First Development Impact Bond to Educate Girl Students in Rajasthan Exceeds Target

Schools girls in the classroom as a part of SSA

The first Development Impact Bond (DIB) pilot, the fund stakeholders say, achieved 160% results. This success has emboldened many more DIB model for impact funding of developmental activities in India.

DIBs are results-based finance mechanisms.  The ‘outcome funders’ only pay for successful results.  If the outcomes are not achieved, the funders do not pay. The working capital that enables the organisations to deliver the programmes comes from ‘risk’ investors who can recover their capital and earn a return if the programme is successful – in this case, if pre-determined education outcomes are met. The risk investor’s return is recycled again for social good. The outcomes to be measured are agreed upon at the outset and independently verified. This applies efficiency and discipline to development funding.

UBS Optimus Foundation is the risk investor that provided the working capital for the program. The foundation earned a comfortable 15% return on its investment. The outcome funders are the Michael & Susan Dell Foundation, with Tata Trusts, The Mittal Foundation, British Telecom and Comic Relief providing funding through British Asian Trust.

The Educate Girls Development Impact Bond aims to improve education of 7,000 children in Rajasthan. The fund kicked off in 2015 and achieved its target in 2018. The organizers say the first two years were tough, but they were able to achieve their target in the third year. The results are vetted by an independent agency. Educate Girls also received a bonus incentive payment for the success. UBS Optimus invested about $270,000, with evaluation costs nearly matching that number. The total costs, including management expenses and investments around the public sharing of results, reached about $1 million.

UBS, CIFF, Educate Girls, along with Instiglio, which managed the DIB, and IDinsight, the independent evaluator, all took lessons away from the experience — from the size of the intervention, to the lead time needed, to how to manage expectations.

$ 11 million DIB Raised

The first phase of the fund raised USD 11 million and the consortium wants to use this as a springboard to double the DIB in size in the coming years. To date, this is the largest DIB globally for education and the largest DIB in India with a potential to be significantly scaled up further. With this new and innovative social finance tool, the consortium aims to improve literacy and numeracy skills for more than 300,000 children, drive focus towards outcomes in the development sector and transform the way education is funded in India.

While traditional funding streams are under severe pressure, innovative financing mechanisms such as DIBs, are a complementary tool to attract new private capital and will also play a major role in bridging the financing gap to achieve the UN’s ambitious Sustainable Development Goals.

This DIB focuses on the quality of education through the delivery of specific measured outcomes of improved literacy and numeracy among children in India, as opposed to simply measuring the number of children in schools.

India has achieved a 99% rate of school access, but quality of learning has remained poor. A typical Indian student is at least two grades behind the level that is expected for their age. It is critical that the attention is now turned to improved learning levels.

Gyanshala, Kaivalya Education Foundation, a Piramal initiative, and the Society for All Round Development – all selected for their diverse and proven interventions – will work within the DIB mechanism to improve learning outcomes for thousands of children.

Phyllis Costanza, CEO, UBS Optimus Foundation, said: “DIBs align incentives between different actors. And so they have the potential to shift the development sector to focus on results and bring in substantial new capital to create social impact at a far greater scale, a key aim of UBS Optimus Foundation.”

Aditya Natraj, Founder and CEO, Kaivalya Education Foundation, said: “The DIB is providing crucial resource to allow us to train principals and teachers in integrated schools and drive up the quality of education for children in Gujarat. By aligning investment in projects with outcomes achieved, this type of outcome-based funding ensures maximum impact for the money spent, and promises a sustainable long-term source of income for effective interventions like our own.”

Notes to editors

This DIB consists of an international coalition of public, not for profit and private sector organisations.

NGOs: Kaivalya Education Foundation, Gyanshala and Society for All Round Development

Funders: HRH Prince Charles’s British Asian Trust, Michael & Susan Dell Foundation, Tata Trusts, Comic Relief, the Mittal Foundation, and British Telecom

Investors: UBS Optimus Foundation

Technical experts: Dalberg Consulting and Gray Matters India

Technical assistance partner: UK Government’s Department for International Development

The funding in year one will be invested into three education NGOs:

  • Kaivalya Education Foundation (KEF): A School Leadership Development Programme in Gujarat which trains principals and teachers in integrated schools.
  • Society for All Round Development (SARD): Two programmes in the north of Delhi – A teacher training programme which provides government teachers with the skills to handle multi-skill classes so that separate remedial classes are not required (indirect intervention) and a remedial intervention programme (direct intervention).
  • Gyan Shala: New privately-operated free schools for out-of-school primary school-aged children in urban slums in Gujarat.

For further information, please contact: Kunal Addvant on +91 98913 96000 /

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