Credentialing America: How Impact Investing Can Help

The postsecondary attainment rate for adults in the U.S. is about 40%. African American attainment rates are 27%. Native American and Latino Americans complete postsecondary programs at even lower rates.

For individuals, the right kind of education can boost employability. For communities, educational attainment correlates with better social, economic and personal outcomes for citizens. The Lumina Foundation notes that societies with higher educational attainment can expect greater civic and social engagement, higher rates of voter participation and volunteerism, healthier lifestyles, and less dependence on public assistance.

The good news in the U.S. is that more young people are attending college. The bad news (as illustrated below by the New York Times) is that graduation rates for the lowest income group haven’t budged in a decade.

The Lumina Foundation (@LuminaFound) is attacking this problem with the goal of lifting the percentage of U.S. adults with credentials (degrees, certificates or other high-quality postsecondary credentials) from about 40% today to 60% by 2025.

It’s important to remember that we’re not just talking about more 18 year olds enrolling and earning a degree. Almost four in 10 college enrollees today are over 25, and more than four in 10 live in or near poverty and attend part-time. Given the new reality, Lumina maintains an equity goal of quality credentials for all learners with a focus on individuals historically less wells served by postsec education.

Based in Indianapolis with about $1.4 billion in assets, Lumina was formed in 2000 (like Strada Education, KnowledgeWorks in Cincinnati, and College Spark in Seattle) with the sale of a student loan portfolios to Sallie Mae.

Lumina has five priorities for action: scalable affordable pathways, transparency credentials, competency-based learning, first credentials for adults, and quality assurance.

Impact Investing for Equitable Credentialing

Grantmakers typically donate funds to nonprofit organizations to advance their charitable mission. The downside to that sort of change making is that it often lacks leverage (putting other people’s money to work), agility (the ability to quickly pivoting to a better idea), scalability (incentives and tools for growth) and sustainability (business models that funds ongoing operations).

Lumina is one of the few national foundations focused on postsecondary outcomes. In addition to traditional grantmaking, Lumina has been a leader in impact investing–a more aggressive set of tools that attempt to leverage profit motives and private markets. The toolset includes two main vehicles:

  • Program Related Investment (PRI): mission-focus investments, agnostic to return; may be structured as equity or debt investments but usually recorded as a grant (and comes out of a foundation’s annual 5% distribution).
  • Mission Related Investment (MRI): mission-aligned investments seeking a return at or near market rates; it may come out of the 5% distribution or be from the endowment.

It’s worth mentioning here that foundation endowments are a giant, largely untapped, asset. They are typically invested in market vehicles with no regard to their social impact. The Kellogg Foundation was among the first foundations to allocate a portion of its endowment for mission related investments (they acknowledged that some of these investments might yield a lower than market return).

In a paper on Boosting Impact, Matt Greenfield and I argued that foundations should invest at least a portion of their endowments in venture funds associated with their field of interest and that it was possible to earn a market rate return while advancing the field.

In 2010, Lumina created a fund for mission related investments. In 2013 and 2014, Lumina invested in education venture funds. In 2015, Lumina began making direct investments in promising for-profit startups focused on the credential gap.

To share lessons learned in applying impact investing to their goal of boosting U.S. credentialing, Lumina hosted an impact investing convening (#LIFTed18) in New York.

John Duong, Managing Director of Lumina Impact Ventures, said he looks for social returns, financial returns, and learning returns from his impact investments. Duong acknowledged that their drive for social outcomes and interest in financial returns can sometimes lead to tension. He admitted that they don’t work as fast as venture investors but he encourages investees to leverage their capital, tools, networks, and brand.

Elizabeth Garlow measures impact for Lumina. She looks not only at quantitative measures but qualitative aspects such as leverage and policy influence.

Featured Signs of Progress

Lumina introduced some of their investees who described the progress they were making. Helen Adeosun, founder of, described how they were supporting the learning of home caregivers.

Brian Hill from Edovo described his tablet program that provides self-improvement tools to incarcerated learners.

Upswing CEO Melvin Hines described their work with colleges to improve access to resources that online and nontraditional students don’t typically use.

Also featured was Credly, end-to-end solution for creating, issuing and managing digital credentials and Credential Engine, a nonprofit organization dedicated to promoting transparency and credential literacy.

Vanguard economist Joe Davis said it was critical for individuals and communities to upskill (i.e., add advanced skills) given the rise of artificial intelligence. He said more than half of jobs now consisted of advanced tasks and in the next 10 years it could be 80%.

Harnessing the innovation of startups through impact investing is proving to be a key component to upskilling America.

For more see

This is the first of a Forbes series of blogs on innovations in learning. If you have questions, corrections, or story ideas, contact [email protected].

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Tom Vander Ark

Tom Vander Ark is the CEO of Getting Smart. He has written or co-authored more than 50 books and papers including Getting Smart, Smart Cities, Smart Parents, Better Together, The Power of Place and Difference Making. He served as a public school superintendent and the first Executive Director of Education for the Bill & Melinda Gates Foundation.

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1 Comment

Noah M

One has to wonder if "impact investing" leaves a Foundation like Lumina less willing to support projects and technologies which compete with their investment portfolio.

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