Impact At Scale

The Beeck Center engages global leaders to drive social change at scale.

Prospects for Impact Investing at Universities

This post is part of our Student Summer Series, which highlights the perspectives of students working at the Beeck Center as they engage and explore ways to scale social impact.

August 15, 2018 | By Eunice Jeong, Student Analyst, Georgetown University Class of 2020 

As educational centers serving students as well as larger communities and cities, universities hold great potential for advancing important discussions on modern social problems and the potential for strategies such as socially-conscious investing to help address these issues. Large schools around the world, often with endowments upwards of $1 billion, hold a unique position in the eyes of communities and the media. These schools are developing the next generation of social impact leaders – government officials, educators, and social entrepreneurs – and they have a significant opportunity to shape the future of socially-conscious investing. Through their own investment of endowment funds and the courses they offer to students and executives, universities can lead by example to promote impact investing and build the capacity of the next generation of leaders to do the same.

This summer, Cambridge University confirmed its divestment from companies in the fossil fuel sector as part of its new commitment to using part of its £3 billion endowment to address climate change. The Cambridge University Endowment Fund (CUEF) investment plan includes a comprehensive review of environmental impact funds, education for university leaders on the topic, the creation of a university Centre for a Carbon Neutral Future as a center for sustainable energy research and related policy discussions, and a commitment to complete carbon neutrality on campus by 2050.

Closer to home, Georgetown University’s board of directors announced in June 2015 that the university will no longer invest its endowment in companies whose principal business is mining coal for energy production. They came to the decision after mounting pressure from student and community groups such as GU Fossil Free, which set up pickets on campus demanding accountability from the Georgetown board and presented its proposal in multiple meetings with the board of directors and President DeGioia. In addition to this divestment, the university is committed to evaluating topics related to socially responsible investments and endowment management. While Georgetown’s financial disaffiliation from coal companies is not yet as extensive as Cambridge’s commitment to actively investing in sustainable energy options, divestment itself is an important first step in impact investing on a campus scale.

Socially-conscious investing is starting to catch on in similar ways in other schools as well. Many consider socially responsible decisions to be part of a university’s obligation to its students and larger community. As students and staff demand that school directors and advisory boards tackle relevant social issues, university commitments to impact investing are starting to become more common. Efforts in campus impact investing can be seen in the boards of other large universities across the country, such as Harvard, Brown, and Boston University. For Georgetown, addressing fossil fuel companies’ effect on climate change problems can be considered to be part of the Jesuit mission of the school – in an official statement, DeGioia remarked, “As a Catholic and Jesuit university, we are called to powerfully engage the world, human culture, and the environment – bringing to bear the intellectual and spiritual resources that our community is built upon…The work of understanding and responding to the demands of climate change is urgent and complex. It requires our most serious attention.”

In addition to promoting impact investing with their own endowments, schools can also provide opportunities for their students to learn about impact investing and tools to apply in their careers. This year, the University of Cape Town will launch its first course on impact investment for lawyers through its Graduate School of Business. The course will be convened by the Bertha Centre for Social Innovation and Entrepreneurship. Program convener Susan de Witt remarked, “Impact investment is growing at a rapid pace, both globally and in [South Africa], and as more international funding becomes available with demands for better social and environmental as well as financial returns, there will be a need for legal expertise to craft the kind of agreements and deals that will ensure these outcomes are realised.” Other universities should consider implementing similar programs so that students can learn to implement social impact investing practices in their future careers. This program is similar to other established programs such as the Social Impact MBA program at Boston University aimed to teach business management with a social impact mindset, aimed toward students interested in the nonprofit and social sector.

How else can schools promote impact investing for students outside the classroom? Socially conscious investing efforts can come directly from the student body in the form of student organizations like the Wharton Social Venture Fund – similar projects exist at the University of Michigan, Columbia University, and the University of California, Berkeley. Students interested in learning about the subject can create or join clubs like Net Impact, a student organization based off the national nonprofit which aims to support business-minded students in pursuing social and environmental impact causes. The organization has chapters in universities across the country. Schools can also host conferences and speaker events featuring impact investing experts and give students the opportunity to learn and network with leaders in the field.

Looking forward, university-sponsored impact investing, whether it’s directly through endowment investments, or indirectly through student education, has significant potential to make a difference in communities and in the next generation of leaders. Schools looking to follow in the footsteps of Cambridge, Georgetown, Wharton, and Cape Town must carefully analyze their priorities and the needs of the surrounding community so that the investments that they produce lead to real returns and social impact. In this way, universities today are in a position to leverage their significant power to create lasting social finance solutions and build the capacity of future leaders.

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