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A student studying in a classroom supported through development impact bond funding

Development Impact Bond Supports Quality Education in India

Project Overview

More than $15 billion spending goes to the education sector in India each year, but there is little evidence that the funds are improving children’s learning outcomes. Development impact bonds — where financial returns for investors are linked to specific, measurable outcomes — is a funding mechanism that drives stronger results.

Our Quality Education India — Development Impact Bond (QEI-DIB) that launched in 2018 with the UBS Optimus Foundation and British Asian Trust is one example. The QEI-DIB is deploying $10 million from 2018-2022 to drive learning improvements for more than 200,000 primary school students studying in government and low-fee private schools. Not only is the QEI-DIB creating opportunities for children to get a quality education, it is also proving effective models that others can adopt in the future.

The incentivisation of student outcomes allows us to constantly invest additional resources in improving our technology and processes and build a performance-oriented culture in the organisation and an outcome-oriented culture in the schools we serve.

Aditya Natraj, CEO of Kaivalya Education Foundation

How it Helps

This development impact bond is the first to bring together a broad group of private, not-for-profit, and public sector partners to work on focused measurable outcomes. Payments made via the QEI-DIB are linked to performance, moving away from the industry’s activity-focused funding to outcomes-based funding. The foundation’s earlier investments in robust student assessments are making the measurement possible.

The program is implemented in the states of Delhi, Gujarat, Maharashtra, and Uttar Pradesh by four nonprofit partners with a track record of successful primary education interventions like school leadership development, personalized adaptive learning, and more. The partners are GyanShala, the Kaivalya Education Foundation, the Pratham Infotech Foundation, and the Society for All Round Development.

They work toward annual targets for learning gains that are compared against those for students attending schools in the same geographical area. Aggregate gains across all four partners determine the success of the impact bond.

Two Years In, Learning Outcomes Exceed Expectations

Early results from two years in show children are learning twice as fast as their peers in control schools. In the second year of the program, 100,000 students in 600 QEI-DIB classrooms gained more than two years’ worth of additional learning compared to schools where these programs were not present. The percent of children at intermediate and advanced levels increased from 47% to 84% in classrooms where DIB partners were present. The impact bond is achieving about two to three times its target, and some partners are outperforming up to five times.

Dalberg Advisors provide regular performance updates and Gray Matters India is the project’s independent evaluation agency. These partnerships enable participating nonprofits to be flexible and agile, using real-time data for effective decision-making like adapting their models and shifting funds to achieve outcomes.

The QEI-DIB provides strong evidence that outcome-linked financing structures are game-changers in moving toward the nation’s social development goals in education and skilling. This will be even more important in a post-COVID-19 world where some of the conventional careers are irrelevant and new job skills are needed. Scaling the development impact bond approach will ensure more children in India have the opportunity to succeed later in the workforce and build financial stability — results worth investing in.

Foundation Project Lead