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The State of Impact Investing Education

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March 12, 2019

Growing size and interest have moved impact investing toward the mainstream in recent years. Business schools have responded with an expansion of their own: new skill-building opportunities that aim to fill gaps in training and prepare students to enter the workforce with the skills needed for impact investing.

Georgetown University’s Beeck Center for Social Impact and Innovation assessed this development in 2016 with a report called From Innovation to Practice: Impact Investing Education and Training. The report concluded that in order to “effectively mature,” the field needed more investments in industry education. Specifically, it highlighted necessary developments in educational infrastructure, the affordability of training, and research to bolster the case for impact investing and inform curricula.

Three years later, has the impact investing education landscape kept pace with the needs of the industry?

The Rise of Institutional Offerings

Top business schools have offered impact investing classes for several years. Now, they continue to refine and grow their offerings. In the past year alone, the Tuck School of Business at Dartmouth College announced two new courses in the space; the Saïd Business School at the University of Oxford introduced a hands-on Impact Lab for MBA students; and the Yale School of Management unveiled an endowed lectureship on social entrepreneurship.

Alongside foundational impact investing education, universities have begun offering impact investing clubs and undergraduate courses so students can gain experience outside of MBA programs alone. Some schools are also turning their analysis inward, with dozens analyzing their endowments for impact and making changes to better align those investments with their institutional values.

“While we do see a growing number of classes on campus, we also see that there’s a demand for experiential, hands-on learning in impact investing,” says Nick Ashburn, senior director of impact investing at the University of Pennsylvania’s Wharton Social Impact Initiative. “Students want to know: ‘How do I go out and find a company that’s touting impact and financial returns? How do I assess that, and what would I present to an investment committee?'”

Still, while it’s possible to take a class or two, there hasn’t been a proliferation of broader programs focused solely on impact investing.

“You’re not going to concentrate or major in impact investing at a top-tier business school right now,” Ashburn says. “One of our philosophies at Wharton Social Impact is we still want you to be a finance ninja and get the analytical skills from all of your other classes and then identify opportunities to apply those skills to social and environmental issues.”

There has been less movement on the Beeck Center report’s recommendation to make impact investing education more affordable. The average MBA student carries nearly $75,000 in debt three years after graduation. Students at some top schools borrow significantly more, often on top of loans from their undergraduate education.

Other Paths to Impact Investing

It is possible for those who haven’t studied impact investing at a top business school to make their way into the space. In fact, experience in the social impact or environmental justice worlds can provide critical unique insight, as can industry-specific operational experience.

“Having exposure to those topics is paramount,” Ashburn says. “If you’re going to be a venture capitalist, experience in your field actually makes you a better investor versus just coming from Wall Street. So, you can imagine, for example, that if you have a background in education, you’re going to be a better ed tech investor. You’ll understand the pain points that the products are attempting to solve.”

Lauren Cochran, managing director at Blue Haven Initiative, suggests also putting in at least a year or two of work in the traditional finance space, such as in investment banking or private equity. “Most impact investing firms are too small to give the basic, but time-consuming training around financial modeling, understanding financial statements, and doing operational analysis of a company,” Cochran writes in a post on Medium.

Exposure to cross-sectional roles and the ability to adapt quickly both also benefit those looking to get into the impact investing space. “We are finding great candidates also show higher levels of learning agility, since many firms’ impact investing practices are still entrepreneurial ventures that must adapt to changing conditions,” writes Kate Shattuck, a principal at Korn Ferry.

The Future of Impact Investing Education

The youngest generation of workers is the group that has most fully embraced impact investing as a goal—for both their portfolios and their lives. As more young people look for ways to work in the field, giving them opportunities to train and gain the necessary skills could push the industry to increase the pace of its growth going forward.

Business schools will likely to continue to further integrate impact investing into traditional finance classes, Ashburn says.

“There’s a growing movement from the industry that says, ‘Hey, we need better data on issues that affect a company, mostly through a risk lens,'” he adds. “The conversation is going to transition from ‘We need to monitor and measure impact and outcomes in a nonprofit sense’ to ‘How are these social and environmental factors impacting businesses and the environment that they’re working in from a risk perspective?'”

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