Doug Crets joins VA/R as Vice President, New York office, and Executive Editor of the soon to be launched education innovation site  EdReformer.com.  He is the former Director of the Education Industry Investment Forum where he created financial forums for executives in alternative investments, money markets, private debt, telecoms and the for-profit education industry.  Doug previously lived for five years in Hong Kong where he worked as a journalist and a media consultant specializing in analysis of new media and traditional media development in countries across Asia.  He also has had experience as a wire services reporter for Dow Jones in New Delhi, India and as a television reporter for a local English channel in Hong Kong.

Blended Capital Combating Poverty

On a recent trip to India we saw great examples of foundations working in concert with microfinance lenders and private enterprise to boost quality of and access to low cost schools in the slums of Hyderabad.

Atlanta-based operating foundation Gray Matters Capital has launched a school rating system to boost quality, improve access to financing, and create customer transparency.  Out of the same office, Indian School Finance Company makes loans to school operators for expansion and technology.  The Dell Foundation is working with private vendors on  technology trials in low cost schools.  Pearson launched a joint venture to expand a network of budget schools.

Two take aways:
1. Early risk takers have paved the way; it's a great time for philanthropic and impact investors to consider India. Here's why Indian education has global consequences.
2. In the US, we should be making better use of public-private partnerships and the complementary aspects of philanthropic and private capital.

The Great Dilemma

The education sector doesn't trust for-profit school managers, but we can't scale nonprofits--hence the great dilemma.  

Race to the Top and School Improvement Grants are increasing demand for scaled improvement, school development, and turnaround capacity.  With no scaled capacity, the sector will struggle to respond to the overdue leadership to upgrade our lowest performing schools.

Here's an idea: a philanthropic LBO (leveraged buy out).  Foundations could help convert one or more for-profits virtual and physical charter operators. Tools and platforms could be spun out to for-profit entities, thereby reducing the cost of converting school operations to nonprofit status.   Debt, structured as Program Related Investments, could support the conversion with an earn out over 10 years. 

There are a couple interesting targets which, if converted soon could make a big difference over the next two years as RttT and SIG roll out.  

Call Tom if you'd like to discuss this further, 206.909.8251.