Stephen Foley: Wall St could point the way to lift poverty

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US Outlook: It is an investment that offers the highest return for the lowest risk. And if that sounds too bankerish to describe charitable schemes that fund girls' education or university places for women in the developing world, then you have Lloyd Blankfein to blame for the phrase.

The Goldman Sachs chief executive was one of the speakers at the Clinton Global Initiative, the former US president Bill Clinton's annual meeting in New York this week, where there was a remarkable consensus among business leaders, politicians and the representatives of non-governmental organisations: schooling more girls, and encouraging women into work or entrepreneurship, not only liberates many from poverty and opens up a world of new and more equal opportunity; it can also boost a country's economy.

Academic work on this subject suggests that higher rates of female education can raise pay, productivity and the use of technology in a country and add perhaps 0.3 percentage points to GDP each year. There are further economic benefits because, if more educated women have fewer children, there is a boost in the percentage of the population at working age.

It seems likely that the effects multiply over time, as girls born to educated women elect to go even further in education than their mothers.

This buzz around female schooling and mentoring mustn't be allowed to dominate other important development goals, particularly around infrastructure projects. Education has its limits if there is no electricity to aid reading after dark; it is impossible if there are no local schools.

But the global recession appears to have exacerbated the gender divide in the developing world, making these efforts urgent. The World Bank identifies 33 countries, many of them in sub-Saharan Africa, where girls are likely to be pulled out of school to help cope with declining household income. The G20 was dishearteningly weak on the effects of the crisis in poorer countries in Pittsburgh this week, but the confluence of interest between business and charitable organisations on display at Clinton's "United Nations of Philanthropy" might actually prove more powerful than any inter-governmental declaration, in any case.

The language and practices of finance and philanthropy are merging. Charities talk not of "giving" but of "impact investing". There has been an explosion in the availability of microfinance, those small development loans that help an individual to start a small business or a cottage industry – the majority of which go to women.

The Clinton Global Initiative is, by the way, an extraordinary event, luring heads of state, Fortune 500 leaders and celebrities into one giant networking-fest, and then saying that no one will be invited back next year unless they pledge themselves to some philanthropic action or donation. Goldman promised to extend to Peru its 10,000 Women scheme, which funds business education for women and matches Goldman employees as mentors to developing world entrepreneurs.

I think that these sorts of programmes offer investment banks a route out of their reputational hell. The public are demanding reparations for the economic devastation wrought by their excessive risk-taking; and there is more than a dash of self-interest for the banks in funding economic empowerment schemes not just in the developing world but in the West, too.

Banks have always funded philanthropic projects, and many employees are committed in their private lives to public service of one kind or another, but now is the time for some grand gestures. What about compulsory community service for bankers? How about splitting bonuses a third, a third, a third between cash, shares and philanthropic vouchers that employees can contribute to causes of their choice? How about a Wall Street Global Initiative?