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May 19th, 2016
Education • Finance

Investing in Innovation (i3) Fund

i3 is one of the many initiatives that were introduced under the umbrella of the Obama administration’s American Recovery and Reinvestment Act of 2009. It aims to encourage pupils from public schools to complete secondary education and progress to college, and it attracts much of its funding from private charitable foundations.

The initiative

The programme aimed to provide competitive grants to expand innovative practices that are demonstrated to have an impact on:

  • Improving student achievement or student growth.
  • Closing achievement gaps.
  • Increasing high school graduation rates.
  • Increasing college enrolment and completion rates.

The investing in innovation (i3) fund was established in 2009 to provide grants to seeking to expand innovative practices. It was formed under section 14007 of the American Recovery and Reinvestment Act of 2009 (ARRA). The grants were to support local education agencies (LEAs) and not-for-profits that were working with districts or schools with a record of improving student achievement and attainment and demonstrated a commitment to public-private participation. Grant awards depended on the type of activity - scale-up, validation, or development.

The challenge

Before 2009, there had been a lack of funding for innovative programmes in the American education sector. Many Americans believe that the government had allocated insufficient resources to public schools for some years and that too many pupils underachieved and dropped out of school and too few enrolled in college.

The public impact

i3 engaged the private sector in fund innovation in education. It secured matching funds of nearly USD150 million from more than 250 private-sector funders for the nearly USD800 million of public money granted.

At USD650 million, i3 is the second biggest of the Obama administration's evidence-based initiatives. It awarded grants to 79 school districts and not-for-profits in 26 states and the District of Columbia. It reviewed approximately 2,300 applications that competed for innovation funds nationally.

Stakeholder engagement

There was considerable support and investment from the stakeholders:

  • Major foundations committed USD500 million to education investment in concert with the US Department of Education's USD650 million.
  • The participating foundations include the Annie E. Casey Foundation, the Bill & Melinda Gates Foundation, the Charles Stewart Mott Foundation, the Lumina Foundation for Education, and the William & Flora Hewlett Foundation.
  • During the roll-out of the programme, the foundations are also “launching the Foundation Registry i3, a new online application that aims to simplify the private funding application process for potential grantees and increase access and visibility for new, especially smaller, applicants. It also aims to improve the ability for foundations to examine investment opportunities.” [1]

Political commitment

While rolling out the project, the federal Department of Education committed USD650 million fund to support i3 and published its priorities and selection criteria. However, the lack of stability in the programme's later stages indicates that political commitment was unstable. Leaders in both the House and Senate continually refused to include any mention of the i3 programme in their draft bills.

In 2015, two Democrat senators tried to revitalise i3. “Senators Michael Bennet (D-CO) and Brian Schatz (D-HI) are championing this cause on Capitol Hill, attempting to extend the success of the i3 fund through their own Investing in Innovation Act. We hope they will succeed, because between i3's focus on historically underserved schools and districts, ground-breaking ideas that bring together advocacy groups, corporations, and LEAs, and a laser focus on evidenced-based results, lawmakers on both sides of the aisle should be able to get behind this program.” [2]

Public confidence

Educators were campaigning vigorously for the continuation of this initiative in 2015, indicating that they were supportive of its aims and achievements. It is not clear, though, how the general public feels about the initiative. However, public confidence in the US public school system is poor – only 31% of Americans have a great deal or quite a lot of confidence in the public school system.

Clarity of objectives

The grants allowed for the proposal were strictly in line with the objectives for which the i3 programme was established:

  • It “provides funding to support (1) local educational agencies (LEAs) and (2) non-profit organizations in partnership with (a) one or more LEAs or (b) a consortium of schools”. [3]
  • Its purpose “is to provide competitive grants to applicants with a record of improving student achievement and attainment.”

It has modified these objectives in order to accommodate new priorities. For example, in 2011 “these changes included the addition of a new Absolute Priority specifically for rural school districts: the elimination of the rural competitive preference points and a shift in the kind of evidence required for certain grants”. [4]


In designing and launching the fund, there was serious concern among policymakers and advocates about whether there would be a sufficient number of organisations who could meet the evidence standards and qualify for grants. “For instance, with the i3 program, in 2010 only 2.9 percent of applicants received grants, and in 2011 only 3.8 percent of applicants received grants.” [5]


i3 is well designed and managed and allocates categories based on careful evaluations. “The i3 fund recognized three levels of evidence-based programs. The top tier of funding, called scale up funds, were awarded for programs supported by evidence from random-assignment evaluations; validation grants were awarded to programs with some but less evidence of success; development grants were awarded to programs with a reasonable hypothesis but little or no evidence of success. In order to qualify for funding, the programs had to improve outcomes for pre-school children, help students qualify for or succeed in college, help students with disabilities or with limited-English proficiency, or serve schools in rural areas.” [6] Not only is there a mechanism for funding but it also encourages the programmes to improve outcomes.


i3's effectiveness is measured by the success of its grants. The government ensures that all grantees are generating proper evidence of using grants for development process, and independent evaluations are carried out to gauge the effectiveness of the funding programme.

All i3 grantees must use part of their budgets to conduct independent evaluations of their projects. “This ensures that projects funded under the i3 program contribute significantly to improving the information available to practitioners and policymakers about which practices work, for which types of students, and in what contexts.” [7]


The interests of the Obama administration – particularly the Department of Education – and private foundations were aligned to improve student achievement and raise standards of education. “The foundations and the public sector are jointly focused on promising programs in recruiting and training teachers and school leaders; expanding clear, consistent, college- and career-ready standards and high-quality assessments; and scaling new school designs.”

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