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How Might We Layer Capital?

Jasmine Burton Common Group

Between October-December 2023, Common Group, an education and workforce development consulting firm that seeks to grow the impact of social investments, conducted a piece of research intended to explore the possibilities of a “synthetic” layered-capital approach to funding education and workforce innovation products, projects, and programs. Layered capital in this context refers to combining funds from two or more capital sources (private, philanthropic, public (government), either through distinct or combined instruments, and either at specific points in times or simultaneously, to ensure the capital retains its comparative advantage (e.g. patience, risk tolerance) and organizations have the capital needed to both achieve a return on investment and return on education.

We spoke with five capital allocators (composed of both philanthropists and venture capitalists) and four education innovators (composed of both for-profits and nonprofits) to assess the appetite of and barriers around giving and receiving blended sources of capital. For this particular research, the researchers selected a majority of innovators that are for-profits because we wanted organizations that could easily access investor capital, but included nonprofits given specific learnings we felt they might offer on aspects of the research.

From a number of wide ranging insights, one recurring theme was the role and potential value of low cost debt, in particular PRIs. The topline finding was as follows: Low cost debt is valuable to innovators, and donors are deploying PRI capital to support for-profit organizations with low cost debt. Donors utilize Program-Related Investments (PRIs), and know that their peers utilize them, but don’t have clear or well-documented use cases for when they should use PRIs, when PRIs are most likely to be successful, case studies documenting successes and failures of PRIs, or connections to peers to understand how their approaches compare. For-profit innovators struggle to navigate the pathways to access philanthropic funding and PRIs, and desire navigation tools to better understand the options they have available and considerations when applying for funding.

In a workshop session, philanthropic donors and impact investors in the audience will be guided through a design sprint process led by Common Group’s expert Human-Centered Design facilitators. Participants will be tasked with the following in a 60-90 min session facilitated by Common Group:

Understand + Define | Participants will read/ interrogate the recommended outcomes of this year long research and have a discussion around PRIs *potentially by way of a case study that we plan to complete by Q4 (10-15 mins)

Sketch | Participants will then brainstorm and sketch their ideal use case and journey (ie journey mapping from their own perspectives as funders in the space) related to the following prompt based on their collective lived experience: What would have to be true for philanthropies to use PRIs to fund for-profit education entrepreneurs? (30-45 mins) *this could be done in table groups with similar funders working together OR we could have them empathize with the protagonist of the case student and journey map from that perspective.

Decide | Participants will then decide what excitements and hesitations they might still have in their understanding of and use cases for PRIs which will be turned into insights that will be added to our research base. The goal is to create sector facing resources for for-profit innovators and philanthropies to help bridge this gap. Participants will be invited to stay involved in the activation/advisory of this work in H1 2025. (15-30 mins)

Track

Catalytic Philanthropy

Format

Workshop (Up to 3 Facilitators/Instructors)

Speakers

  • NameJasmine Burton
  • TitlePrincipal
  • OrganizationCommon Group
  • NameGeorge Vinton
  • TitleCEO
  • OrganizationCommon Group

Description

Between October-December 2023, Common Group, an education and workforce development consulting firm that seeks to grow the impact of social investments, conducted a piece of research intended to explore the possibilities of a “synthetic” layered-capital approach to funding education and workforce innovation products, projects, and programs. Layered capital in this context refers to combining funds from two or more capital sources (private, philanthropic, public (government), either through distinct or combined instruments, and either at specific points in times or simultaneously, to ensure the capital retains its comparative advantage (e.g. patience, risk tolerance) and organizations have the capital needed to both achieve a return on investment and return on education.

We spoke with five capital allocators (composed of both philanthropists and venture capitalists) and four education innovators (composed of both for-profits and nonprofits) to assess the appetite of and barriers around giving and receiving blended sources of capital. For this particular research, the researchers selected a majority of innovators that are for-profits because we wanted organizations that could easily access investor capital, but included nonprofits given specific learnings we felt they might offer on aspects of the research.

From a number of wide ranging insights, one recurring theme was the role and potential value of low cost debt, in particular PRIs. The topline finding was as follows: Low cost debt is valuable to innovators, and donors are deploying PRI capital to support for-profit organizations with low cost debt. Donors utilize Program-Related Investments (PRIs), and know that their peers utilize them, but don’t have clear or well-documented use cases for when they should use PRIs, when PRIs are most likely to be successful, case studies documenting successes and failures of PRIs, or connections to peers to understand how their approaches compare. For-profit innovators struggle to navigate the pathways to access philanthropic funding and PRIs, and desire navigation tools to better understand the options they have available and considerations when applying for funding.

In a workshop session, philanthropic donors and impact investors in the audience will be guided through a design sprint process led by Common Group’s expert Human-Centered Design facilitators. Participants will be tasked with the following in a 60-90 min session facilitated by Common Group:

Understand + Define | Participants will read/ interrogate the recommended outcomes of this year long research and have a discussion around PRIs *potentially by way of a case study that we plan to complete by Q4 (10-15 mins)

Sketch | Participants will then brainstorm and sketch their ideal use case and journey (ie journey mapping from their own perspectives as funders in the space) related to the following prompt based on their collective lived experience: What would have to be true for philanthropies to use PRIs to fund for-profit education entrepreneurs? (30-45 mins) *this could be done in table groups with similar funders working together OR we could have them empathize with the protagonist of the case student and journey map from that perspective.

Decide | Participants will then decide what excitements and hesitations they might still have in their understanding of and use cases for PRIs which will be turned into insights that will be added to our research base. The goal is to create sector facing resources for for-profit innovators and philanthropies to help bridge this gap. Participants will be invited to stay involved in the activation/advisory of this work in H1 2025. (15-30 mins)

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