MUMBAI — UBS Optimus pioneers a new funding model that supports female education in India through investment in a local Rajasthan charity, Educate Girls. Educate Girls is an organization that helps enroll marginalized girls in school.

UBS–the Swiss, grant-making foundation of the Swiss Bank–has created the world’s first “development impact bond.” The bond requires funding in advance from private investors. If targets are achieved, these investors will receive a return from donors or governments.

Additionally, this development impact bond gives private investors an incentive to fund education, limiting the financial risks taken on by governments and donor agencies. This, in turn, allows them to focus on the efficacy of the programs.

In 2009, India installed the Right to Education Act (RTE Act) which gave impoverished or disadvantaged children the opportunity of free education until the age of 14. Funding for the program has declined within the past couple of years, yet enrollment into the program is still high due to its ceiling on annual household income being higher than most other states.

UBS Optimus has made a three-year-long undisclosed investment in Educate Girls and expects to earn back the money with interest of up to 15 percent by the end of the term, as long as the children’s learning objectives are successfully completed.

Paying back UBS is nonprofit, Children’s Investment Fund Foundation. The chief executive of the organization, Kate Hampton comments, “While this is designed to improve the quality of girls’ education in Rajasthan, the concept could be attractive to funders across a range of issues who want to make investments with both financial and social returns.”Rajasthan is one of the poorest states in India and home to the lowest levels of literacy, especially for girls. However, UBS’s development bond aims to improve education for 55,000 children in 140 villages in the Indian district of Bhilwara.

The development bond has received some criticism as some individuals believe the model will lessen government incentives to provide basic services to its people.

But the program has so far proven effective, enrolling 44 percent of all out-of-school girls within its first year, achieving 23 percent of the targeted learning progress. Nevertheless, the team-up of UBS and Educate Girls is on its way to accomplishing wonders for female education in India.

– Jenna Salisbury

Photo: U.N. Multimedia