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  • Impact bond
  • Education
  • Asia

Gujarat, India

7 mins

Quality Education India Development Impact Bond

Last updated: 9 Dec 2022

The Quality Education India DIB was set up in 2018 to support education providers in India to improve learning outcomes for 200,000 school children in grades 1 to 8 across Delhi, Gujarat, Maharashtra and Uttar Pradesh.

Project Location

Aligned SDGs

Target population

Primary school-aged children

The problem

Despite evidence of improving enrolment, children in India perform lower than expected in literacy and numeracy due to low quality primary school education. 

The solution

The overarching goal of the Quality Education India Development Impact Bond (QEI DIB) is to offer a solution at scale to the learning crisis in India. The QEI DIB aims to achieve this goal by funding five high performing service providers to improve grade-appropriate learning outcomes for more than 200,000 school students in Grades 1 to 8. The five education providers are Kaivalya Education Foundation (KEF), Gyan Shala, Society for All Round Development (SARD), Educational Initiatives and Pratham Infotech Foundation.  

In the DIB, the education providers are delivering four interventions with a mix of direct and indirect education model types, which are: 

  • Kaivalya Education Foundation is delivering an indirect, whole school management programme that focuses on school leader training in Maharashtra and Gujarat;  
  • Gyan Shala is delivering a direct classrooms programme for children in urban slums in Gujarat;
  • SARD is implementing a remedial education model in Delhi; and
  • Educational Initiatives and Pratham Infotech Foundation are using a computer-based adaptive learning platform (Mindspark) to close learning gaps and provide actionable insights to teachers in Uttar Pradesh.

A further important aim of the QEI DIB is to drive focus towards outcome-based contracts in the development sector in India and provide evidence of the benefits of private sector participation in service delivery. By measuring the cost and effectiveness of a range of education delivery models, it aims to support the development of a robust body of evidence to inform the allocation of future funding in the sector. 

To support the use of outcome-based contracts in India, the key objectives of the DIB are to engage the Indian Government, use robust measurements and consider ways to standardise processes and produce templates for future outcome-based contracts. Additionally, learning is being generated on the effectiveness of DIBs, and resources and partnerships are developed to help replicate DIBs both in South Asia and globally by the consortium of partners.  

Source: Erskine, C. (2019) Quality Education India Development Impact Bond: A case study produced as part of the DFID DIBs pilot programme evaluation

The impact

According to the final results report, the programme managed to outperform its outcome targets over the last 4 years. It also contributed to further close the learning gap experienced by some students during the pandemic.

Some key findings from the Quality Education India report include:

  • Increased levels of learning, despite the COVID-19 pandemic: Students in the programme learned 2.5 times more than those in non-participating schools.
  • Shifting to an outcomes-based funding approach can be a catalyst for change: Education providers were able to create a step change in learning outcomes achievement (50% higher on average) compared to their previous grant programmes. Factors which helped drive this success included robust performance management, regular engagement with each education provider and flexibility in funding and approach.
  • Funders got better impact because they were paying for outcomes: The actual price per outcome was 46% lesser than the original expected price, suggesting that DIBs can provide better value for money for funders.
  • The investor achieved the targeted return: The investor, UBS Optimus Foundation received a return of 8% on its investment, suggesting that impact focussed investors can make a return, whilst assuming the responsibility for implementation and the associated risk in such programmes.

Outcomes framework

The primary outcome of the QEI DIB is improvement in learning outcomes. Improvement in learning is defined as the difference between a baseline and endline score on a standardised test, at the start and end of each school year. To support attribution of effectiveness, the performance of the students receiving the intervention is then compared to the performance of students from comparison schools, both at baseline and endline. The assessment of learning used in the DIB is based on a robust, standardised test of grade-level skills in numeracy and literacy.  

The payment structure reflects the education models delivered through the DIB: a higher payment is attached to models that work directly with students (e.g. implementing class teaching/directly operating classrooms); and a lower payment is attached to in-direct models (e.g. teacher or school leader training). The targets are expressed as a standard deviation (standard points of variation around the mean) difference from the comparison group performance. The outcome pricing structure, outlined in the table below, comprises a fixed price per beneficiary for reaching the improvement target and the standard deviation target for the different models. 

In a straight payment-by-results contract, service providers would be expected to cover upfront costs before payments linked to outcomes are made. In DIBs though, this upfront working capital is covered by a private investor. The UBS Optimus Foundation (UBS-OF) is the investor and manages the payments to the service providers. UBS-OF has raised almost $2.5 million of client donations to the QEI DIB. Outcome funders will then make a payment to UBS-OF at the end of each year, which enables the working capital to be recycled once an independent assessment has been made about whether the outcomes have been met.  

