Harvard Case - Paying to Improve Girls' Education: India's First Development Impact Bond
"Paying to Improve Girls' Education: India's First Development Impact Bond" Harvard business case study is written by Anjani Datla, Dan Levy, Patricia Garcia-Rios. It deals with the challenges in the field of Business & Government Relations. The case study is 20 page(s) long and it was first published on : Apr 2, 2019
At Fern Fort University, we recommend that the Indian government continue to invest in and expand the Development Impact Bond (DIB) program for girls' education. This program offers a unique opportunity to leverage private capital, incentivize innovation, and achieve measurable improvements in educational outcomes for girls in India.
2. Background
This case study focuses on India's pioneering Development Impact Bond (DIB) program, launched in 2015 to address the critical issue of low female literacy rates in the country. The program, spearheaded by the Michael & Susan Dell Foundation, aimed to improve girls' education in the state of Madhya Pradesh by partnering with private investors and NGOs. The core idea was to incentivize NGOs to deliver high-quality education programs by offering investors a financial return contingent on achieving measurable results in girls' education.
The main protagonists are:
- The Michael & Susan Dell Foundation: The driving force behind the DIB program, providing initial funding and technical expertise.
- The Indian government: The ultimate beneficiary of the program, seeking to improve girls' education through a novel funding mechanism.
- Private investors: Providing capital to the program, expecting a financial return based on the program's success.
- NGOs: Implementing the educational programs and striving to achieve the desired outcomes.
3. Analysis of the Case Study
This case study offers a compelling example of a public-private partnership (PPP) that leverages innovation and financial markets to address a critical social issue. The DIB program utilizes a results-based financing model, aligning the interests of all stakeholders and promoting accountability.
Key elements of the analysis:
- Social Impact: The program directly addresses the issue of low female literacy rates, a critical factor in economic growth and social development in India.
- Financial Viability: The DIB structure incentivizes private investment by offering a return based on measurable outcomes, making it attractive to investors seeking social impact investing opportunities.
- Government Policy and Regulation: The program demonstrates the government's commitment to innovation in social sector financing and its willingness to explore new models for delivering public services.
- Competitive Strategy: The program creates a competitive environment among NGOs, encouraging them to develop and implement high-quality educational programs to attract investors.
- Corporate Social Responsibility: The program offers a platform for corporations to engage in CSR initiatives and contribute to social development through their investments.
4. Recommendations
- Expand the DIB Program: The Indian government should expand the DIB program to other states and target additional social issues, such as healthcare, sanitation, and poverty alleviation. This would leverage the program's success and attract further private investment in social development.
- Develop a Robust Monitoring and Evaluation Framework: To ensure transparency and accountability, the program should have a robust monitoring and evaluation framework to track progress and measure outcomes. This will build trust among investors and stakeholders.
- Promote Collaboration and Knowledge Sharing: The government should facilitate knowledge sharing and collaboration among stakeholders, including NGOs, investors, and policymakers. This will foster best practices and accelerate the adoption of DIBs for social impact.
- Create a Supportive Policy Environment: The government should create a supportive policy environment for DIBs by streamlining regulatory processes, providing tax incentives, and promoting awareness of the program. This will encourage private investment and facilitate the program's growth.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Consistency with Mission: The DIB program aligns with the government's mission of promoting social development and improving the lives of citizens.
- External Customers and Internal Clients: The program benefits external customers, such as girls and their families, as well as internal clients, including NGOs and investors.
- Competitors: The program encourages competition among NGOs, leading to improved program quality and better outcomes.
- Attractiveness: The program's success has demonstrated its attractiveness to investors, with potential for significant social impact and financial returns.
6. Conclusion
The Development Impact Bond program in India represents a pioneering initiative that leverages private capital to address critical social issues. This program has the potential to transform the landscape of social sector financing in India and beyond. By expanding the program, promoting collaboration, and creating a supportive policy environment, the government can unlock the full potential of DIBs to achieve sustainable and impactful social change.
7. Discussion
While the DIB program has proven successful, some potential risks and challenges remain:
- Risk of Program Failure: There is always a risk that the program may not achieve its desired outcomes, leading to financial losses for investors.
- Measurement Challenges: Measuring the impact of educational programs can be complex and require robust data collection and analysis.
- Political Instability: Political instability or changes in government policy could impact the program's implementation and sustainability.
Key Assumptions:
- The program's success relies on the commitment of all stakeholders, including the government, investors, and NGOs.
- The program's outcomes can be accurately measured and verified.
- The political environment will remain supportive of the program's goals.
8. Next Steps
To implement these recommendations, the following steps should be taken:
- Phase 1 (Short-term): Expand the DIB program to two additional states within the next two years.
- Phase 2 (Medium-term): Develop a comprehensive monitoring and evaluation framework for the program within the next three years.
- Phase 3 (Long-term): Establish a national DIB platform to facilitate collaboration and knowledge sharing among stakeholders within the next five years.
By taking these steps, the Indian government can solidify the DIB program's success, expand its reach, and create a sustainable model for social impact financing that benefits both the country and its citizens.
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Case Description
In 2013, Educate Girls (an Indian nonprofit working to increase the number of girls enrolled and learning in school), partnered with Instiglio, a startup specializing in financial instruments for social programs in developing countries to create the first Development Impact Bond-a financial instrument similar to a Social Impact Bond. UBS Optimus, a Swiss foundation, agreed to act as the investor and the London-based Children's Investment Fund Foundation would reimburse UBS Optimus' initial investment and pay returns if Educate Girls met or exceeded a set of predetermined goals. Instiglio would broker the deal and IDinsight, a new evaluation organization would conduct the evaluation. Agreeing on the evaluation design, however, proved challenging. An evaluation was vital to the DIB because success payments hinged on its findings, but Educate Girls was concerned that the investors and evaluators were not considering the realities of program implementation when proposing complex evaluation methods. Whereas, the investors and evaluators were not interested in backing a DIB where the impact findings could be open to question. This case places students in the decision room with the DIB parties and asks them to grapple with the tradeoffs social organizations and evaluators often have to face. The 8-minute video supplement can be used toward the end of the class discussion to reveal to students how the parties resolved their differences and signed on to the DIB.
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