Philanthropy is in the midst of a significant shift. Over the last several years, we’ve seen the rise of new kinds of social impact organizations that are altering the traditional categories of giving and impact investing—a classic sign that perhaps we didn’t have the traditional categories of organizations correct previously.
These organizations recognize that tackling the complex societal issues of the day requires a cross-sector perspective and approach. The challenges are too interdependent across a range of systems, organizations, and individuals.
As a result, they are breaking down silos to support solutions across nonprofits, businesses, and government. Among this emerging group of mission-first funders is Strada Education Network, which invests in and brings together a wide array of both nonprofit and for-profit organizations focused on improving pathways between education and employment.
Tom Dawson recently stepped into the role of interim president and CEO at Strada Education Network after serving as the organization’s chief operating officer.
But his experience working in education—and in driving college outcomes—predates his time at Strada. Among many roles, Dawson has served as a senior policy officer at the Bill & Melinda Gates Foundation and as a deputy assistant secretary at the U.S Department of Education.
Dawson joined me to talk about the philosophy behind Strada’s strategy and how it’s set up to advance social impact.
Michael Horn: Tom, you have had quite a career, with senior roles at the Gates Foundation and the Department of Education. Now you have this opportunity with Strada. What are some of the big shifts that you’ve seen in education philanthropy over the last couple of decades?
Tom Dawson: When I was first at the Gates Foundation a decade ago, the notion of college completion was really a new idea. Most of the philanthropy, energy, and thought leadership in higher education were focused on college access and affordability. But at Gates, we were starting to provide a lot of grants in areas of college completion, and I remember wondering at the time how long it would take for a “completion agenda” to become more visible and a part of the lexicon. Now there are nationally known organizations like Complete College America solely focused on that work. So many of the organizations we work with are centered on this idea, and states and policymakers are increasingly focused on improving college completion rates. There has definitely been a noticeable shift in a relatively short amount of time.
The role big philanthropies play has also shifted. A decade ago, they were generally skittish about program-related investments. Now, everyone is doing program-related investments. There is this new breed of social impact organizations—Strada is one of them, as are organizations like Emerson Collective—that are pulling multiple levers to solve complex and ingrained problems.
Horn: What’s the thinking behind that strategy, and why do you think there is now greater comfort around investing in different kinds of organizations? Strada is not just making grants, but actually making investments in for-profits and even owning some outright.
Dawson: In education, you can’t really take a siloed approach. We’re taking a sector-agnostic approach that reflects the critical role of not just NGOs, but also investors, entrepreneurs, and technology in crafting solutions to complex, multidimensional problems. We have found this is a much more intentional way of ultimately having an impact on—and bringing to scale some of the effective interventions for—the target populations that we seek to serve.
Horn: You call yourselves the Strada Education Network. You’re not Strada Philanthropies or the Strada Foundation. Why network?
Dawson: It refers to this internal network we’ve created, through the grants we provide and the investments we make in our nonprofit and for-profit affiliates, as well as the external, larger network we engage with. We’re working with parties that we do not have direct influence over, like state governments and policymakers, to hopefully achieve even greater scale. The affiliate model—coupled with our in-house research and impact investments—sets us apart from traditional foundations whose primary focus is on grantmaking.
Horn: Strada is focused very intentionally on measuring social impact and not just scaling for its own sake. How do you measure that, especially when you’re so entangled with all these entities across the education ecosystem?
Dawson: We take a long path on measurement. We started intentionally measuring the impact of our nonprofit affiliates about three or four years ago, and we’re just now getting the volume of research and data necessary to actually show what their impact is—it just takes a long time to have a sufficient volume of students and to have a commitment from the various parties involved. Often when people talk about impact in the education and training space, they’re really talking about data on reach and on the number of students served. Those are important things but it’s not necessarily measuring impact. So, we have been working for years with our nonprofit affiliates to do that, and our plan is to extend that to our investments as well.
Horn: People are waking up to the fact that while knowledge and skills are important, so are social capital and having mentors and relationships that can unlock opportunity. With the acquisition of organizations like Roadtrip Nation, Strada has been very much ahead of the curve on this idea. The organization seems to always be peering around corners and thinking about what’s to come. With the pandemic and the recession, there is a lot of speculation about the future of education and work. How do you see this playing out in the sectors you’re watching and investing in?
Dawson: I would be remiss if I neglected to say that we haven’t made any long-term decisions about how the effects of the pandemic and the recession will affect our activities. That said, we are starting to learn how the pandemic has impacted learners. Throughout the course of the pandemic, we have regularly released a variety of short-burst evaluations and surveys of how the pandemic was affecting decision-making among learners. We have found adult learners, in particular, are looking for opportunities to improve their skill acquisition. I would really focus on that phrase—skill acquisition—because these adults aren’t necessarily looking for a degree or a credential in a certain area from a certain institution. They’re looking to improve the skills that they possess to make them more relevant. As a result, they are open to going to a variety of different providers, whether it’s traditional institutions, competency-based institutions like Western Governors University, or on-the-job learning. They are hungry and open to a variety of different pathways. Most learners still go to a traditional institution but there’s increasing openness to going outside of that.
Horn: The prevailing wisdom has been that higher education enrollment is counter-cyclical; that enrollment increases in times like these. But, just as Strada’s surveys indicated, we haven’t seen students rushing back to degree programs quite yet, but they are going to short-term programs that are super focused on skill acquisition. Do you think this will continue, or will we see some retrenchment to more historical behavior?
Dawson: I think the trend is here to stay. Does the rate of increase continue on the path that it’s on? That’s uncertain. But the openness and willingness to experiment with new types of programs that are really focused on skill acquisition precede the recession. I just think the pandemic accelerated it. A lot of learners already have excessive amounts of student debt and are not looking to take on more. Many do not have the time for a traditional program. Most students now are adult learners. They have families and they have jobs. The traditional way of pursuing an education is just not relevant for a growing share of learners.
At the same time, I would caution against viewing skill acquisition and traditional institutions as being mutually exclusive. I think we’re seeing a lot of evidence that the more entrepreneurial and thoughtful traditional institutions are moving into the skill acquisition space. The colleges and universities that will ultimately win the day are ones that can be responsive, open, and flexible to the needs of adult learners.
Horn: Strada has also invested a lot trying to understand what skills are actually in demand in the economy. What are you seeing in terms of how the labor market is valuing these short-term programs?
Dawson: A lot of employers are growing frustrated with the glacial pace of change in a lot of traditional higher education. Most employers do still have that preference for the degree, but is changing and it’s changing more quickly than it has in the past.
Horn: As you’re looking at the Biden administration, you’re probably seeing a lot of familiar faces. What’s a policy initiative the administration is looking at that you’re closely watching?
Dawson: I actually just wrote about this in Barron’s. The desire of the Biden administration to better fund workforce training programs at significantly higher levels is interesting. While historically many of those programs have been underfunded, I think the challenge really lies in what we call a “first-mile problem.”
Learners and workers don’t know where to go to get the information they need to make relevant career decisions. That’s why we invest in organizations like Roadtrip Nation, which is all about solving that first-mile problem. Someone might have an interest in a particular field or is vocationally inclined to be an engineer or an artist, but they don’t know how to identify a career path that is true to those interests while still allowing them to have a livable wage and provide for their family.
Despite all of the improvements that we’ve made, there’s still a siloed approach to education and workforce development, and pouring more money into one or more of those silos will not address the first-mile problem. I think there are limits to what government alone can do on that, but that’s why you need to have this multi-dimensional approach that also includes foundations, for-profit players, and organizations like ours.