A trip to Ghana in 2008 to help secure microfinance loans for struggling rural schools convinced IDP Foundation President Irene Pritzker that a new financing model was desperately needed to ensure the survival of these small local institutions.
Pritzker returned to the United States and launched her foundation’s IDP Rising Schools Program (IDPRSP), which helps schools get the financing and expertise to sustain themselves. The IDP Foundation utilizes mission-driven impact investing to maximize economic and social returns.
“Education is the way to conquer the world’s greatest challenges, and everyone needs equal access,” Pritzker said at Yale School of Management on November 2. Pritzker spoke as part of the Center for Customer Insights’ Colloquium on the Behavioral Science of Philanthropy, which examines how behavioral economics can be used for philanthropic ends.
In Ghana, she said, she found banks unwilling to lend to small village schools—many struggling with “dangerous and deplorable conditions”—because the loans were deemed too risky. Yet thousands of children were attending these schools. “These are all little social enterprises,” Pritzker said.
Determined to find a way to finance improvements in the schools, Pritzker traveled Ghana for three years, connecting with small school proprietors and government entities. She found a local bank willing to make loans and began a pilot program that encompassed 105 small schools with a total enrollment of 27,000 children.
Educating the school leaders on financial literacy and on how to navigate Ghana’s governmental and other educational resources was the key step in ensuring loan repayment, Pritzker said. The pilot schools eventually posted a 93% loan repayment rate. Seven years later, there are 540 schools in the program. (The IDPRSP loan repayment rate represents a cumulative figure, which only includes all active loans within the program. The loan rate fluctuates between 93% and 98%. It includes partial payments, but does not include loans that have already been repaid.)
“There is no doubt that this is a viable financing model,” Pritzker said. “It is scalable and sustainable. We’re investing in local social enterprises. We’re not coming in from the outside. We’re working on the grassroots level, empowering local people.”
This is the kind of innovative thinking that’s required in today’s fast-changing impact investing space, Pritzker said, but potential investors need to be well informed and selective. “Young people today want to invest in socially responsible funds, so wealth managers are increasingly adding ‘impact investing’ funds to their offerings,” Pritzker said. “It’s happening so rapidly, it’s hard to keep up with.”
Investors should be sure that funds align with the United Nations’ Sustainable Development Goals, a framework for national growth and empowerment that takes into account the major challenges facing the world and its population and that all 193 U.N. member nations have endorsed.
“The whole system has changed,” Pritzker said. “Traditional philanthropy is out the window, and the new philanthropy involves thinking about sustainability, scalability, and the intersection with the Sustainable Development Goals.”
Pritzker is now poised to expand her IDP Rising Schools Program into other countries. “People are stunned when they see we have this type of repayment rate—93%, she said. “And it’s scalable. It’s been successful enough that we think we’re only going to continue expanding.”
About the Event
The IDP Foundation is committed to finding new and innovative approaches to break the cycle of poverty. Irene Pritzker, the foundation’s President, visits Evans Hall to discuss how the IDP Foundation’s mission-driven impact investing maximizes economic and social returns on investment. She will also discuss the UNDP’s Sustainable Development Goals, and how her foundation’s Rising Schools Program is working towards achieving the target of free primary and secondary schooling worldwide by 2030.
President, IDP Foundation
Irene Pritzker became a founding member and President of the IDP Foundation, Inc. in 2008. It is her belief that education is the way to conquer the world’s greatest challenges, and that everyone should have equal access to education to provide...
Irene Pritzker became a founding member and President of the IDP Foundation, Inc. in 2008. It is her belief that education is the way to conquer the world’s greatest challenges, and that everyone should have equal access to education to provide hope, opportunity and economic impact on their homeland. The IDP Foundation is dedicated to developing programs in education that are sustainable and move away from aid dependent models. She believes a combination of smart philanthropy and investment solutions can be galvanized to make that future a reality. Exemplifying this goal is the IDP Rising Schools Program, a carefully crafted microfinance initiative targeting existing but very poor private schools in Ghana. After a successful pilot with 105 schools with an initial enrollment of 27,000 children, the program is scaling up to reach a total of 580 schools by July 2017 and impacting 150,000 children. In addition to program development, Irene has worked consistently with her wealth advisors and managers to ensure that the IDP Foundation is mission aligned in its investment strategy. The corpus of the IDP Foundation is currently 88% mission aligned with an additional portion earmarked for impact investing funds and seed capital for socially responsible companies that offer direct impact investment opportunities. In 2010, the Foreign Policy Association awarded Mrs. Pritzker the Global Philanthropy Award and in 2012 the IDP Foundation, Inc. was granted special consultative status to the United Nations.