CARTAGENA, Colombia – Inter-American Development Bank President Luis Alberto Moreno today called on Colombian private sector leaders to join a social inclusion fund to help talented, underprivileged youth to gain access to quality higher education.
Moreno issued the call to action at the June 16-17 Transforming Philanthropy forum organized by Give to Colombia with support from the Colombian government. The conference brought together business people and philanthropists to share successful experiences and promote networking in the context of Colombia’s new social investment policy. One of the goals of the forum is to encourage public and private sector leaders to back path breaking ventures such as the social inclusion fund.
The new fund, to be established and managed by Lumni, offers a private sector alternative to finance higher education opportunities for outstanding students from traditionally disadvantaged social groups, prioritizing youths from indigenous and Afro-Colombian communities. Lumni is an innovative social enterprise created to attract independent private investors to finance high-performing undergraduate and graduate students.
“Philanthropy goes beyond giving grants. It requires that all sectors of society become involved in investing in the solution of social problems,” said Moreno. “It is also a matter of scale and synergy. We need to think strategically and develop a market model that is efficient and transparent, with accountability, towards reaching bigger goals and measuring the impact of the resources committed.”
“The IDB is in a position to play such a catalytic role by bringing together private and public interventions, which are often fragmented, into high-impact, scalable initiatives,” he added.
Moreno recognized Grupo Nacional de Chocolates, Harinera del Valle, Bavaria SABMiller, Fiduciaria Colpatria, COMFANDI, Brigard y Urrutia Abogados and Grant Thornton Ulloa Garzon Auditors for agreeing to support the social investment fund and for demonstrating leadership in this initiative.
Working with and building on the experience of Felipe Vergara and Miguel Palacios, the social entrepreneurs who established Lumni, the fund will finance students’ tuition and living expenses. Once they graduate, students will pay the fund back with a percentage of their salaries. This financing model not only provides students an accessible and less costly alternative to traditional student loans. By repaying the fund, young people who benefit from the financing will help future generations of students. The program will also offer mentoring and job placement services in order to reduce the drop-out rates prevalent among students from disadvantaged social groups.
The IDB’s Multilateral Investment Fund supported Lumni when it pioneered the human capital fund methodology, playing an instrumental role in helping the social venture’s founders perfect their business model, launch a mentoring system and increase the program’s coverage from approximately 60 students in 2005 to over 1,200 at present in Chile, Colombia and Mexico.
Hans Schulz, general manager of IDB’s Structured and Corporate Finance Department, which supported the design and structuring of the new initiative, praised Colombian efforts to scale up the social inclusion fund and to attract local resources to attain concrete and sustainable results, providing an example for other countries on how corporations can have a positive social impact.
“In Latin America we have a long way to go to create synergies and promote meaningful partnerships that correctly align private philanthropy, impact investing and public social investing,” said Bernardo Guillamon, head of the IDB’s Outreach and Partnerships Office. “Supportive public policy is also needed to promote private efforts and Colombia is showing the rest of the region a promising way of achieving it.”