Crowdfunding and impact investing at Tides: expanding capital markets to support entrepreneurship, innovation and improvement in U.S. public education

Abstract

Over the next thirty years, seismic demographic shifts will render the U.S. a “majority-minority” nation where people of color (now 37 percent) will comprise 57 percent of the population by 2043. This shift brings us to a crossroads. Will we as a nation act now by making savvy investments into social innovations and improvements that can result in increased educational attainment and overall quality of life for all citizens? Will we act and invest now to diminish the persistent disparities in factors such as high school graduation, college attendance, incarceration, and life-long earning potential that are strongly correlated at present with race and socioeconomic status? Though governments spend more than $500 billion annually on educational services in America, these public sector funds are highly restricted in their use. Instead, grants from private philanthropy have traditionally been the only sources of capital to launch, test or scale innovative new technologies, programs, products and services for the U.S. education sector. But grants as the lone capital source for educational innovation are insufficient to fuel the level of improvement our education system must achieve.The emergence of impact investing and crowdfunding over the last five years provides an exciting and potentially game-changing solution to this capital problem that may help us to meet the mandates of the future. This capstone examines my work between June 2012 and October 2013 as a doctoral resident at Tides Foundation on the design and launch of an online platform to facilitate impact investments from large numbers of people into entrepreneurial social enterprises whose products and services might improve outcomes in education, social equity, the environment and economic opportunity. The capstone recounts the process by which I attempted to advance this work based on four goals and fifteen corresponding objectives; explores the challenges and opportunities presented by an unexpected change in the organization’s leadership; and provides a glimpse into the most valuable lessons I gained during this process about management, pedagogy and policy. This capstone concludes with reflections, recommendations and possible implications of this work for my own leadership practice (particularly as a leader working to improve the schools and youth development initiatives “from the outside in”); for Tides Networks work in impact investing amongst public foundations; and for entrepreneurs and investors in the education sector at-large.