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A number of Indian and overseas charitable organisations have joined hands with the UK Government’s Department for International Development (DFID) to launch a development impact bond (DIB) to improve quality of education in India.
Called Quality Education India, the bonds follow an outcome-based financing model for social/development programmes in which the funders will only pay for successful results. If the outcomes are not achieved, the funders will not pay.
The bonds, supported by a wide range of charity institutions including British Asian Trust, the Michael and Susan Dell Foundation, Mittal Foundation, UBS Optimus Foundation and Tata Trusts, have so far raised $11 million.
Commenting on the launch of the bond, Finance Minister Arun Jaitley said, “This landmark financial instrument applies an entrepreneurial approach to philanthropy and is likely to change the lives of over 300,000 children in India by driving up standards in literacy and numeric.”
The government strives to see the best possible outcomes for the money invested. Every rupee to be spent in the DIB aligns with one goal which is to improve the quality of education. Such outcome-based funding is fundamental for driving quality and improving learning outcomes in the education sector, he said a message.
UBS Optimus Foundation is the risk investor that will provide the working capital for the programmes and will be repaid by the outcome funders once verified outcomes have been achieved.
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