OUR SPECIFIC INITIATIVES

A Focus on STEM:

Rural students who complete an undergraduate degree see more than a 4-fold increase in salaries and STEM undergraduates are twice as employable as non-STEM undergraduates

The Need for Spoken English:

India’s farm to non-farm transition is largely concentrated in the services and sales sectors, where Spoken English is increasingly a requirement. Fluency in English results in higher labour mobility, wage premiums, and an increased likelihood of formal employment.

CONTEXT AND CHALLENGES

01

Student learning levels in India flatline in secondary school. Due to poor foundational learning, when children progress into secondary grades (7-12), there is a low level of achievement and teachers are not equipped to provide remedial academic instruction. This results in a widening learning deficit that significantly reduces the child’s learning and employment prospects as well as the government’s return on investment in that child’s education.

02

A completed secondary education is an important determinant of the difference in the lifetime earnings and incomes of workers however currently in India 17.1% of all secondary grade pupils drop out between Grade 8 – Grade 12.

03

Gender is a significant issue at the secondary level, due to poor sanitation, distance, early marriage and issues with male teachers. 16.9% of girls drop out at the secondary level (DISE, 2016).

04

There is minimal life-skills coaching at this stage contributing negatively to students’ holistic development and success with transition to the workforce. Specifically, there is also a felt need to cater to the lack of technical expertise which prevents low income students from qualifying for professional and higher education institutes

DESIGNING THE SOLUTION

Within Secondary Education, STEM courses are particularly beneficial for low income youth:

An Undergraduate degree, especially in STEM, can significantly improve a child’s employment prospects. STEM undergraduates are twice as employable as non-STEM undergraduates. Furthermore, admission into top 10% elite STEM colleges leads to a 10-fold increase in income.

Based on these finding, Social Finance India is in the process of designing a Pay for Success framework to establish outcome pricing to positively impact STEM outcomes for students to enter professional colleges

The Program will seek to measurably improve outcomes for students in Grades 11-12:

  • Improving the success rate in national examinations;
  • Increasing the percentage of students scoring a first-class or a distinction at Grade 12 graduation;
  • Increasing the number of students qualifying for professional and technical post-secondary college seats; 

Over a 10-year period, this program has the potential to positively impact over one million rural youth and generate significant increases in average income.

EXPLORING THE FIELD OF SPOKEN ENGLISH THROUGH A PAY-FOR-SUCCESS SOLUTION

Poor learning outcomes in English are negatively impacting millions of youth in India

Spoken English is a critical skill required to participate in the job market and be gainfully employed. In India, English language skills are poor as only 58% of youth aged 14-18 can read simple sentences and of those who can read, roughly only 80% understand the meaning of the sentences read.

What are the challenges?

  • Due to a lack of skilled English teachers, children do not get an opportunity to learn this vital skill at school.
  • Out of school, English is not widely spoken or heard, especially in rural settings.

Designing the solution

  • Social Finance is exploring programs to improve spoken English and establish an outcome pricing mechanism
  • We are partnering with reputed EdTech partners who specialise in teaching English-as-a-second-language
  • Our aim is to showcase the effectiveness of EdTech integration to improve learning outcomes and to a successfully scale-up such programs through outcomes-based funding

VALUE

PROPOSITION OF IEOF

IEOF is not an individual impact bond provider.

IEOF is an outcomes fund focused on long-term systemic change. It will structure and launch multiple impact bonds or pay-for-success contract in parallel and at scale (across the five focus areas- ECE, primary, secondary, school-to-work, and inclusive) to achieve a set of pre-defined outcomes while reducing transaction costs and risks often associated with individuals impact bonds.

Benefits of moving to this approach include:

  • Centralised contracting capability: Build a better understanding of contracting for outcomes, and provide a focal point to develop contracting expertise as well as lowering transaction costs.
  • Integrated, coordinated interventions: Allows for an integrated, holistic approach to addressing social challenges, and coordinated funding for multiple providers based on an overarching strategy aligned to Government priorities.
  • Sustainable funding: Act as a longer-term source of funding, providing increased stability and capacity to delivery organisations.
  • Knowledge-building: Act as a platform for knowledge-building beyond one-off projects, which can have significant influence in informing future policy and approaches

The ultimate goal of IEOF is to migrate towards a “rate card approach,” another paradigm shift in how social programs are financed in India.

WHY DO WE NEED

A NEW APPROACH

Way too often, non-state actors fund education organizations in a fragmented and restrictive manner, that is not aligned to the national agenda. At Social Finance India, we believe that in order to create significant social change, and we need to facilitate technical experts to work at scale in conjunction with government priorities. We believe that fragmented philanthropic funding will not achieve India’s national achievement goals.

India’s education budget is less than half of what is needed

to successfully meet the SDG’s. Without significantly more and better funding, we pose a significant threat to realizing the capacity of India’s population dividend.

01

State government spending is earmarked

for teacher salary and administrative costs, leaving little capacity or capability to invest in system remediation. However, when aligned with government policy and properly regulated, non-state service providers can bring much-needed innovation, agility and capacity to the education sector, both in delivering education and providing ancillary services.

02

Non-state providers work at a small-scale

relative to the size of the problem and, there are multiple small streams of non-state interventions that cannot fix the larger issue at scale. Government must take the lead in delivering and financing inclusive, quality education for all.

03

There is inadequate attention to skilling the ecosystem

around the school to address education challenges; all stakeholders around the school need to be accountable for education outcomes. Funding and programming for Service Providers today are often highly fragmented. Restrictive grants prevent social entrepreneurs from adapting to conditions on the ground.

04

Philanthropic giving focuses on delivery over design

and funds flow through a flat structure which makes it difficult to correct course once a program is underway. Donors lack transparency into which interventions work best, and their relative cost-effectiveness. This system of funding is too often holding back the results we can and must achieve

05

Government bureaucracy makes it a challenge to scale programs

and requires alignment and capacity across stakeholders to do so. For many (but not all) types of impact, outcomes funds can ensure that scarce public and philanthropic funds are only used for programs that achieve the desired results

06

Indian education sector and skilling needs a new partnership model centered on success, that will:

Build capacity
of service providers

through enhancing delivery readiness and absorptive capacity to deliver quality programs at scale, with robust data management, reporting, leadership and delivery mechanisms

Build transparency
and adaptability

in the implementation of education programming to allow for data-driven flexibility in program delivery.

Build a knowledge
and data repository

from independent third-party outcome assessments of funded programs to disseminate widely and inform future design through identifying innovative and effective programming.

Catalyze
innovative finance

to reduce transaction costs of education programs at scale through a portfolio of impact bond products to collectively channel $1 billion in to education program delivery.

Mobilize
government resources

to create sustainable, main-stream systems.

OUR

STAKEHOLDERS

Outcomes Funders

Come together to deepen their impact by paying for long-term, sustainable outcomes, after they are achieved – transferring delivery risk to the private sector, and improving overall program performance and value for money.

Investors

Provide upfront working capital investments where required, and support the education organizations to build capacity and deliver better results. They achieve a measurable impact, as and when an uncorrelated financial return.

Education Organizations

Work with a new rigor to deliver to outcomes (rather than inputs) – with the flexibility and support to innovate and adapt based on what is working on the ground, in collaboration with other providers.

Government

Will be a key partner in every project, ensuring funding and programs are aligned with their policy priorities. They will co-fund outcomes, support enabling environment, and with our support build capacity to commission for outcomes.