EduDebate
Can Social Enterprise Lead Innovation in Education?

Current education systems are struggling to meet the rapid pace of change and the needs of millions of learners. By offering new thinking on old challenges, social entrepreneurs aim to fill the gaps left open by traditional actors, whether in terms of access, pedagogies or learning tools. 

Can social enterprises succeed where traditional actors have failed? Are social entrepreneurs able to drive change in education by pioneering creative solutions and breaking down silos across social, business and public sectors? Experts and practitioners from around the world share their views. 

Participants
John Rendel
Maria A. May
Mr. Yuan Gu
Aldo de Pape
Shahida Saleem
Andrew Yu

How Social Impact Investing Is Driving Change in Education

Mr. Gabriel Sanchez Zinny
Director, National Institute of Education Technology (Argentina)
Mar 07, 2016
WISE ed.review
In Latin America, social impact investment—that is, the leveraging of private capital to meet public needs—holds great promise. And as the region's economic situation continues to evolve, this approach is increasingly gaining momentum.

In recent years, social programs have largely come from the public sector. Innovative government measures like conditional cash transfers (CCTs) have lifted millions out of poverty and into a burgeoning middle class. Yet those programs are reaching their limit at the same time that these citizens have come to expect ever-higher quality public services. Here, the private sector can offer unique solutions. Social impact investing and entrepreneurship can bring not only much-needed capital, but also new technology and managerial know-how to sectors ranging from heath and education to poverty alleviation.

Education is a prime example, since the main providers of educational services—that is, governments—are also responsible for regulating the sector. Outside organizations can bring in much needed fresh air. A number of interesting social initiatives, both for profits and nonprofits, are innovating how and what teachers teach, and how students learn.

There is, for example, the Pescar Foundation. Pescar is working to reduce Argentina's "skills gap"—the distance between what students learn and what is actually required of them in the workforce—by creating a connection between high school coursework and students' career goals. In the United States, the Lumina Foundation, with nearly $1.4 billion in assets, is working on redesigning higher education to make it more accessible, affordable, and relevant.  Qfuturo, in Colombia, offers an application that helps students better evaluate the long term rate of return on various career paths, so they can make a more financially sound decision before enrolling in advanced coursework. Lumni, a for-profit venture in Mexico, the United States, Chile, Colombia, and Peru is redefining university financing for students across the region.

Meanwhile, in Brazil, the Lemann Foundation—the brainchild of businessman Jorge Paulo Lemann—has entered into partnerships with entities like the Khan Academy, Coursera, and Geekie, which provide free or low cost online learning. Now, students anywhere in Brazil can develop new, in-demand skills from world-class professors and universities. 

These are the success stories. Yet many other promising avenues for change are not succeeding because of the two great challenges facing this nascent sector: the need for financing and the problem of scaling.

When it comes to the first, access to finance remains limited in Latin America simply because there is little culture of philanthropy, and even less understanding of impact investing. Though in both cases things are changing, the fact remains that the private sector is only slowly evolving away from a long-held belief that government bears the sole responsibility for social welfare. That has limited the sector's commitment to make real investments.

This is in sharp contrast with the United States, where private enterprise channels billions of dollars a year toward social investments in education. Investors there understand that improving human capital is in their long-term best interest. In Latin America, business groups are frustrated due to the lack of qualified talent, but too often choose to complain to their government about it rather than take matters into their own hands. 

Secondly, scaling up successful projects is no easy task. Even though social entrepreneurs launch new and often very effective local projects, very few are able to expand. Impacting policies on a regional or national level requires much greater coordination and funding. 

Here both sides, governments and entrepreneurs, need to meet in the middle and find ways to work together. Ministries of Education at every level have an inherent ability to scale because they are already involved in every school; however, due to the nature of their large bureaucracies innovation is difficult. Entrepreneurs, on the other hand, are nimble, and once their pilots have successfully reached a critical mass—say a few thousand users—they should be able to present them to education officials so that the government can take what works and expand it.  

In fact, it is multilateral organizations that have pioneered these kind of partnerships, particularly the Inter-American Development Bank's Multilateral Investment Fund (MIF, or FOMIN in Spanish). The IDB has started financing social entrepreneurship programs within governments, with the best known example in Latin America being Start Up Chile. In July 2015, Start Up Chile announced the "Educa Challenge," which awarded over $1.2 million in seed money for the winner of a competition to create the most innovative education-related application. Likewise, similar efforts by Mexico's INADEM and Colombia's INNpulsa are underway. 

To keep making progress on alleviating poverty, we must focus on education and creating decent jobs throughout the region. The challenges ahead are immense. The responsibility cannot be borne solely by the government, and it is past time for the private sector to step up and make the social impact that it is capable of.

Themes
Finance and Funding, Social Innovation & Entrepreneurship, Innovation in Education

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