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Reinventing Education for Impact Investing


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Part 7 of 7 in the Series: Education in the Cloud. Introduction at:

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Reinventing Education for Impact Investing

  1. 1. Education in the Cloud Digital Classrooms as Data Factories What is a “Smart” City? Learning Ecosystems and the Internet of Things Blockchain and “The Ledger” How Austerity Generates Data Reinventing Education for Impact Investment
  2. 2. Moving forward we’ll be hearing a lot about efficacy and impact. This has to do with education being pulled into global financial markets. As public funding for public education evaporates, doors are opened for venture philanthropy. Impact Investing is a major force behind ed-tech investments In 2012 a new vehicle for venture philanthropy was introduced to the US from the UK-Social Impact Bonds or Pay for Success. Source Source
  3. 3. Their Jefferson Learning Accelerator acts as a matchmaker for school districts and ed-tech. UVA’s Curry School hosted an Ed-Tech Efficacy forum in May 2017. Students are being used to beta-test programs with no IRB protocols in place. Source
  4. 4. Measuring efficacy will focus on the impact of ed-tech. As a result, teachers must become peripheral “guides on the side.” Offline human instruction doesn’t deliver data in a form that satisfies the market’s demand for “impact.” Nor does it facilitate human capital management. Moving forward, learning that takes place offline with no record of it being uploaded to the cloud will become more and more rare.
  5. 5. When you see “impact” think “venture capital.” There is a burgeoning network of accelerators coming online to provide technical support, work space and working capital to scale ed-tech start ups. As the ed-tech conversion gains steam, reformers will want to direct the conversation towards identifying the “good” programs. No one will be asking whether or not digital education is a good idea. They simply want to demonstrate “impact” so they can net a financial return on their investments. Source
  6. 6. Social Impact Investing The Global Impact Investing Network (GIIN) defines it as: investments made into organizations, companies and funds with the intention to generate social and environmental impact alongside financial return. Source In 2013, the Harvard Business Review predicted that social impact investing would be the next venture capital. Source In 2015, the IRS announced that foundations could invest endowment funds into mission related investments (MRIs) without penalty. Source As a result the impact investment sector is anticipated to grow significantly in coming years. In 2015, 156 entities reported $77.4 billion in impact investment assets. Source
  7. 7. The Wharton Business School at the University of Pennsylvania is a big supporter of social impact investing. Judith Rodin left UPenn to run the Rockefeller Foundation. Under her leadership the foundation created GIIN, promoted impact investing and brought social impact bonds to the US.
  8. 8. Education “Impact Investment Opportunities” K-12 Badging Systems Teacher Credentialing Innovation School Models Educational Games Social Emotional Learning New Assessment Systems “Student-Centered” Learning Programs Early Learning ProgramsImpact Investment Opportunities from “Get Smart.” Source
  9. 9. Impact is evaluated according to education data. The creation of Statewide Longitudinal Data Systems started in 2005. All but three states have taken some action towards building SLDS infrastructure. Education impact investments have been linked to pre-k, early literacy, and workforce placement outcomes. For that reason data needs to be gathered from P-20.Source
  10. 10. Huge datasets are being used for economic and labor projections. This is education as human capital management. Will this data be used to profile students? And with increased automation does it even make sense to try and predict what the labor market will look like a decade hence? SourceEducation should NOT be about human capital.
  11. 11. And the Coalition on Evidence-Based Policy Making wants to create a national unit record system to consolidate the data. Among those testifying in favor of this the national unit record system at an October 2016 hearing was David Medina, co- founder of Results for America. Results for America has lobbied for the expansion of “Pay for Success” programs nationally. Source
  12. 12. Accessible, aggregated student data is needed to streamline evaluation of pay for success and social impact bond deals. Everyone loves data, including Booz Allen Hamilton who sent a representative to testify in favor of the national unit record system. Source More HERE
  13. 13. What is a social impact bond? A social impact bond is a mechanism through which a government decides to fund a public program using private capital. The program is also called “Pay for Success.” An agreement is drawn up stipulating required outcomes that define program “success.” A “successful” outcome, in theory, saves the government money in the future. If a third party determines that the program has met the specified outcomes, the investor is rewarded with a portion of the anticipated future cost savings as specified the SIB “deal.”
  14. 14. Translating Plain English: Can the Peterborough Social Impact Bond Construct Apply Stateside? Drew von Glahn and Caroline Whistler, Third Sector Capital Partners, 2011 “Fit with Issue-Area Priorities: As the bonds unite private investors or philanthropists with government entities, alignment with issue areas is critical. Sectors such as education and workforce development are two areas in which local and federal governments have a vested interest in both increasing social outcomes and the efficiency of public funds spent. Strong government benefits will help attract public sector partners.” Source SIB promoters are targeting education.
  15. 15. Provisions for “Pay for Success” are in the ESSA. In October 2016 the US Department of Education issued the first two Pay for Success deals authorized under new ESSA regulations. Source
  16. 16. Likely Deal Types Pre-K Early Literacy Workforce Development
  17. 17. Knowledgeworks supports the learning ecosystem model. Will Pay For Success / SIBs be used to underwrite this “transformation?” Source
  18. 18. Social Impact Bonds and Pay for Success have been promoted by America Forward, the policy arm of New Profit. New Profit is a venture philanthropy fund that seeks to “reimagine learning.” They are heavily invested in programs that promote digital education. Source
