October 24

Martina Mettgenberg-Lemiere / Anh Nguyen

Funding Education With Impact: How We Can Address Student, Market Needs in India

India is home to one of the largest and most complex education systems in the world with more than 1.5 million schools and more than 260 million enrollments. While the country has achieved near universalisation of primary education, major gaps remain. Access to education remains problematic for girls, marginalised communities and special needs children while dropout rates increase with grades. Learning outcomes in terms of literacy and numeracy have been low – among fifth-grade students in rural India, 52.2 percent cannot read at a second-grade level and 74.1 percent cannot solve a division problem.

Education is one of the most funded causes among private social funders in India with 36 percent of corporate social responsibility funding in 2016, 54 percent of HNWI funding in 2015 and about US $45 million in impact investment per annum over 2014-2017. This has translated into near-universal access to education of 96.9 percent at primary school level, but not in other education segments; nor has it affected an improvement in learning outcomes, such as literacy and numeracy.

In our latest report on Funding Education with Impact – A Guide to Social Investment in India, commissioned by Credit Suisse, we have identified solutions implemented by funders as well as social purpose organisations including nonprofits, social enterprises and hybrids that address market needs and have enormous potential to transform the education system in India.


Affordable Private Schools

Privatisation of education has been on the rise in India. According to our analysis of the District Information System for Education data, between 2010-11 and 2015-16, government school enrollment decreased by 13.1 million while private school enrollment increased by 17.5 million. This has been fueled by easy access and higher perceived value of private education by parents.

Affordable private schools (APSs), which typically charge a fee of INR 1,500 (USD 24) per month, are rapidly changing the educational landscape in both urban and rural India. While such schools have filled the gaps in access and learning quality to a certain extent, similar to public schools, they suffer from poor infrastructure and inadequate funding. Further, attainment levels have not seen substantial improvement in these schools.

Efforts such as the Standard of Excellence in Education Development Schools’ co-investment fund for affordable private schools and Varthana’s loans to these schools are innovative models that could significantly transform this low-cost segment, thereby improving access and learning experience for students from low-income families across India. Kaizen Private Equity, Acumen Fund, Gray Matters Capital and Indian School Finance Company are some of the notable funders of affordable private schools.


Collective Impact

Complex social issues can be solved only when various stakeholders come together to create “collective impact” by putting in place five conditions: a common agenda, a shared measurement system, mutually reinforcing activities, continuous communication among stakeholders and a backbone organisation to support the effort. Recent partnerships signal a movement in this direction.

FSG, for example, partners with Central Square Foundation, Children’s Investment Fund Foundation (CIFF), UBS Optimus Foundation, Marshall Foundation and Omidyar Network to implement the Program to Improve Private Preschool Education (PIPE) to scale up the affordable early childhood education segment in India. To date, FSG has completed an extensive research study to understand parents’ aspirations for early childhood education in eight cities.

The Educate Girls Development Impact Bond is another example that brought together multiple stakeholders playing different roles, including outcome payer (CIFF), program investor (UBS Optimus Foundation), service provider (Educate Girls) and outcome evaluator (IDinsight). In addition, the Michael & Susan Dell Foundation has invested in Unitus and Menterra Social Impact Fund launched by Villgro to promote early-stage investment in education startups.


Creation of Commons

Market infrastructure is most economically and effectively provided in collective form to prevent duplication of efforts, lack of standardisation, waste of funding and sub-optimal solutions. In the education space, such common needs include: curricula, resources, standards, data and tools for teachers, students and school management. Due to the multitude of disparate and redundant metrics and tools, efforts to improve learning outcomes in India have not been successful.

Innovative solutions such as the household-based Annual Status of Education Report (ASER) survey undertaken by Pratham Education Foundation have become the benchmark to measure progress in access, infrastructure and learning outcomes. While ASER is a step in the right direction, gaps remain as it only provides data for rural areas. Increased funding into this area will, therefore, go a long way in addressing common needs. Central Square Foundation, for instance, has built online portals to assess quality and performance in collaboration with the Ministry of Human Resource Development. Such funding instances could bring about the much-needed systemic transformation in the education space in India.


The Way Forward – The AVPN Collectives

Discussions at our AVPN India Summit in September dovetailed with our research finding that systemic change would be best brought about through collaborative efforts around affordable private schools, collective impact and the creation of commons.

To this end, AVPN is harnessing its convening power to catalyse pooled funding for under-represented causes with high-impact potential. AVPN launched the Early Learning Collective, in partnership with FSG, to improve early learning outcomes delivered across APSs for low-income children in urban India. The collective will utilise funding from across the spectrum – most notably combining philanthropic foundations and CSR funding in an impactful and targeted manner. To learn more about the collective or to join us, please write to membership@avpn.asia.

It’s about time stakeholders in the education sector in India thought about with whom and how they can partner. This is the only path to an effective education system that meets market needs.


Martina Mettgenberg-Lemiere is head of insights and capacity building, Anh Nguyen is knowledge manager, at Asian Venture Philanthropy Network (AVPN), a unique Pan-Asian funders’ network catalysing the movement toward a more strategic and collaborative approach to philanthropy and social investment.

Photos courtesy of AVPN.




Education, Impact Assessment, Investing
Base of the Pyramid, impact investing, poverty alleviation