Why should we invest in education?

By June 19, 2022 Blog

Did you know, that investors around the world are making impact investments to unleash the power of capital for good? In this article, we would like to provide you with the core characteristics of impact investing in digging into the education field.

Impact investing definition

Impact investing is first and foremost an alignment of an investor’s beliefs and values with the allocation of capital to address social and/or environmental issues. Impact investing refers to investments “made into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return”.

Impact investments can be made in both emerging and developed markets and target a range of returns from below market to market rate, depending on investors’ strategic goals.

The growing impact investment market provides capital to address the world’s most pressing challenges in sectors such as renewable energy, sustainable agriculture and affordable and accessible basic services including housing, healthcare, and education.

The Global impact investing Network defines the Core Characteristics of impact investing with the following four notions:


The investor’s intention is to have a positive social or environmental impact through investments.

Investing with return expectations

Impact investing is expected to generate a financial return on capital or, at minimum, a return on capital

Range of return expectations and asset classes

Impact investing targets financial returns that range from below market (concessionary) to risk-adjusted market rate and can be made across asset classes such as cash equivalents, fixed income, venture capital, and private equity.

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Impact measurement

This is the commitment of the investor to measure and report the social and environmental performance and progress of underlying investments, ensuring transparency and accountability while informing the practice of impact investing and building the field.

Impact investing in Education

Many will agree in recognizing Education as the most powerful investment in our future. Research shows that education can make a lasting difference in people’s lives, and it is not just good for individuals but also for nations. Investing in education is not just the right move but it is also a smart economy.

Education leads the path towards health, empowerment, and employment. Evidence shows that each additional year of education boosts a person’s income by 10% and increases a country’s GDP by 18%. Some investigations estimate that if every child learned to read this will mean 170 million fewer individuals would live in poverty. By 2030, over 600 million more children will need to be enrolled in school to achieve basic education for all.

So how can we get more people to school, learning skills that will help them to heal wounds and rebuild their societies?

We must invest more in education. We need $26 billion more to get people in school and learning.

We must invest more effectively in learning, and improving learning assessment. And being accountable to communities for education results.

We must invest more equitably to make sure people who are most in need have access to quality learning.

Impact investing challenges

Financing is one of the key barriers to growth within the education sector. Most of the impact investments are made to expand school infrastructure and capacity.

Impact investors are looking to strengthen the ecosystem which surrounds the emerging sector to offer quality education in a sustainable manner.

The objective is for institutions to be sustainable and managed independently, to generate market demand, and to drive intense competition between schools.

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