Top marks for India’s largest development impact bond


The Quality Education India Development Impact Bond (QEI-DIB) provides funding to four education non-profits working across Delhi, Gujarat, Maharashtra and Uttar Pradesh

· Independent evaluation shows that the QEI-DIB exceeded targets for a second year in a row, improving learning outcomes for more than 100,000 children over two years (2018-20)

· Children covered by the program are learning twice as fast as their peers in comparable schools where the non-profit partners are not present

· Overall, the impact bond is achieving 2-3X of its target and some partners are outperforming up to 4-5X of their target

New Delhi: The innovative Quality Education India Development Impact Bond (QEI-DIB) was launched in 2018 with a focus on improving learning outcomes in Language and Math. Over 4 years, the program will cover 200,000+ primary school children studying in government and low-fee private schools. The QEI-DIB will also help identify education programs that can be successfully scaled and generate evidence to shape philanthropic and budgetary allocation in future years.

Since 2018, the QEI-DIB has supported over 100,000 children in more than 600 schools across Delhi, Gujarat, Maharashtra and Uttar Pradesh. There are four leading non-profit partners, chosen for their ability and track record in achieving outcomes. Examples of participating non-profits funded through the QEI-DIB include training for teachers, leadership programs for school principals, standalone schools in poverty-stricken areas, and technology-based learning solutions. Each of these partners have taken on ambitious targets to ensure learning gains for their students.

The QEI-DIB is uniquely data driven. Evaluation and performance management data are regularly shared with non-profit partners. This enables them to be flexible and agile, using real-time data for effective decision making which includes adapting programs in the field and shifting funds within their budget to achieve outcomes.

Kaivalya Education Foundation (KEF) is one of the partners in the QEI-DIB. Aditya Natraj, CEO of KEF talks about how “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.”

Payments made via the QEI-DIB are linked to performance. The results over the past two years demonstrate the value of moving away from activity-focused funding to outcomes-based funding.

An independent evaluation shows that in its second-year, students in QEI-DIB classrooms gained more than two years’ worth of additional learning compared to schools where these programs were not present. The 2018 ASER survey indicates that the average Grade V student in India is at least two years behind in grade appropriate learning. Instruments like the QEI-DIB can help to close the gap.

“It’s exciting to see how structures like the QEI-DIB help align the whole value chain of educators, on ground partners and funders to a common vision. Clarity on outcome targets has allowed the program to focus on what matters most – helping children learn. As an outcome-focused funder, we are encouraged by early results and want to build on this work” says Geeta Goel, Country Director, Michael & Susan Dell Foundation.

The learning achievement allows UBS Optimus Foundation (the risk investor who provided the upfront working capital) to get the full outcome payment for year two. This puts the risk investor on track to make a return of 8% on its investment if the outcome targets continue to be met for the duration of the program. The non-profit partners will also receive an incentive payment if they consistently outperform.

The governance of the QEI-DIB is led by a Steering Committee comprising of British Asian Trust, the Michael & Susan Dell Foundation, and UBS Optimus Foundation. Other partners include Comic Relief, the UK Government’s Department for International Development (DFID), the Mittal Foundation, British Telecom, the Lawrence Ellison Foundation and Tata Trusts.

“Development impact bonds are becoming a lot more interesting for investors who are eager to channel their money to where it can do the most good for society while also delivering financial returns. They will certainly increase the social benefits and capital flows and help some of the world’s most vulnerable people at the same time,” said Phyllis Kurlander Costanza, Head UBS in Society and CEO UBS Optimus Foundation.

Pioneering the ‘pay-for-performance’ model

The QEI-DIB is a four-year program that runs from 2018 till mid-2022. Key outcome funders for the impact bond include the Michael & Susan Dell Foundation, British Asian Trust, Comic Relief, Lawrence Ellison Foundation, British Telecom and the Mittal Foundation.

The structure includes a results-based finance mechanism, where the outcome funders only pay for successful results. If the outcomes are not fully achieved, outcome funders will pay proportionate to the results which are achieved.

The risk investor (UBS Optimus Foundation) commits up to USD 2.9 million of annual funding for participating local non-profits. The risk investor will make a return on the investment if pre-determined education outcomes are met. All returns will be rolled over into other philanthropic programs. The learning outcomes of students and schools participating in the program are independently verified by Gray Matters India, a specialist in student assessments.


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