Lessons From the World’s First Development Impact Bond

Lessons From the World’s First Development Impact Bond

Sneha Arora   |   29 August 2018

Initiated in 2015, the Educate Girls’ Development Impact Bond (DIB) was the first of its kind, creating a new financial model for international development. Through the release of its results, the success of the DIB has been established, with much being said about the beneficial social effects of the first impact bond in India.

In our analysis, Atma will share the key features of this impact bond and the lessons Education sector NGOs can derive from it. Let us start by explaining what this impact bond is in a nutshell:

  1. Social Problem:  In India, 1 out of 10 girls aged 11-14 yrs is kept out of school. In addition to out of school girl students, in Rajasthan, the quality of girl’s education was also a concern with the female literacy rate of 52% (lower than the national average of 65%).
  2. Objective :  An experiment in the financing and delivery of a social program was designed in the form of an outcome based impact bond-aimed at increasing girls’ school enrolment and learning outcomes achievement in Rajasthan.
  3. Key Players:  Implementing NGO: Educate Girls (a local NGO founded by Safina Hussain); Upfront capital funder: UBS Optimus Foundation; Outcome funder: Children’s Investment Fund Foundation (CIFF); Performance Manager: Instiglio; Impact measurement: IDinsight.
  4. Financing :  UBS Optimus provided $270,000 (Rs. 1.8 cr) of upfront funding to Educate Girls in 2015 which would be paid back to UBS by CIFF at the end of the 3 yr project period in 2018 with a 15% rate of return if the decided outcomes were met.
  5. Final Results : At the end of 3 yrs, Educate Girls enrolled 92% of out of girls in the age group of 7-14 yrs back in schools vs. a target of 79% (achieving 116% of target) AND improved learning by 8,940 learning levels vs. a target of 5,592 learning levels (achieving 160% of target)

Educate Girls not only achieved, but also surpassed fairly ambitious education outcomes. Here at Atma, the question for us was to understand what are the lessons other education sector NGOs can learn from the success of Educate Girlsboth as an institution and from its recent DIB programme.

In our assessment, we have steered clear of elements of success that might arise from innovative financing. While we acknowledge the ease of operations that comes with comfort on capital, for the purpose of making the learnings relevant for the NGO partners we work with, we have kept aside the financing aspects; with the assumption that they are not likely to have access to impact bonds anytime soon. Thus, we are distilling out learnings which are useful and easy to practice in a business-as-usual scenario for NGOs.

Let’s take a look at the key lessons NGOs can learn from the success of the first education focused impact bond in India.

1. Program has power  -  invest in program design

Not enough can be said about the power that a well-designed program has in catapulting an organisation and its impact at an ecosystem level. Educate Girls adopted a community driven approach to bring back out of school girls to school.

At the end of Year 2, outcomes were way behind target, but by Year 3 Educate Girls had not only met but surpassed these targets. What happened in that one year?

Several adjustments were made to the program to improve students’ success. First, were changes to the program delivery- such as an increased number of sessions and creating teaching groups aligned with student’s competency levels. Second, was an improvement in curriculum- content was customised such that it allowed for more personalised learning. Third, additional efforts were taken focused on the key stakeholdersteachers and parents. Home visits were conducted for persistent absentees and further training was provided to teachers.

The big lesson to be learnt here is that it is important to be adaptive with program design and make modifications to it if required to meet target outcomes.

2. Focus on the bird’s eye — monitoring impact is essential

The success of the Educate Girls DIB relied heavily on evidenceevidence that girls’ enrollment was increasing and learning levels were improving. The financial payouts were contingent on outcomesand hence monitoring these outcomes was not something that was started after many years of implementation.

Monitoring was in fact a critical aspect of program design. The big lesson for us is to ensure that we start thinking about measuring success as an organisation right from the design stage of the program. This involves developing the systems, processes and resources that are required to monitor outcomes as an essential component of program effectiveness.

Monitoring and evaluation is not a good to have, but a mindset orientation that needs to be developed as social sector practitioners work with limited resources.

3. Dream big -  design for outcomes at scale

In 2007, Educate Girls was set up as an NGO and worked with 50 government schools in Rajasthan. However, let us think about the size of the problem; in Rajasthan alone 10% of girls aged 7-14 years are out of school and several students are many levels behind their grade. The rest of India is no different; at a national scale 62 million children (girls & boys) are out of school².

Thinking at scale requires us to have the courage to face the size of the problem we are dealing with. We need to broaden our horizon from communities and cities to state and national level. We should recognise that though the task at hand is challenging, there are so many more children that need our support.

After the success of a 50-school test project in 2007, Educate Girls extended their efforts to reach 5,000 schools in 2013 and then incrementally increased their outreach to 21,000 schools by 2017³. As of today, Educate Girls has directly impacted over 2 lakh children and is one of the most scaled up NGOs in Education sector in India. 

4. Join hands  -  leverage partnerships

Educate Girls started creating forums to engage and involve the community right from the start. One of its strongest support systems is its team of community volunteers whose mantra is “My village, My problem, My solution”. Over 11,000 youth volunteer their time to work with Educate Girls' staff, going door to door to map each and every out of school girl and then create and implement an enrollment plan.

A second stakeholder with whom the NGO works very closely is the State government. No individual entity can achieve the scale the government has and children in government schools are in urgent need of educational support. So, it makes sense to partner with the government and provide skilled services to help improve the public education delivery in India. The Educate Girls team signed MoUs with the Rajasthan and Madhya Pradesh state governments and works hard to maintain good working relations with them.

So all in all, can you, as an education NGO, achieve the success that Educate Girls did? We think, yes. Atma believes that every NGO has the potential to be bigger, better and stronger. You might not reach 2 lakh children, but the question you must ask yourself is this- can I reach 10 times more children than I do today?

Sow the seeds of scale early into your organisation’s field of operation, and watch them bear fruit and multiply with the same effort you put in today.

Think big; educate more children!

¹ In total, only 2 Development Impact Bonds exist till date in India and are hence are not a widely accessible source of funding.
² The High Dropout rate of girls in India, Mint, Jan 31st 2018
³ The UN GCNI and Deloitte Best Practices Compendium on Gender Equality

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