A development impact bond (DIB) designed to help close the gender gap in school enrollment and improve learning levels in Rajasthan, India, has achieved promising results after one year, the project's backers report.
Designed and managed by financing consultancy Instiglio, with upfront financing from the UBS Optimus Foundation, the Educate Girls Development Impact Bond is funding efforts to enroll out-of-school girls and improve learning in a hundred and sixty-six government schools over three years. The initial investment will be paid back by the outcome payer, the Children's Investment Fund Foundation (CIFF), with up to 15 percent interest, depending on the improvements achieved by Educate Girls, a Mumbai-based NGO working to tackle issues at the root cause of gender inequality in India's education system. According to Instiglio, independent evaluator IDinsight found that at the end of the first year, the organization's program had enrolled 44 percent of all out-of-school girls it had identified and met 23 percent of its targets for learning progress in English, Hindi, and math. Based on those results, the UBS Optimus Foundation already has recouped 40 percent of its initial investment, which amounted to $267,000, Devex reports.
While the use of social impact bonds to address persistent social challenges has gained traction in recent years in the United Kingdom and the United States, DIBs — with a foundation, rather than a government, as lead investor — are relatively new. But with some of the startup challenges — including getting multiple parties to agree on outcomes and the payment schedule — behind them, Educate Girls officials believe they will see even better outcomes over the next two years.
"The DIB has actually transformed the way we think about our impact," said Educate Girls executive director Safeena Husain. "Because of this focus on results, we have increased the feedback of data from the field that is shared among all staff [and] we are continually analyzing where things are working well and where we need to make changes. This flexible and responsive approach inherent in the results focus is now being adopted across our other programs. The main driver for us testing the DIB was to demonstrate we can deliver quality at scale, not just scale."
"We're excited by the development impact bond as an innovative way to attract a range of investors to crucial social services," said CIFF chief executive Kate Hampton. "While this is designed to improve the quality of girls' education in Rajasthan, the concept could be attractive to funders across a range of issues who want to make investments with both financial and social returns. The first year has been successful for both children's learning outcomes and for us as we've been learning how to manage the challenges that are inherent in any new financial instrument."