college at CU. Together they have a son and daughter, and a Frenchie named Coco Disco. They live in the Whisper Creek neighborhood of Arvada. When Jason is not at work, he and his  family can often be found making turns in Summit County, wakesurfing in Glendo, WY, cooking, dancing and traveling.

Erica Loughrey, Associate Financial Advisor

Erica Loughrey

Erica is passionate about providing purposeful advice to help clients enjoy a meaningful life.

Erica is an advisor at CCM. She joined the firm in 2021, fulfilling her desire to work for a values-based company with a deep commitment to making an impact. She moved from her hometown of Anchorage, Alaska and quickly fell in love with the sunny and beautiful state of Colorado. She brought with her prior experience as a para-planner and is delighted to be engaged in a profession that empowers individuals to flourish financially. She believes strongly in exceptional client service and creating lifelong generational relationships.

In 2022, she accomplished two of her major career goals, finishing her master’s degree in financial planning (MSFP) and earning her Certified Financial Planner™ designation.

Erica enjoys spending time outdoors and traveling to exotic locales. In her free time, you can find her out skiing, hiking, scuba diving, practicing yoga or jetting off to new places to explore. She has a never-ending list of travel plans, having already visited over 20 countries, and feels lucky to have so many wonderful opportunities and adventures.

Lee Strongwater, Senior Financial Advisor

Lee Strongwater, WMS

An entrepreneur and world traveler, Colorado Capital Management vice president and co-owner Lee Strongwater brings a global perspective to investments and life planning.

For more than 15 years, Lee has passionately assisted clients with their financial planning and portfolio management needs. He especially enjoys helping them live more meaningful lives and invest in ways that are aligned with their values. Lee holds a bachelor’s degree in political science from the University of Colorado and a master’s degree in international affairs from Columbia University. He also holds the Wealth Management Specialist (WMS) certification.

Before joining Colorado Capital Management, Lee was a managing partner at Strongwater-Schott, a fee-only investment management and financial planning firm in Denver. Prior to that, he was an entrepreneur who helped start and manage several small firms, including a children’s product company that went public in 2007.

Lee is an active volunteer for several organizations. He is a past President and current member of the Board of Directors for the Boulder Jewish Community Center, an organization that is highly respected on both a local and national level. Lee is also on the Investment Committee of Girl Rising-Global Education, a venture philanthropy fund that invests in social entrepreneurs with culturally-relevant ideas. The fund’s investments promote gender equality and improve educational outcomes for girls and boys living in poverty in Kenya and India.

Lee is married and has two daughters. He enjoys hiking, skiing, traveling—mostly to Mediterranean countries—and trying out new recipes from his journeys. When he’s not on the go you can find him engrossed in a book.

Steve Ellis, Senior Financial Advisor

Steven Ellis, CFA

Steve Ellis has spent his career making an impact, so it’s not surprising that Colorado Capital Management’s founder and president launched the firm’s entry into impact investing.

He brings over 30 years of experience as a financial advisor to high net worth clients. His early work included teaching college courses in accounting and finance, consulting for a major accounting firm, and researching and acquiring investments as the chief due diligence officer of a leading national financial planning firm. Since 1989, he has advised individual and institutional investors on the management of their wealth. Steve is a Chartered Financial Analyst (CFA), holds a business degree from the University of Colorado, magna cum laude, and a master’s degree from Cornell University.

Steve launched the firm’s entry into impact investing in 2012 and is committed to helping build the field. Steve is a passionate speaker on the topic. He has taught about impact investing at various conferences and classes around the country, including as a past faculty member at Middlebury Institute of International Studies. He is listed in the Who’s Who in Impact Investing.

Steve is married, with two daughters, enjoys hiking, biking, skiing, tennis and bridge, and is actively involved in the community. He has served on numerous boards and committees for a wide array of nonprofit organizations, including the Boulder JCC, Rose Community Foundation, Jewish Family Service, and Friendship Bridge. His passion for impact and community service helped lead Colorado Capital Management to become a Certified B Corporation and to build a strong culture of volunteerism and philanthropy.