Making the grade

Want to reduce gender inequality? Educate. Improve quality of life? Educate. Increase financial independence? Educate. Seeing a trend? So do we.

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UBS Optimus Foundation is a client-focused foundation linked to a global wealth manager staffed with philanthropy experts. Our aim is to take a leading role in driving philanthropy that delivers long-lasting, breakthrough solutions to social and environmental issues. And one of our most recent initiatives focuses on an issue especially close to our hearts: education.

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So, what do we mean by sustainable, long-lasting, breakthrough philanthropy? It starts with identifying the real issue we want to address. In this case, the state of global education, where 250 million children in school can’t read or do basic math at the age of nine (UNICEF, 2016). The magnitude of this challenge requires fresh approaches and tools. We must find a viable solution – the traditional model of building schools one by one, while well intentioned, may not drive the scale required to solve these issues. And even the wealthiest philanthropists don’t have enough resources to solve problems alone.

Development impact bonds (DIBs) are one new tool that can be used. An impact bond is not a bond in the conventional sense, but rather a performance-based contract, where investors are repaid only if social targets are achieved.

Our Quality Education India Development Impact Bond (DIB), which we launched in September 2018, is, according to The Economic Times, the world’s largest education DIB to date. Since its launch, the DIB has funded teaching enhancement programs in 600 schools, reaching more than 100,000 students aged 5–11. The children benefiting from the program in government-run schools and slum communities tend to be from the most disadvantaged backgrounds. And quality is the key word – as opposed to only focusing on enrollment, we focus on children’s learning outcomes. And based on an independent verification conducted by Gray Matters India, the program has, in its first year, resulted in almost a third more students achieving basic literacy and numeracy skills than a representative control group of students from non-participating schools.

Through the DIB, we aim to showcase to others, including the government, how this can be achieved and further scaled up in India. We recognize that real change is about improving the quality of education and the longevity of that quality. It’s about improving education for children today, and their children tomorrow.

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Image presenting how Development Impact Bond process works

How it works

  • The investor (UBS Optimus Foundation) commits working capital to fund the implementing partners' work upfront.
  • Outcome payers commit to paying for the outcomes over a multi-year period.
  • Local NGOs deliver education interventions to improve learning outcomes of students.
  • Learning outcomes for beneficiaries (children) are measured annually by an independent evaluator.
  • Verified achievement of learning outcomes triggers annual outcome payments to repay the investor.
Image presenting Development Impact Bond process details

Disclaimer:

Example is for illustrative purposes only.

Development impact bonds are not financial products.

The UBS Optimus Foundation is a grant-making foundation that helps UBS clients use their wealth to drive positive social change for children. The foundation selects programs that improve children’s health, education and protection, ones that have the potential to be transformative, scalable and sustainable.

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