The Brief | January 11, 2019

The Brief’s Big 7: Pay-as-you-earn, change in the air, institutional shifts and impact multiples, Boston Ujima Project’s Agent of Impact

The team at


Greetings, Agents of Impact!

Income share agreements for financing education align the interests of students and their investors. Unless they don’t. Already in 2019, Lambda School and African Leadership University have each raised $30 million sums to expand their “pay-as-you-earn” education finance models (see No. 6, below). A growing number of organizations are testing such alternatives to traditional student loans. “ISAs” provide upfront funding for college tuition, fees, books, and other living expenses. Students agree to pay a portion future income for a fixed period of time. By giving funders a claim on a percentage of the student’s future income, income share agreements tie investors’ returns to student success in a way regular student loans don’t.

Caveat emptor. On the heels of Lambda School’s big raise, the Roosevelt Institute, a liberal American think tank, warns “funders can shape ISAs to quietly push much of the risk back onto students by crafting contracts that work to their advantage, avoiding consumer protections laws and aggressively marketing the alleged advantages of ISAs.” Roosevelt researchers Brittany Farr, Daniel Hornung and Julie Margetta Morgan point to shortcomings in Purdue University’s “Back a Boiler” ISA program, including less favorable terms for students in less profitable majors. In an exchange on Twitter, Lambda’s Austen Allred‏ called the coding school’s terms “incredibly favorable for the students.”

– Dennis Price, editorial director

Featured: The Brief’s Big 7

1. The Call: Something changed in 2018… Conversations about impact investing with families and institutional investors have shifted from “‘I’m happy to listen,’ to, ‘We really want to do this,’’ Caprock Group’s Matthew Weatherley-White said on last month’s ImpactAlpha’s Agents of Impact Call No. 6. “That’s transformative.” Impact America Fund’s Kesha Cash, Enterprise Community Partners’ Rachel Reilly, Bank of America’s Jackie VanderBrug and Stanford’s Alicia Seiger also joined The Call to help round up a year in which impact investing broke through from feel-good to a legitimate source of risk-mitigation and investment advantage, er, impact alpha. The recap and the replay.

2. …and we’ll see even bigger changes in 2019. This is the year impact investing gets real. Really. So says Equilibrium Capital’s Dave Chen, who returned to ImpactAlpha’s Returns on Investment podcast with a half-dozen forecasts for the “institutional shift” in impact investing. Trend No. 1: “We’re seeing this year the institutionalization of climate change in all sorts of investment products,” Chen said. Pull up a seat.

3. Rise Fund’s ‘impact multiple of money’ puts a dollar value on impact – and impact investors react. When TPG Growth’s Rise Fund acquired a stake in the educational technology company EverFi two years ago, the private-equity firm calculated not only its expected financial return, but the dollar value of the social benefits driven by EverFi’s products and services. Rise Fund’s “Impact Multiple of Money” methodology is similar to the “social return on investment” many impact funds and others have been calculating for decades. Jed Emerson, one such early practitioner, sounded a warning. “Monetizing impact should not be our end-goal in assessing its value,” Emerson told ImpactAlpha. The focus “side steps the opportunity we have to invest in funds and firms that address larger, systemic challenges.”

4. Agent of impact: Boston Ujima Project’s Lucas Turner-Owens. Lucas Turner-Owens’ favorite part of his job is hitting the street to talk to business owners in the Roxbury, Dorchester and Mattapan neighborhoods of Boston. Turner-Owens is the manager of Boston Ujima Project’s planned $5 million fund, launched last month, to make low-interest loans and small equity investments in such businesses. Investment decisions, however, will be guided by neighborhood residents themselves, who vote on the fund’s priorities and which businesses to back. Turner-Owens, who was raised in Mattapan, says such self-determination already is increasing the “agency” of Ujima’s community investors. Turner-Owens returned to Boston after working for Operation Hope, the financial education non-profit, and Cooperation DC, which provides technical assistance to cooperatives. Ujima couldn’t find a traditional fund manager able to handle the complexity of Ujima’s democratic approach. “It was just too foreign, both in how we would administer the program and the administrative burden to track it,” Turner-Owens says. “We decided we would do it ourselves.” Follow ImpactAlpha on Instagram.

  • Boston is a seedbed of local impact investing. Look around. 
  • Agents of Impact weekly roundup: Follow the talent with career moves, job openings, events and opportunities

5. The investment firms fixing finance to better serve Black entrepreneurs. The Boston Ujima Project is among the new crop of finance organizations around the country democratizing investment decision-making, rethinking credit underwriting, directing capital to fill long-standing gaps and dropping legacy investing practices that have excluded people of color. In a guest post on ImpactAlpha, Chordata Capital’s Tiffany Brown and RSF Social Finance’s Lynne Hoey explore racial equity investment strategies that are reducing investment risk and surfacing overlooked opportunities. The inclusion alpha.

6. Deals of the week. Drink from the deal firehose all week long on A few that stood out:

7. Opportunity Zone investors want impact. A surprising number of real estate developers, venture capitalists and other Opportunity Zone investors are seeking to drive genuine social impact, say Lisa Green Hall and Jennifer Collins. “Firms are eager to ascertain the efficacy of the legislation, attract capital from impact players, engage community voices in the process and … include social outcomes in return calculations,” the two fellows of Georgetown University’s Beeck Center write in a guest post on ImpactAlpha. Let’s help them get it.

  • Signs of gentrification. New data from the Economic Innovation Group suggests concerns about displacement are premature. Very few of the Opportunity Zones nationwide show higher than average income growth rates and growth in the white share of the population, two key signals of gentrification.
  • Sweeteners. One way Chicago and Cook County can lever Opportunity Zones for community benefit: buy up and resell vacant land at a low cost to Opportunity Funds willing to meet specified community needs, according to a new brief from the Urban Institute.

— January 11, 2019.