March 06, 2018
LOS ANGELES—ECMC Foundation today announced the launch of Education Innovation Ventures (EIV) to tap into the creative power of the private sector to solve problems of inequity in education.
EIV uses program-related investments (PRIs), a funding tool made available to both for-profit and nonprofit enterprises. PRIs complement the Foundation's traditional grantmaking strategy, allowing it to unlock a wider spectrum of investment tools, including grants, loans, deposits, equity and guarantees, among others to fund innovative and scalable solutions that improve educational and career outcomes among students from underserved communities.
"The decision to include PRIs in our set of funding tools was borne from the frustration that my team and I felt about education and skills gaps, and our desire to expand our channels in providing more of a solution to the issue," said Peter Taylor, president of ECMC Foundation. "While grants play an important role in addressing problems in higher education, they aren't enough."
In two years, 65 percent of new jobs will require some form of education beyond high school. However, only 40 percent of adults currently have a postsecondary certificate or degree. Adding to this is the skills gap, where employers are having a difficult time finding workers with the right skills to fill jobs.
"We needed a solution that had the potential to catalyze transformation in new and different ways," Taylor said. "After a lengthy consideration of our options, the ECMC Foundation team landed on a funding strategy that pairs grants and PRIs together, giving us greater leverage to improve educational outcomes among students from underserved backgrounds."
Unlike traditional grantees across philanthropy, PRI grantees are expected to generate both social gains and financial returns, resulting in additional dollars to further impact the field.
"If all of the dominos fall into place, in theory, the financial returns from PRIs could be recycled in perpetuity, leading to unprecedented impact," said Taylor.
The Foundation's first PRI partners are:
- Employment Technology Fund: a U.S.-focused impact fund committed to supporting social enterprises that are working to remove barriers to employment for millions of underemployed, low-income adults.
- Venn Foundation: a Minneapolis-based foundation that manages donor-advised accounts for funders interested in making investments using PRI tools.
With the Employment Technology Fund, ECMC Foundation joins the Joyce, W.K Kellogg, Rockefeller and Walmart Foundations as an Executive Committee Advisory Board member and will make joint decisions with other board members on PRI investments.
"Well-known, major foundations like these, along with others like Gates, Lumina and Kresge, have been using PRI tools for years, but the vast majority of philanthropy doesn't," said Jessica Haselton, who is directing ECMC Foundation's PRI portfolio. "Entering this space means we're joining a selective group of pioneer funders. We're incredibly excited to see how these tools will enable both for-profit and nonprofit organizations to make an even greater impact for learners and help solve deep issues of inequity in our higher education system."