This Clever Bond Draws Rural Girls in India to School – and Citizenship

SDG 16’s striving for peace, justice and inclusive societies where accountable governance matters first comes to life in a classroom. Educate children and you produce engaged, thinking citizens. Get girls into that classroom and you tackle another problem that undermines society and economic potential. In rural societies across Asia and Africa, girls often get less education than boys – or none at all.

Could creative financing change this game? In northern India’s Rajasthan state, a hotbed of governance and development innovation, a pro-girls education charity and social impact investors teamed up to create the first development impact bond or DIB. Impact meant achieving two outcomes among 7,300 children across 166 government schools: getting girls into school and attaining results in Hindi, math and English

A DIB incentivizes the players to reach the desired outcome by linking a financial payout to development results. UBS Optimus provided $270,000 in upfront capital to Educate Girls with a possible outcomes payout of $422,000 – its money back plus a 15 percent annual rate of return. The Children’s Investment Fund Foundation agreed to pay UBS Optimus upon achievement of the targeted results. IDinsight verified the outcomes.

Eighty percent of the outcome payment was tied to learning gains for children in grades 3 through 5, while 20 percent of the payment was linked to Educate Girls’ success in identifying and enrolling girls who had dropped out of school. Educate Girls uses volunteers to go to door to door to find out-of-school girls, then leverages neighborhood and community meetings to keep those girls in school.

Claiming Credit

The tricky work fell to IDinsight, which had to ensure that Educate Girls could claim credit for the learning outcomes, as IDinsight CEO Neil Buddy Shah explained in July at a Brookings Institution review session in Washington. A randomized control trial screened out other possible explanations including “the government’s own programming, other education NGOs, or even contextual factors like, was there a drought in that region, and parents were pulling their students out of school?”

Educate Girls struggled in the first two years of the three-year program to hit the learning targets. “At the end of year one, when we saw the results we kind of were like: oh my God, we are never going to make it,” founder and executive director Safeena Husain told the Brookings crowd. “And I think there was this deep realization that we had to do things very, very differently.” The charity overhauled the pedagogy and its own systems in the drive to the finish line.

safeena husain
Safeena Husain

In the third year, Educate Girls students learned 79 percent more than students at comparison schools, which “roughly translates to an additional entire year of education,” according to Shah.

In conventional development assistance, interim results may get more attention than outcomes. An agreement with an implementing NGO that is training teachers, for instance, might make payments based on milestones such as completion of a training guide or a set number of skills-building sessions. The aspiration is that the teachers will take their newfound smarts into their classrooms and transform student learning outcomes. That may be a big assumption. A DIB puts the outcome at the center of the intervention and reduces the risk for funders.

While the Economist magazine laments that development impact bonds are “complex, ponderous and costly,” it lauds these financial newbies for teaching development strategists to focus on outcomes over inputs. “Rajasthani girls are not the only people with lessons to learn.”