An education initiative that finances the creation of small Montessori schools throughout the country has launched a fund to draw community reinvestment capital from banks and other lenders.
The Wildflower Foundation is aiming to raise $10 million for its Sunlight Loan Fund, which received community development financial institution certification in December. The money will be used to help teachers navigate the financial and business challenges that come with operating their own schools.
The initiative is an effort to help teachers become "social entrepreneurs," according to Matt Kramer, CEO of the Wildflower Foundation.
He said the program serves teachers in a parallel way to how students receive education at Montessori schools. Teachers are provided the resources and guidance to lead their own schools, similar to how Montessori schools emphasize self-directed learning by students.
"Teachers come up with their own vision for their schools," Kramer said, with decisions about how to design the classroom and structure the education "reflecting that teacher's individual experience and passion."
The curricula at Montessori schools are rooted in teaching methods that the Italian physician and educator Maria Montessori began to implement early in the 20th century, based on individualized guidance alongside a student's self-direction.
Students "should have a lot of choice" as they learn and mature, Kramer said. "But they should only have choices between good options."
Wildflower began in 2014 as an initiative funded by Sepandar Kamvar, a computer scientist and entrepreneur who financed the opening of the first Wildflower schools while also serving as a professor at the Massachusetts Institute of Technology.
In 2018, Wildflower raised an initial $3 million from philanthropic donations and the investment firm Calvert Impact Capital.
Now that Wildflower has obtained CDFI certification from the Treasury Department, the initiative is able to attract commitments from financial institutions seeking to support causes that benefit local communities and receive credit under the Community Reinvestment Act.
The Sunlight Loan Fund is one of more than 1,300 CDFIs seeking to commit capital to community reinvestment initiatives. It is among a much smaller percentage of CDFIs that provide access to education. Even fewer focus specifically on Montessori education.
Wildflower has helped teachers open 59 so-called micro-schools across 14 states, as well as in Puerto Rico and Washington, D.C. The schools are typically single classrooms that include two teachers for around 25 students.
Wildflower has recorded no defaults on the 43 loans that teachers have taken out to launch their schools, according to Kramer.
"From a banking perspective, it's a very solid business to offer child care," Kramer said. "We create the schools, and they don't go away."
Brett Theodos, director of the Urban Institute's Community Economic Development Hub, said that many banks have increased their CRA commitments in recent years at the same time that federal, state and local funding for community reinvestment initiatives has grown.
Banks are drawn to commit financing to CDFI funds in particular because they "provide capital with a mission," Theodos said.
For the CDFIs, one challenge is consistently attracting "CRA-motivated bank capital" so that they "can have money to lend," Theodos noted.
U.S. Bancorp recently closed on the inaugural commitment to the Sunlight Loan Fund, providing $500,000 to the Wildflower Foundation at an interest rate of 3%.
U.S. Bank is excited to "expand early childhood education opportunities" by supporting Wildflower as it helps "more children in diverse communities begin their learning journey," Kate McAnnar, the bank's impact finance relationship manager, said in an email.
Wildflower plans to use the capital from U.S. Bank to extend loans of around $100,000 each to teachers opening schools, according to Kramer. The fund charges an interest rate of around 5% to help cover operating costs.
Teachers structure schools in the Wildflower network as charter schools, independent nonprofit child care centers or schools serving lower-income families that are eligible for government education vouchers.
Wildflower schools typically open in places where there is sufficient access to philanthropic organizations and government education subsidies to help lower-income families pay tuition, according to Amy Gips, a partner and loan fund manager for the Wildflower Foundation and the Sunlight Loan Fund.
Banks are increasingly "seeing the same value that impact investors have seen," Gips said. "And they seem to be more interested in wanting to help and be involved."
At the micro-schools, it is especially important for teachers to build sustainable financial models because Wildflower does not typically provide financing after three years, Gips said.
"We're expecting that the school will be able to cover their costs with the revenue they're generating," she said.
Kameeka Shirley, a Wildflower teacher-leader in Dade City, Florida, said the organization's teachers spend time both in the classroom and making business decisions.
Shirley, who previously worked as a teacher at a Montessori charter school and served for two years in Teach For America, said that Wildflower's commitment to diverse educational opportunities is what "continues to light my fire."
Wildflower urges schools to enroll students from a diverse range of backgrounds — in proportion with the communities where the schools are based.
The schools offer individualized or sliding-scale tuition models "where different families at different income levels have different tuitions," Shirley said.
"One of the most rewarding parts of working in a Montessori classroom is that the social-emotional lessons are just as important, if not more important, than the curriculum," Shirley said.
In one example, Shirley described working with a student with learning difficulties. Shirley and her teaching partner were able to make accommodations for the student, including different seating arrangements and work plans that still allowed him to participate in class alongside his peers, she said.
"We were able to observe and work within his needs to provide resources so that he could learn and reach his achievements," Shirley said.
