Investment where profit means better schools
- Published
The project wants to raise literacy and numeracy standards for 200,000 young people in India
The worlds of bonds, investors and the financial markets might seem like a long way from the millions of the world's poor who never even get to see their children going to school.
But a project is trying to harness the money and energy of the financial markets to the delivery of higher standards of education.
It wants cash and compassion to go hand in hand.
The British Asian Trust is planning to raise $10m (£7.5m) for an "education development impact bond" in which investments are linked to specific targets in improving education for disadvantaged communities in India.
It's a project being supported by the British Asian Trust's founder, Prince Charles.
Serious business
The trust wants to apply a business-like model to supporting education for extremely deprived communities. The funding is based on a bond - a loan which will be repaid with interest.
Prince Charles is backing the project to improve access to education in India
But the management speak about meeting "performance targets" is about improving children's life chances.
The aim is to get more young people to stay in school, particularly girls, and to raise the literacy and numeracy levels of 200,000 young people in Gujurat, Rajasthan and Delhi.
Richard Hawkes, chief executive of the British Asian Trust, highlights the importance of the linking of the funding to specific, measurable outcomes.
Rather than relying on good intentions, he thinks this is a way of giving investors confidence that something positive will be achieved.
Investors will be paid interest - but the real goal is to change the life chances of poor families in India
It will put $7.6m (£5.7m) into delivering the improvements, with four education providers shortlisted to carry out the work, together with local and national education authorities.
It will mean backing projects such as remedial support for children who have fallen behind and training for teachers and heads.
There is a four-year time frame for primary pupils to make sufficient progress, with results to be independently verified.
And if the promised results are not achieved, the funders will not have lost anything, as "they only pay when the outcomes have been met".
Helping girls stay in school
The initial funding, which provides the working capital to allow the process to begin, has been provided by the UBS Optimus Foundation, the charitable arm of the Swiss financial services firm.
But the trust wants to open a widening cycle of investment and improvements.
The funding is linked directly to improving schools results
There have already been positive signs from this type of experiment.
The charity, Educate Girls, is being funded by a "development impact bond", with the aim of improving school enrolment and raising standards for girls in Rajasthan.
This is linked to three-year targets on getting out-of-school girls into education and then monitoring progress in English, Hindi and maths for 18,000 children.
Safeen Husain, the executive director of Educate Girls, says the "razor-sharp focus on outcomes" has meant a much more focused, data-driven approach.
Good business
Analysing the results so far has meant "redesigning the curriculum from scratch and retraining staff".
If the targets are fulfilled, the funders will pay their contribution. But the real prize is in the long-term change that it wants to deliver through improving education.
Richard Dawkes thinks this funding model could achieve more than traditional philanthropy
Educate Girls wants to prevent more 10-year-old-girls from dropping out of school - and better-educated girls will bring multiple benefits to the local community in better outcomes for health and job opportunities.
Mr Hawkes believes this type of financing could achieve more than traditional philanthropy.
"Positive intentions are not a guarantee of success," he says.
"We want to learn which interventions make the biggest difference. We want to gather data on what works, so we can scale that up.
"We want to be something that is part of a big change."
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