Students at a computer lab using Mindspark software in Lucknow, Uttar Pradesh. Education partners Educational Initiatives and Pratham Infotech Foundation delivered a computer-based adaptive learning platform to close learning gaps and provide actionable data to teachers to improve learning.
Students at a computer lab using Mindspark software in Lucknow, Uttar Pradesh. Education partners Educational Initiatives and Pratham Infotech Foundation delivered a computer-based adaptive learning platform to close learning gaps and provide actionable data to teachers to improve learning. Credit: British Asian Trust

Social finance: we can’t change education outcomes if we don’t innovate

Even before the outbreak of Covid-19, we were facing a global learning crisis. The pandemic disrupted education systems worldwide and exacerbated existing challenges. As school closures led to a loss in foundational skills and increased levels of illiteracy, we tried to buck this trend with an innovative development impact bond, focussed on improving learning outcomes for students.

We hope that important learnings from this initiative could help transform education approaches globally.

In 2018, we launched the world’s largest education development impact bond – the USD 11 million Quality Education India Development Impact Bond (QEI DIB). A development impact bond is an outcomes-based mechanism that incorporates the use of funding from investors to cover the upfront capital required for an organisation providing a service to set up and deliver that service. The service is set out to achieve clearly defined and measurable outcomes, and if these are achieved, the investor is repaid by a funder who has agreed to pay for the results.

The QEI DIB programme involved a consortium of funders, investors, performance managers and technical partners who engaged four Indian education organisations to improve basic literacy and numeracy skills of primary school children.

Each education partner ran their own interventions, supported by a performance manager who helped the partners use data and adapt so the focus always remained on improving learning outcomes. The programme, backed by independent evaluation, also sought to demonstrate the benefits of outcome-based funding to drive innovation in the global education sector.

The programme came to an end in 2022 after four years, with one of the biggest challenges being the closure of schools across India for almost two years in the middle of the programme.

A focus on outcomes, incentivised by payment-for-results, enabled new interventions to be tried and supported greater flexibility in the delivery of interventions, a key factor in ensuring students exceeded learning of their peers in other schools.

What were the key lessons learned?

1. Shifting to outcomes-based funding can be a catalyst for change

Education partners achieved 50% higher learning outcomes on average compared to their previous programmes. Factors which helped drive this success include robust performance management, regular engagement with each education provider and flexibility in funding and approach.

At the end of the four-year programme, 200,000 students – many from marginalised migrant communities and urban slums – had learnt 2.5 times more than students in other schools. Twice as many students achieved age-appropriate learning levels compared to other schools. Personalised and adaptive learning through technology showed five times the learning gains for students, while community-based interventions helped increase engagement and learning through higher contact time with students.

2. Funders increase impact by paying for outcomes

Not only were the outcomes of the programme met, but they were also delivered at a significantly lower price per outcome than anticipated. The actual price per outcome was 46% less than the original expected price, reflecting value for money for funders. The investor, UBS Optimus Foundation, received a return of 8% on its investment.

These results can help build the case to direct new forms of funding to developmental challenges, ensure more impact per dollar invested in the sector and help implementers find innovative methods to deliver programmes more effectively.

3. Autonomy breeds innovation

Education partners were provided with support throughout the programme to use data to guide decisions, pivot approaches and find creative ways to solve problems. The interventions they used to keep children learning ranged from school leader training to direct classrooms for children in urban slums, remedial education and using a computer-based adaptive learning platform.

With more focus on outcomes rather than inputs or activities, service providers were given more freedom to test, learn and adapt quickly. One provider described the support as having a personal trainer in the gym, motivating and encouraging you. Another teacher said the programme had reinvigorated their love for teaching.

The flexibility to pivot interventions proved cost-effective as it allowed the freedom to stop spending money unnecessarily on ineffective activities. Carefully selecting partners based on past performance also helped drive success.

By aligning financing to results and focusing on the end outcomes for children, the programme encouraged and incentivised more innovation and creativity than with conventional financing models. Particularly in the uncertain context of the pandemic, the flexibility of an outcomes-focus provided space to understand how to improve efficiency in real-time and increase value for money.

What next? Challenges for the development sector

The Quality Education India Development Impact Bond has been a great success, but the challenge now is how we change mindsets in governments, encouraging them to adopt a more outcomes-focused approach and bring systemic change to programme design.

The education sector, philanthropists, investors, and government have a unique opportunity to avert the global learning crisis by pushing alternative models, instead of business as usual.

Impact investing could mobilise private capital and raise trillions to address the world’s most pressing development needs and are a more sustainable way of leveraging capital than through just donations.

There are still opportunities for creative thinking about how to incentivise social justice outcomes, mobilise and leverage resources, and generate impact beyond grants.

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