How an 'Education Bank' Could Rejuvenate American Schools

Imagine a new type of financial institution, an "Education Bank," that is half-charity organization and half-bank.

A bold and innovative plan to save U.S. education that borrows equally from philanthropy and banking

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Last year Mark Zuckerberg invited four hundred of his closest friends, many of them Silicon Valley's movers and shakers, for a screening of "Waiting for Superman," a documentary about the decline of public education in America. But something critical was missing from the all-star gathering -- a truly compelling vision about where to find sustainable sources of capital to fund and scale breakthrough ideas in education.
Here's a solution.
The Money Report
Imagine a new type of financial institution, an "Education Bank," that is half-charity organization and half-bank. Like a charity, it would accept tax deductible donations. Like a bank, it would leverage those donations into circulation in the form of a new digital currency called Education Dollars. Schools could use these Education Dollars like coupons or credit card points that could be "redeemed" at participating stores.


Here's how the Education Bank would work in three easy steps.

First, individuals who want to support education could make charitable contribution in conventional dollars to the Education Bank, much like they might contribute to their alma mater or their child's schools fundraising campaign. The cash would be placed in a reserve account.

Second, the Education Bank would issue a multiple of this amount into circulation as Education Dollars, or E-Bucks. E-Bucks would be distributed to schools, colleges and universities. In this sense, the Education Bank is like a foundation or public agency making grants, but the grants come as E-Bucks.

Third, these E-Bucks would work like coupons or credit card points. Their primary function would be to give schools and teachers discounts at participating stores. Businesses, retailers, merchants, restaurants, service providers and professionals would sign up to agree to offer discounts, in lieu of coupons, by accepting E-Bucks in partial payment for their goods or services. For example, Amazon might say that a textbook is $70, or $30 plus 60 E-Bucks. Target might say that a binder is $4, or $2 and 5 E-Bucks. Local and national banks could agree to accept E-Bucks as partial payment for interest due on overdue credit cards, mortgages and distressed credit relationships. The value of E-Bucks would be determined by the market of participating stores based on their willingness to provide discounts to the education community.

Still confused? Let's say I donate $100 to the Education Bank. The Bank turns my donation into 200 E-Bucks, which it grants to a school. That school can spend, or "redeem," those 200 E-Bucks at participating outlets, like Target. If Target agrees to accept E-Bucks, they might sell a $10 binder for $5 and 5 E-Bucks. This amounts to a $2.50 discount on binders for schools with E-Dollars. In this way, donations to the Education Bank are leveraged into an alternative currency that gives schools special buying power at certain stores, and stores can participate in a national movement to invest in education.


Students, teachers and staff who benefit from the Education Bank's activities would be encouraged to approach more businesses to sign them up for this program. This would create a viral growth imperative to stimulate the redemption and use of Education Dollars. The beneficiaries of any program are its most passionate proponents and evangelists. People who receive E-Bucks in the course of shopping might "pay them forward" to their favorite, school, cause, charity or a friend in need.

The system could even be replicated and scaled to address other pressing social, heath, housing, environmental and economic problems with the formation of a parallel network of Social Banks, Health Banks, Energy Banks, Eco-Banks, and Housing Banks etc each issuing their own form of form of money: Health Dollars, Social Dollars, Eco-Dollars, Housing Dollars.


We have real problems in our educational system. State and local governments are cutting back on school funding. Merchants, retailers and business today struggle to stimulate demand for unused capacity. Consumers are hurting in their pocketbooks. The movers and shakers who gathered in Silicon Valley with Mark Zuckerberg can take the lead in meeting this challenge through an Education Bank.