Funder Spotlight: How the ECMC Foundation Helps Underserved College Students Thrive

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IP Funder Spotlights provide quick rundowns of the grantmakers that are on our radar, including a few key details on how they operate and what they’re up to right now. Today, we take a look at a national grantmaker focused on helping underserved students succeed in college and in the workforce.

What this funder cares about

Created in 2000, the Los Angeles-based Educational Credit Management Corporation (ECMC) Foundation is exclusively interested in organizations—including for-profits—whose work increases college success and career readiness, with a focus on students from underserved backgrounds.

This wasn’t always the case. For its first 14 years, the foundation provided millions of dollars in scholarships. In 2013, the board of directors of the foundation’s parent company, the ECMC Group, decided that the foundation should become a grantmaking organization. President Peter J. Taylor was hired in 2014 to lead the foundation in a new direction with a focus on long-term, systemic change in postsecondary education to help low-income and first-generation students achieve academic success. Since then, the foundation has made more than $200 million in grants and program-related investments. It had $797 million in net assets (without donor restrictions) for the fiscal year ending December 31, 2020.

Why you should care

Pre-COVID, only 12% of students from low-income families earned a bachelor’s degree by age 25, compared to 70% of students from high-income families. Only 14% of community college students transferred to a university and completed a bachelor’s degree within six years. Then the pandemic hit, forcing many low-income students to postpone or completely abandon their college plans. The ECMC Foundation supports organizations working to get students back on track and bring new ones into the pipeline.

The foundation claims to be one of the largest—if not the largest—funders of postsecondary career technical education (CTE) in the country, and the first national postsecondary education funder to address basic needs among college students. It does so through its Basic Needs Initiative, which aims to increase students’ access to food, housing, childcare, mental health, financial assistance and transportation.

Aspiring grantmakers should note that the foundation has an open application process. And those that receive funding will likely be satisfied with the ensuing relationship. A 2019 study by the Center for Effective Philanthropy ranked the ECMC Foundation in the top 15% of funders for its understanding of the factors that affect grantees’ work, and in the top 5% for the responsiveness of staff.

Where the money comes from

The ECMC Foundation was created in 2000 as the charitable arm of the Minneapolis-based ECMC Group, a nonprofit corporation whose services include assistance for students to plan and pay for higher education, financial literacy training, and services around student loan guarantees, default prevention, training and outreach. The ECMC Group had $847 million in net assets for the fiscal year ending December 2019.

Where the money goes

Foundation trustees committed an additional $5 million toward grantmaking in 2020, which resulted in the largest expenditure in grants and investments—$44.8 million—in the foundation’s history. Sixty-four percent of this amount went to grants earmarked for College Success ($14.8 million) and College Readiness ($14 million).

Within its College Success area, the foundation looks for projects that address basic student needs, improve credit mobility and transfer, enhance student-centered supports, and reform approaches to enhance completion. Organizations receiving College Success grants include the American Association Community Colleges, the Institute for Higher Education Policy and the Thurgood Marshall College Fund.

Career Readiness grants fund initiatives that improve postsecondary CTE, use intermediaries to build institutional capacity, and support organizations to report, evaluate and share efforts to improve practice and inform policy. Organizations netting Career Readiness grants included the American Indian College Fund, Jobs for the Future and the Urban Institute.

In 2020, the grantmaker also launched the Catalyzing Transfer Initiative, a $4.5 million effort to support the development and wider adoption of clear and equitable transfer agreements, with the aim of increasing the number of Black and Latino community college students transferring to and graduating from four-year programs.

All told, the foundation made 443 grants in 2020, a notable 52% increase over the previous year. Money flowed to organizations in every state in the nation except Montana and New Hampshire. Historically, the foundation has made grants to organizations serving students in every state and Puerto Rico.

Open door or barbed wire?

The ECMC Foundation’s website checks off pretty much all of the boxes for providing maximal transparency to grantseekers. It includes biographies for its board of directors and staff, links to robust annual reports dating back to 2016, a grants database, and clear instructions on how to apply for grants. It also doesn’t hurt that the foundation is one of the few national postsecondary funders with an open application process.

In June of 2021, the foundation updated its website to better reflect how and what it funds. As part of that process, it expanded the website’s functionality and added pages exploring grantee work, funded research, and lessons learned from internal evaluation efforts.

Latest big moves

The foundation launched three key initiatives in 2021. First, there’s $10 million for Single Mothers Student Success, which looks to increase the share of single mothers who earn an associate’s degree in five years. Then there’s Improving Online CTE, a $2.5 million investment in solutions to improve student outcomes and close equity gaps in online postsecondary CTE programs, especially for Black and Latino students.

Lastly, the foundation rolled out the Transformational Partnerships Fund (TPF), which supports universities interested in collaborative efforts to reduce operational costs and boost efficiencies.

TPF sounds like a relatively innocuous project, but prior to the pandemic, university officials rarely pursued partnerships or mergers out of fear that doing so would signal to the broader community—and donors in particular—that the school was in financial trouble. The pandemic forced many schools to give mergers and partnerships a second look, and TPF allows leaders to do so in an anonymous and collaborative way. The Chronicle of Higher Education’s Goldie Blumenstyk called the fund “useful to a broader swath of higher ed, beyond the grantees themselves.”

One cool thing to know

In the last six years, the foundation received 1,187 letters of inquiry through its open online application system. Of those, 875—or 74%—were from organizations or higher education institutions with which the foundation had never interacted.

What we hope it does next

One of our biggest gripes with higher ed philanthropy has been funders’ inability or unwillingness to press institutions to reduce tuition, and with it, student loan debt. After all, investments in college readiness can only go so far if students understandably refuse to assume a crippling debt load.

This is why we find the ECMC Foundation’s Transformational Partnerships Fund so refreshing—it’s a rare instance of a funder adopting a carrot approach (versus a stick) to incentivize leaders to cut costs. So just as foundation leaders have called on states to make it easier for community college students to transfer to four-year institutions, we hope the foundation uses its bully pulpit in the years ahead to demand that administrators address the student loan crisis, while expanding the TPF.