QUALITY EDUCATION INDIA
Development Impact Bond
The vision for the Quality Education India DIB
The Quality Education India Development Impact Bond (DIB) has enormous ambition to drive learning outcomes for 300,000 primary school children
This Quality Education India DIB brings together, for the first time, an impressive coalition of public and private partners, harnessing the expertise of organisations including the British Asian Trust, UBS Optimus Foundation, the Michael & Susan Dell Foundation and Tata Trusts, together with Comic Relief, the Mittal Foundation, the UK Government’s Department for International Development (DFID) and BT. High-performing local NGOs are the service-delivery partners.
The Quality Education India DIB builds on the success of the pilot DIB with Educate Girls that ran from 2015-18.
The total outcome fund raised under
the Quality Education India DIB is US$11m and we want to use this as a springboard to double the size of the DIB in the coming years.
Why this DIB in India?
Entrepreneurialism in India, and the willingness of government to work with business and others, make it a good time for exploring innovative finance with increased transparency. The fall in international-aid funding, as India's economy has strengthened, means the country is seeking new ways to approach development.
Outcome-based funding models, including DIBs, are ideally suited to driving quality, because they call for clear targets and measurements - in this case with a focus on improving learning outcomes. That is why an education DIB has already been piloted in India, with some of the partners involved in the new DIB, albeit on a much smaller scale. The insights and learnings from the pilot have been incorporated into the design and approach of the new DIB.
Who is involved and how it works
Quality Education India DIB partners
The Quality Education India DIB coalition is led by a Steering Committee made up of the British Asian Trust, the Michael & Susan Dell Foundation, and UBS Optimus Foundation and Tata Trusts.
The risk investor:
UBS Optimus Foundation (the risk investor) has raised US$3m to provide upfront working capital to the consortium’s NGOs. This will enable implementation of the programme over the four-year lifetime of the DIB.
The programme implementers:
The three local NGOs for year one (Gyan Shala, Kaivalya Education Foundation and Society for All Round Development) will use the risk investor's working capital to fund the delivery of their programmes, while leading independent global development adviser Dalberg will work as the day-to-day performance manager for on-the ground delivery.
The outcome funders:
If outcome delivery is achieved, the outcome funders (see below) make payment, as per the agreed payment metrics. The risk investor reinvests this to fund the working capital requirement for that year. Michael & Susan Dell Foundation is the anchor outcome funder for the DIB, and the British Asian Trust has convened a group of other critical outcome funders, including Tata Trusts, Comic Relief, the Mittal Foundation and BT. Having successfully achieved the first US$11m close, our intention is to double the size of this DIB in the coming years.
The UK Government, through the Department for International Development (DFID), is providing experience and funding for programme management, legal advice, learning and evaluation. Legal support is also being given by Hogan Lovells, J. Sagar Associates and Reed Smith.
Assessment, Evaluation, and Payments
Each year, the agreed outcomes will be assessed by an independent evaluator called Gray Matters India. They will measure the interventions’ effectiveness at raising educational outcomes in areas such as numeracy and literacy. Dalberg will also regularly measure this, so that delivery partners can adapt the programme quickly to achieve outcomes.
As a result of learnings from a pilot programme that ran 2015-2018, this Quality Education India DIB will spend less money on assessment; it will focus on quality of learning and not on attendance; it has diversified the risk by working with multiple delivery partners; and outcome funders will make payments to the risk investor at the end of each year rather than just at the very end of the programme. (Educate Girls, who were behind the pilot, will act in a strategic capacity, as a technical adviser, in 2019.)
Allocation of funds
- The outcome funders will pay for the agreed social and measurable outcomes of the programme.
- Just under 80% of funds will be allocated to service provision.
- 16% is for programme management costs (delivery and advocacy).
- 6% has been set aside as a potential return to the risk investor should the programme’s outcome goals be met.