Back to school

It can never be wrong to invest in the development of children. Our UBS Optimus Foundation (UBSOF) joined forces a few years ago with four partners to launch the world's first Development Impact Bond (DIB) in education. By mobilizing the tremendous possibilities offered by social finance, we were able to help the Indian NGO Educate Girls to scale up their activities in rural Rajasthan – where girls have particularly poor access to adequate schooling. We also wanted to set a benchmark for the industry and establish a common framework for achieving sector-wide impact.

Three years on from the launch, we've just published the final data on the program and I'm delighted to say that the DIB has surpassed our expectations on both scores. Returns depended on performance. And the targets were ambitious, covering not only enrolment levels of girls in primary education but also demonstrable learning gains for both girls and boys in English, Hindi and mathematics.

The results speak for themselves: the Educate Girls DIB achieved 116% of the enrolment target and 160% of the learning target in its final year.  

This impressive outcome allows UBSOF to recoup its initial funding of USD 267,000, plus an added 15% internal rate of return (the maximum) from the bond's outcome payer. Educate Girls will receive part of this return in the form of a bonus payment which will help them continue their vital work. The rest will be rolled over into other UBSOF programs.

While this DIB was a "proof of concept" to show potential investors how such programs can deliver both social and financial returns, its success also demonstrates that such impact bonds offer an effective and innovative way of achieving real and meaningful change.

I'm impressed by the outcome of this program and hope that our industry finds many more ways of combining the power of innovative social finance and partnerships to make a real and lasting difference to the lives of people who deserve our help.