Irene Pritzker talks about her work with the IDP Foundation, which uses philanthropy as a means to support sustainable investment in educational and social impact initiatives.

Transcript

Yes, when I asked Anna, “What did you want me to speak about?” she said, “Well, I’d like you to talk about something that you really care about,” and that obviously is the cause that we have deeply embedded in the work of our foundation.

So when I cofounded the foundation with my daughter we weren’t really sure exactly what we wanted to focus on but we were very interested in microfinance and I went to hear a lecture that was given by a Professor James Tooley and he was talking about the fact that all over the world there are so many children that are in privately owned schools, and these schools are completely marginalized, and they have no access to capital, and they have no access to virtually anything.

So without going into detail about his research I just will say that I then went to Ghana to look at some microfinance options for extending finance to schools.

And when I got there I discovered that the types of schools that James Tooley was talking about had nothing to do with the types of schools that this organization was thinking about lending to.

The types of schools that James Tooley were talking about-was talking about were basically rings of kids under a tree with a blackboard nailed to it, or in slum markets, or peri-urban or very urban environments with virtually no infrastructure, no title to the land.

The children that were attending the schools were usually the children of head porters, petty traders, rural workers, and these were the schools that were absolutely at the bottom of the economic pyramid.

And what I discovered upon further investigation is that actually hundreds of millions of children are being educated or attempting to be educated in these schools.

The other thing is that all of the educational funding policies, all the financing for education, financing for development, all of the millennium development goals, and all of the post-2015 sustainable development goals still say education should be free and provided by governments and all of the policies still are endorsing that idea.

But yet what’s absolutely appalling is that really literally hundreds of millions of children have only these privately-owned, individually-started schools as their only option.

In their, it’s hard to wrap your hands around the actual figures but actually in India they’ve come up with the fact that over 100,000,000 children are actually attending such very low fee, very poor infrastructure schools such as these.

So you can only imagine if you start looking at India and they’ve come up with that figure what it’s like around the rest of the world.

So anyway, there we were in Ghana and I’m saying, “But these aren’t the schools that James Tooley was talking about. You’re going to lend to these schools? I’m, no, I’m not interested in this. Where are those schools that James Tooley was talking about?”

So one of the loan officers at the bank said to me, “Well, would you like to see a school like this?”

And I said yes so off we went into the Agbogbloshie Market, which was a, a really big slum kind of environment, and there I met Paulina.

And Paulina had been a successful loan client of this bank for many years for her yam business but she had also seen a need in the market and she had established a school, which was, had quickly grown to have over 400 children in it only up to the fourth grade and it was in a horribly ramshackled really disgusting environment.

So she went back to the bank and said, “Could I have a loan for my school?” and they said no.

So even though she had been for 15 years a very creditworthy loan client they wouldn’t give her a loan for the school.

So I decided that, “You know what? Let’s have a crack at this.”

So we made a lot of inquiries and investigations and we couldn’t find anybody else that had ever done it for such poor types of schools so we found ourselves a very good Ghanaian partner, a financial institution, local, called Sinapi Aba, a local microfinance credit-issuing institution and we took our money form the foundation and we said,

“Okay, this is a super risky adventure-venture but we can be nimble. We’re a private foundation. We haven’t got a board. It’s a corporation so youI only have to meet with me.“

And we decided to take a large chunk of money, and to partner, and to fund the loan portfolio, and to go out and find out what it would take to give schools like this a loan.

Anyway, we started with the pilot in 2009 and over three years we did put 105 schools through this program that we devised.

And we discovered that actually you can give a loan to such a school. You can expect it to be repaid. We have over 95% repayment rate of the loans.

These schools grow.

They take multiple loans and it’s a whole untapped market that really can exist, can be replicated and scaled around the world. It can be a financial model for financing education.

So of course how did we do it? Well we went out into the field and we looked for schools and we said, “Is there a school here? Is there a school there or do you know?” found out about it.

We interviewed, we’d make up our own market research. We interviewed all sorts of school owners, and parents, and teachers and we found out that they really were only having these schools because there was no viable government alternative.

