FAQs

Money for development is too often spent with little understanding of the results that the investment achieves. The Quality Education India DIB only funds educational outcomes, rather than educational activities, to ensure maximum impact is achieved with the funds invested. The DIB aims to nudge the culture of development and philanthropy towards more outcomes-based funding.

At the same time, the world’s development challenges cannot be solved through traditional donor grant making alone. New sources of finance must be unlocked to close the estimated $2.5 trillion annual funding gap needed to achieve the Sustainable Development Goals (SDGs), but we also need to influence the way funding is used to drive better outcomes and make the system more efficient and effective. DIBs play a role in helping to do that. 

The Quality Education India DIB is the world’s largest education DIB, valued at $11 million. Its scale reduces the proportion of funds spent on transaction costs, which are static regardless of the overall size. It is the first education DIB to involve multiple outcome funders and implementation partners. This coalition of public, private and not-for-profit partners includes Indian philanthropists, UK development organisations, global corporates, the Indian diaspora, US philanthropists, and a seasoned investor specialising in DIBs.

Reaching 200,000 students, the programme exceeded its outcome targets over the last 4 years and closed the learning gap many other students saw during the pandemic, demonstrating the potential to transform the quality of education at scale.

Students saw increased levels of learning, despite the COVID-19 pandemic, learning 2.5x more than those in non-participating schools.

Education providers were able to create a step change in learning outcomes achievement (50% higher on average) compared to their previous grant programmes. This suggests funders may need to consider how they can create more opportunities to fund outcome linked programmes. 

Funders got better value and impact by paying for outcomes, which were delivered at a significantly lower price per outcome than anticipated (INR 569.6mn as against INR 598.5m that was committed by the outcome funders).  

The investor, UBS Optimus Foundation received a return of 8% on its investment, showing that the implementation risk in such programmes can be successfully transferred to impact focussed investors.

The education providers  were carefully selected from a longlist of NGOs, based on the type and quality of educational services they offer. These education providers had used good models and had proven track records – the DIB enabled them to successfully scale up their interventions.

The QEI DIB was followed the small Educate Girls pilot DIB. That experience gave UBS Optimus Foundation the confidence to engage in the QEI DIB which was more than 10x larger and started to achieve the scale that is needed for such programmes to be feasible as investments. With a strong group of education partners and a performance manager in place UBS OF was confident to invest in the QEI DIB. The investment and the successful execution and delivery of impact of QEI DIB and in parallel in the Utkrisht Maternal and Newborn Health DIB has been a important proof point showing that results can be achieved and investors can assume the programme implementation risk.

The key reason for involving an investor is to provide the funding, and assume the implementation risk of programme while the impact is being created. NGOs often lack the capital to assume this risk and this is where the investor comes in. In the event an NGO is well funded and has spare cash it could assume the risk itself. 

The private sector has an important role to play in development. Public-private collaboration can unlock investment in development programmes that would otherwise be neglected due to risks that the public sector alone would not be willing to carry. This private risk investment incentivises all parties to achieve outcomes and maximise social impact. The private sector also has an important role to play in pushing for better governance, policy reform, transparency, and anti-corruption. Given corporates’ social responsibility, DIBs are an efficient and effective means of facilitating their investment in social development.

The outcome funders make annual payments in proportion to the improvement in children’s learning, as verified by an independent assessor.  At the end of the four-year DIB, if the implementing partners succeed in achieving the outcome targets, the investor will earn up to 8% return on its investment, and the implementing partners will also receive bonus payments. However, if the outcomes are not achieved, the investor risks losing its investment as the outcome funders will not make sufficient payments.

Yes, the DIB is a form of payment-by-results. The DIB is an innovative and pioneering model of development financing that holds huge potential for growth. A pilot DIB with Educate Girls was a tremendous success, achieving 160% of its target outcomes. DIBs are not a silver bullet, and they will not be suitable for all the challenges faced in different development contexts. The partners in the Quality Education India DIB all shared an appetite to take risks and use any lessons learned to catalyse further innovation in development financing. Only by testing bold new approaches will we be able to achieve the impact at scale needed if we are to realise the Sustainable Development Goals, including ensuring quality education for all.

The investor, UBS Optimus Foundation, received a return of 8% on its investment, showing that the implementation risk in such programmes can be successfully transferred to impact focussed investors.

Payments to providers are made upfront as they do not bear risk. The impact of not meeting targets is met by the investor.

Research shows prolonged COVID-19 school closures have led to significant learning losses among school students in India. According to UNICEF, school closure has affected 275 million children in India, in addition to the 6 million and more out-of-school students before the pandemic.

Prolonged school closures led to immense learning losses among students. A study by Aziz Premji Foundation found that ~80-90% students from Grades 2-6 at least one of four foundational learning abilities in Language and Mathematics, such as reading with understanding and performing addition and multiplication. A UNICEF-Dalberg survey found that 76% of parents felt students were learning less/significantly less than in non-COVID settings.

In addition to reduced learning, changes in daily routine including lack of outdoor or social activities, and social distancing have also affected the mental well-being of the students.

As per the COVID-19: Stringency Index tracker, India had one of the strictest lockdowns in the world resulting in the possibility of Indian school children being one of the worst affected groups globally. Unfortunately, it remains unclear when schools may open given the likelihood of an impending third wave.

There is limited information on ‘cost effectiveness’, especially in the Indian context. There is no clear understanding of how much it should cost to achieve learning outcomes. This is a key barrier to outcomes-based funding, necessitating a lot of effort negotiating and benchmarking appropriate prices for outcomes each time.

As part of the QEI DIB, we produced a study to plug knowledge gaps around effective and efficient ways to support student learning. It provides guidance on prices to expect per learning outcome for effective education interventions in India to inform decisions on which educational interventions to invest in for how much. Interventions that have not been shown to be effective have been excluded.

Some key findings include:

• Education provider interventions implemented in government schools were found to increase learning outcomes achievement by approximately 50% on an average, compared to learning outcomes previously achieved by the same organizations in grant settings.
• An additional investment of INR 1,000 – 3,000 (or USD 13-40) per student in high quality in-person interventions in government schools can deliver an additional year of learning in India. 

Read more: https://qualityeducationindiadib.com/2021/10/14/cost-effectiveness-guidebook/