There is no capital protection for the investment. This means that if the service providers underperform against their targets UBS-OF is at risk of losing the entire investment. If service providers achieve more results than the agreed upon the base case UBS-OF will receive a return on their investment. However, there is a cap on this return: if service providers achieve above 120 per cent of their targets, the maximum return the investor will receive is 8 per cent per annum. Since UBS-OF is a Swiss Foundation, and as such cannot return funds to donors, any returns will be re-invested into other development projects. Service providers are also incentivised to overachieve on their targets in the DIB, as the contract includes a bonus payment in the final year if they achieve over 100 per cent of their targets. 

In addition to the funding committed by investors, the project has also benefitted from funding from the Foreign, Commonwealth and Development Office in the UK (Technical Assistance Grant for the DIB - $1,500,000). 

Source: Ecorys (2019) Independent Evaluation of the DFID Development Impact Bonds (DIBs) Pilot programme.


  • 2016 - 2018

    Conceptualisation of impact bond, engagement with stakeholders, design of contract 

  • January - June 2018

    Legal contracting process 

  • April 2018

    DIB launched 

  • September 2018

    Delivery commenced

  • July 2019

    Interim results announced and outcome payment

  • July 2020

    Interim results announced and outcome payment

  • July 2022

    Final results announced and outcome payment

Project insights

  1. A four-point rationale 

    There were four main factors underlying the rationale of the QEI DIB:  

    1. To galvanise the market of high performing NGOs in India to support the learning crisis. While there is an established market of service providers in India, and a number of high performing NGOs with viable solutions, they are often limited by the availability in capital, inadequate performance management systems and poor coordination between stakeholders. The flexible outcomes-focused financing mechanism in the DIB model allows the testing of a range of proven models, at scale, with the opportunity to compare their performance within a shared framework of monitoring and evaluation.  

    2. To engage the government and explore the potential transition from DIBs to SIBs in India. The DIB model aims to provide evidence to the Indian Government on the benefit of private sector participation in service delivery and driving a shift towards outcomes based approaches that can help deliver a more consistent and greater impact.  

    3. To scale the learning and successes of the Educate Girls DIB. The Educate Girls DIB was considered a ‘proof of concept’ for DIBs in the education sector, and there was interest in testing the model on a larger scale, and to explore the opportunities to reduce transactions costs in DIBs. 

    4. To test the applicability of a rate card with a standard pricing framework of potential outcomes, as used in social impact bonds (SIBs). By including a range of interventions, rather than just one, the model is able to compare outcome performance for different education models within the same assessment framework.  

    Source: Ecorys (2019) Independent Evaluation of the DFID Development Impact Bonds (DIBs) Pilot programme.

  2. Building on the first education DIB 

    The project is building on the success of the first DIB in education, the Educate Girls DIB, which funded one service provider to achieve improved outcomes in enrolment and learning in Rajasthan. There is evidence in the QEI DIB that learning has been taken forwards from the Educate Girls DIB to improve design and increase efficiency in transactions, for example in the legal processes. The legal contracting process for the QEI DIB took six months, compared to two years for the Educate Girls DIB. This supports the idea that with each DIB project some of the time and costs associated with the routine transactions can be reduced. 

    However, the development process overall was still long and complex, particularly as the DIB framework includes multiple outcome funders and multiple service providers. As a result, it has not been possible to reduce the time and cost required to set up the DIB as much as the stakeholders expected. Developing templates to standardise processes will help with efficiency for future DIBs, to ensure that new DIBs do not have to start from scratch and can build on the lessons learned from previous DIBs.  

    Source: Ecorys (2019) Independent Evaluation of the DFID Development Impact Bonds (DIBs) Pilot programme.

  3. Building collaboration and solutions at scale 

    One of the main achievement in this DIB has been to bring together a number of sector-leading experts to work collaboratively and openly in shared areas of interest in education and impact investing. In particular, the inclusion of a robust assessment tool means that the evidence from the project has the potential to provide important learning about the effectiveness of different types of education models, a prominent issue in India. At the same time, this can generate learning about the suitability of the DIB model in different contexts, and the potential to develop a rate card system.

    The level of collaboration supporting the achievements in the design and set-up phases illustrate the potential for DIBs to offer collective, scalable solutions to important global issues, and to restructure existing ways of funding and systems thinking. In the long-term, the project has the potential to add greater value, not just to impact investing, but to the education sector in India.  

    Source: Ecorys (2019) Independent Evaluation of the DFID Development Impact Bonds (DIBs) Pilot programme.

  4. Lessons learnt  

    The main lessons learnt as noted by stakeholders are: 

    • It is important to involve all actors upfront and clearly define the role and responsibilities of each;
    • Workshops help to support clarity and create consistent messaging across the different stakeholder groups;
    • Maintaining a proportion of the budget that is not tied to outcome metrics can be useful, as this provides the necessary budget for adjustments to the design;
    • There needs to be a balance between an outcome metric that is rigorous and one that is well understood by all stakeholders and linked to those used by other stakeholders in the sector. 

    Source: Ecorys (2019) Independent Evaluation of the DFID Development Impact Bond Pilot programme.

Downloads and Resources

Quality Education India DIB Case Study Report

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