User:Ferromario/Education angel

An Education Angel is an individual who decides to invest in the education of other individuals by means of supporting their formal education, personal development or both. The structure of the investment can be monetary or non-monetary, typically involving an element of both.

Origin of the term
The term Education Angel was coined by Wedu. The term derives by the concept of Angel Investor, who are individuals investing in a company or a project in the early stages. Originally the Angel Investor are believed those who financed a theater production. Wedu seeks to bring an investment approach to the creation of future leaders and financing for education.

Forms of investment
In the general definition of becoming an Education Angel the kinds of investment can be monetary and non-monetary. Monetary investments is simply the allocation of capital in different forms for the service of improving the education of one single person or a group of people. These forms can include scholarship, student loans and innovative structures like Future Income Sharing Agreements (FISAs) or Human Capital Contracts (HCC).

Non-monetary investments involves different activities, such as the allocation of time, in the form of volunteering, or allocation of other assets in kind.

Depending on the kind of investment there will be specific rights being gained by the Education Angel. See section "Source of capital" below.

Motivation of investment and risk profile
Education Angels are typically seeking a combination of profit, or financial return and social impact, or social return. Depending on the business model used by the Education Angel the proportion of social and financial return may vary. For instance in a funding model based solely on scholarships, the social return will be maximized and the financial return will be the minimum possible. Other models based on student loans, or other financial products, can increase the financial return for the Education Angel.

There is significant debate on the rationale for Education Angel to accept the high risk embedded in investment structures like FISAs and HCC. Nonetheless, the merit of such instruments has been highlighted in economic theory starting from Adam Smith in The Wealth of Nations as a way to make Human Capital a tradable asset. and were more recently and most notably, associated with the work of Milton Friedman.

Source of capital
The definition of Education Angel does not embed any particular source of capital which could be used seeking profit, allocating capital in the form of equity or loans, as well as philanthropic contributions or donations.

Examples of organizations
Different organizations are using business models requiring Education Angels. These include Wedu, Vittana, Kiva for their education portfolio, Lumni. Recently SoFi is aiming to transform MBA alumni from institutions as prestigious as Stanford, Harvard and many other, into Education Angels by inviting them to invest in the education of future students in their own university.