Or, either that or the public school was so badly governed that the parents just wouldn’t leave their children there because half the time there were over 100 children in a classroom and the teachers often wouldn’t show up, or they’d be drunk, or they’d be asleep, or whatever.

The unions are very strong. So when we started to look at them and said, “Well, what does it need?”

And after we asked all sorts of questions we came up with what was needed was we needed to give them a loan we needed to teach them financial management.

So we needed to have financial literacy and we needed to have school management.

We needed to teach them how to also interact with the government bodies. So we’ve always worked very, very closely with the Ghanaian Education Services. They know what we’re doing.

They’re amazed to know how many of these schools there are.

We found that if we gave them nine modules - this took us three years to work out, by the way- but if we gave them nine modules one day a week of financial literacy and school management, so nine weeks it took, during those nine weeks they would each come punctually to class. They did homework, we tested them, and then we gave them a loan.

They would, could apply for a loan and we would give them a loan.

And then we collected data very, very carefully on what they were doing with the loan and what their repayment rates were.

So one of the secrets to this was making sure that the people who were teaching, the proprietors were in fact the loan officers.

So we sat, had sat around a, a boardroom table in Kumasi in Ghana and we created these modules of training ourselves. And then we, so now that we have different manuals depending on whether it was a branch manager, or whether it was the actual teacher, or whether it was somebody who was coordinating the program, and so our grant paid really for the staffing, the time, the loan officers, the training and all the rest of it.

And now that program is scaling so we’re on target to, for, to have reached 580 schools by next July, July 2017 and there’ll be over 150,000 children who have no other alternative for education.

So [APPLAUSE]... yes.

See, I knew it was worth it.

So anyway, we’re very excited by what we’re doing but it is ex-, right now we’re at 476-, 400 and, is it 458 schools and 115,000 children so we’re on, we’re on target.

Many of these proprietors have taken multiple loans.

You have no idea the number of grades that they have added. Almost all of the classrooms now have floors, ceilings, walls between the toilets, and we’re just about to conduct a huge assessment of where we are and what, what has changed in the needs of these schools

But the alarming thing is that it’s very political. Even though I’m invited to speak around in the United Nations and, and many different places have invited me to talk about this model, and the World Bank is becoming quite interested, and the fact that we’re taking it to other countries now, other financial institutions are interested because it’s actually very profitable for a financial institution, not just in terms of the financial return but also because of their social impact, their social credit, and they all, all financial institutions want that in their communities.

So there’s an awful lot of pluses but it is still amazingly controversial in the... education funding environment for the, the big funders Global Partnership For Education, which is the division of the World Bank that handles dishing out education grants to different countries.

And the UN in general it’s usually political because they, people keep clinging to this belief that education has to be free and it has to be public despite the fact that for over 70 years trillions of dollars have gone into funding education and we’re nowhere near education for all.

And if we continue this madness we never will get there. And when you start looking at the whole geopolitical situation and you understand how many of the new 179-post 2015 sustainable development targets actually all pivot back into the need for education it makes you really angry it just and it’s so hard to move the needle.

And so what we’re doing is we’re just saying, “Okay. We’re just going to keep writing about it.

We’re just going to keep expanding. We’re just going to keep trying to improve the model and we just will keep on advocating for policy change because until such time as their policy change we can be sure that we will continue to have a huge poverty-stricken, uneducated bunch of kids coming along.”

So that’s my passion. It’s been a bit of a serious talk.

I would love to have time to some of you-tell some of you about the rollicking funny times we had in trying to do something like this, more laughter, more frustration.

But just to have that passion, and it’s not a, as, as Ben was saying, it’s not about having a mission.

It’s about actually, you know, doing it, doing it yourself.

And I think when you get out there and you do do something that nobody has actually done before it’s terrifying but it’s a great use of philanthropic dollars.

It’s really, it’s really rewarding to take these huge risks realizing that you have to power to take the risks, that nobody is telling you you can’t, and being thoroughly rewarded along the way.

That’s it.

[APPLAUSE]