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UBS Optimus Foundation leads Indian education impact bond expansion

ImpactAlpha, September 17 – The philanthropic arm of Swiss bank UBS is fronting $3 million for a development impact bond, or DIB, to support education for 300,000 children in India. The Dell Foundation and the British Asian Trust have joined the initiative as “outcome funders,” who will repay UBS Optimus, with interest, if the program is successful.

Nearly all school-aged kids are enrolled in school in India, but most don’t read at grade level, and only 30% can do basic math. The private sector in India – early edtech startups, low-cost private schools, and philanthropists and investors – has been testing and trying to scale learning models that can improve education access and quality for India’s schoolchildren.

The new impact bond, dubbed the Quality Education India DIB, aims to build on the success of a similar program that UBS Optimus Foundation funded three years ago. The foundation fronted $270,000 to nonprofit Educate Girls to improve girls’ school enrollment and education quality in Rajasthan. Earlier this year, the project was declared a success by surpassing both enrollment and learning targets; UBS’s investment was repaid—plus a return—by the project’s backer, the Children’s Investment Fund Foundation.

The DIB’s focus will be on improving literacy and numeracy for 300,000 students in Delhi and Gujarat over the next four years. The UBS Optimus Foundation is providing $3 million in working capital to three local organizations—Gyan Shala, Kaivalya Education Foundation and Society for All Round Development—to implement their education programs. Outcome targets have not been announced; but if the program reaches the pre-determined targets, UBS will be repaid, annually, and could earn as much as a 6% return.

Outcome funders include lead backer, the Dell Foundation, and a consortium of other supporters convened by the British Asian Trust: Tata Trusts, Comic Relief, the Mittal Foundation, and BT. The outcome funders have contributed $11 million for the DIB and hope it will serve as a foundation for raising additional capital in the coming years to expand the program.

In addition to this initiative and the original girls’ education DIB in Rajasthan, UBS Optimus Foundation has backed a $3.5 million DIB, also in Rajasthan, to improve maternal health.

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