Financing Global Basic Education

What does it cost to deliver basic education in the developing world? What’s the role of foundations and private investors in this?

These were the questions driving the most recent International Education Funders Group (IEFG) meeting. Firelight is a member of the steering committee of the IEFG, and tracks this question very closely, because of the importance of education for the life chances of the children we serve.

How to pay the bill

Education finance is a hugely important area - perhaps the weakest link in delivering education for all. The global community aspires to give all of the world’s children a quality education through secondary school, but it hasn’t come up with a model for paying the bill. The funding gap is estimated to be something more than $30 billion annually, which far outstrips available resources, including development aid.

This is both a macro issue for governments and the World Bank, but it’s also a micro issue that involves "getting the unit costs right" on the ground.  Foundations and others are looking for approaches that can reduce the cost of delivering schooling, while maintaining or improving quality levels. There’s a great appetite among foundations for more information on reworking cost structures, introducing technology, and mobilizing new resources for education.

Grants and investments, government and nonprofits

Foundations typically make grants to nonprofits, and thus they work at the margins of education financing, where the main provider is government, and investment vehicles typically involve bond issues. At the IEFG meeting, we looked at both grants and investments.

Investors and the education sector tend to eye one another with some unease. Investors find education both complex and monolithic, and thus a difficult arena for change. They also complain of low investment yields and little "deal flow" and scalability. For their part, educators (and many foundations and nonprofits) are mistrustful of private investment in education, for reasons of social equity and reaching the most vulnerable.  

There was some discussion at the meeting of foundation experimentation for new funding vehicles. UBS Optimus and the Children's Investment Fund Foundation are piloting a "Development Impact Bond" (DIB) to promote girls schooling in Rajasthan in India. These bonds are labor intensive to put together, and there isn't really an “impact bond market” yet that brings together investors and investable opportunities, but they do represent a bridge between grants and investments. 

Where there are no government schools

The IEFG meeting featured community-financed schools, which tend to arise where government has not provided schooling. One in five primary school students in Zambia attends a community school, and Firelight has experience funding organizations managing these community efforts. I personally worked for eight years on community schools in Mali, where they grew to about 40% of the total number of primary schools. I presented the Mali experience at the IEFG meeting, particularly how communities had been able to fund the schools sustainably from the local cash crop, cotton.

We also dove into the controversial area of low-cost private schools in the developing world, a growing phenomenon. There is a diversity of thinking, even controversy, among foundations about these private schools. Some foundations feel that they are sustainable, encouraging efforts, while others feel they exclude the very poor.  

My personal take is that on the ground the low-cost private schools and the community schools can look quite similar, and that they both stem from a local initiative to provide what the government has not. Until government provision is more available and of good enough quality, both private and community schools will arise, and provide an important resource to families and children who wouldn’t otherwise have educational opportunity.

Grassroots innovation

Another session featured Hewlett Foundation funding of both Firelight and TrustAfrica, focused on “grassroots innovation.”  Within this project, Firelight identifies Tanzanian nonprofits, which have sound, affordable, and replicable ideas about how to improve children’s learning outcomes in primary school.

We have great hopes for this work, and we will report regularly about it in this blog in the future.

Next gathering will be on ed tech

The next IEFG meeting, in October, will be in Firelight’s backyard. It will be held in Silicon Valley and will have a focus on the potential for education technology to speed up the effort to bring quality education to all children. We’ll keep you posted.