  19. 19. Utah Pre-K Social Impact Bond raises concerns. The premise was that providing access to preschool would reduce future expenditures in special education. Students were screened, and at-risk children were identified and provided with access to preschool. When the students registered for kindergarten, the program claimed 99% did NOT require special education services. However, even the best programs would only have been expected to reduce the need for such services by 10-20%. Additionally, Goldman Sachs only paid a fraction of what a high-quality preschool actually costs. It is unclear if the “success” of the program involved pulling in students who would never have needed services or if services were being denied to students who genuinely needed them. Source
  20. 20. “Quality” provides cover for data-mining babies and toddlers. Many cities are considering using Social impact bonds or pay for success programs to expand access to universal pre-k. As a result pre-k programs are becoming increasingly data-driven and technology dependent. Intrusive programs like TS Gold are building student “growth” profiles that could ultimately be used to evaluate social impact bond deals by third parties. Access to imaginative play, manipulatives and physical activity will be reduced as more and more device- mediated activities come into classrooms. Education is remade to serve the needs of big data.
  21. 21. Students Generate Data Dashboards Aggregate Data Devices, Apps, LMSs & Sensors Transmit Data IoT Credentials and Competencies Registered on Blockchain Ledgers Social Impact Investments Seed Ed-Tech Data Informs Human Capital Management Predictive Analytics Blockchain Smart Contracts Trigger Digital Payments Classrooms as Data Factories
  22. 22. By allowing big data to rule our classrooms we are normalizing the surveillance of childhood. Source Just because evidence of learning is not uploaded to the cloud, doesn’t mean it didn’t happen.
  23. 23. People are working to bring SIBs and PFS to scale. Rate cards are being developed to streamline the process. In 2016. Social Finance developed rate cards that would permit multiple pay for success deals to be issued at once. Source
  24. 24. In 2016 the first social impact bond on blockchain was issued. UBS, the Swiss bank, donated code used to issue a “smart contract” social impact bond in support of HIV research on the blockchain. If they are successful issuing “smart contracts” for social impact bonds on the blockchain, private interests could enter into education deals that establish parameters of “success” that are actually very harmful to children. The voices of parents, teachers, students and community members would be entirely shut out. Public education will be outsourced entire to venture capital. Source
  25. 25. Neighborhood Schools Student “Personalized” Pathway Weighted Funding Follows Student Blockchain Automated Smart Blockchain Contracts Badges Certifications Skills Social Traits Competencies Logged In The Ledger Trigger Payments to Educational Provider ESA Educational Savings Accounts $ $ Work-Based Learning Online Gaming Makerspace Projects Service Learning Cyber Courses Private Instruction Museum Programs
  26. 26. Could we be approaching peak financialization? If rate cards and PFS “smart contracts” become accepted vehicles of municipal finance, we could be looking at a future where “public” education becomes largely dependent on private capital. Putting “smart” contracts on the blockchain further automates the process and restricts opportunities for human intervention once the deal is initiated. Source
  27. 27. In addition to the net profit of each Pay for Success deal, there is additional money to be made on speculation.
  28. 28. Investors plan to securitize social impact bonds. Venture capital takes advantage of ongoing austerity conditions in the public sector to “invest” in early childhood and education SIBS. THEN those SIBs can be grouped into asset backed securities that can be traded in the global financial marketplace. Voila, a new futures market!
  29. 29. Data-driven education is dynamic. Asset Backed Securities (aggregated SIBs) would be the basis for a new derivatives market. With derivatives, investors make a bet with another party on whether the price of the underlying asset will go up or down. Imagine derivatives composed of SIBs for a group of districts. You could bet on whether the education would improve or decline. That is why “growth” and ongoing formative assessments are required. Real time flows of data encourage continuous betting on educational outcomes.
  30. 30. When everything tanks... Credit default swaps are used as insurance against defaults on a credit event. It is pretty clear that digital education will not be tenable over the long run. Those who can secure credit defaults swaps and accurately predict market failure will end up securing the highest returns. Digital education is being set up to be the next “Big Short.”
  31. 31. Constant flow of student DATA via dashboards informs investment risk. Digital Education Impact Investors Seed Ed-Tech Sell Hardware & Software & Generate DATA Neighborhood Schools Virtual Schools Out-of-School Time Charter Schools Dynamic, data-driven education becomes a speculative commodity of global financial markets. Blended Learning Will dashboards influence risk predictions on securitized SIBs?
  32. 32. Social Impact Investments Seed Ed-Tech & “Smart” Classrooms Derivatives Markets Built on Education Data Speculation Education Investments Securitized Credit Default Swaps = Profit for Some When The System Fails Digital Education = The Next “Big Short” What might a futures market in education data look like?
  33. 33. AI-Driven Philanthropy What might the implications be for linking blockchain smart contracts to charitable transfers? Is there potential for AI block-box algorithms to play a role in automated disbursement of philanthropic capital? Could data from the Internet of Things feed such algorithms and shape decisions about where funds are directed? Could such a process further automate education, preferencing platforms that deliver data tailored to IoT distribution? Charities Aid Foundation, a UK based philanthropy that is involved in social impact investing and social impact bonds, prepared the above whitepaper that discusses the intersection of blockchain technology and the future of charitable giving. Source
  34. 34. Dates of Note 2007-Social Finance UK created to develop SIBs. 2010-The first social impact bond was launched in the UK at Peterborough Prison. 2011-Social Impact Bond lab set up at Harvard with support of Rockefeller Foundation. 2012-First US social impact bond deal set up in New York on Rikers Island. 2013-Meeting of the Minds floats the idea of using Social Impact Bonds to fund “Smart” City projects. 2016-Social Innovation Fund hires Social Finance to create rate cards to scale social impact bonds. 2016-UBS donates code for blockchain “smart contracts” that create a social impact bond vehicle in support of HIV research. Source