| Notes |
Non-state actors in education in
developing countries
A framing paper for discussion
Liesbet Steer, Julia Gillard, Emily Gustafsson-Wright, and Michael Latham
October 2015
The paper was prepared as background to the Annual Research Symposium of the Center for
Universal Education held March 5-6th, 2015, in Washington, DC.
2
Contents
Acknowledgements ......................................................................................................................... 3
Introduction.................................................................................................................................... 4
I. Non-state education: a growing phenomenon........................................................................ 5
II. Who are the non-state actors?..................................................................................................7
A. Typologies of non-state actors in education delivery ...........................................................7
B. Non-state actors as providers of finance ............................................................................ 11
C. Non-state giving and impact investing. What does it add up to?.......................................14
III. What is the role for non-state actors? Arguments and evidence........................................19
A. Strengths and weaknesses of non-state actors in delivery ................................................ 22
B. Strengths and weaknesses of non-state financiers ............................................................ 24
IV. In search of common ground............................................................................................. 27
Basic education should be freely available and accessible to all............................................... 27
Non-state actors in education are highly heterogeneous and generalizations are dangerous . 27
Rules of the game are more important than actors .................................................................. 28
Non-state actors must be regulated carefully........................................................................ 29
National dialogue can help provide clarity............................................................................ 30
V. Questions for discussion.........................................................................................................31
VI. References.......................................................................................................................... 32
VII. Annex: UN Declarations and Goals ................................................................................... 36
Universal Declaration of Human Rights – Article 26 (1948) ................................................... 36
Convention on the Rights of the Child (1989) – Articles 28 and 29......................................... 36
Education for All Goals ............................................................................................................. 38
Open Working Group Proposal for Sustainable Development Goals....................................... 38
3
Liesbet Steer is a fellow with the Center for Universal Education at the Brookings Institution.
Julia Gillard is a distinguished fellow with the Center for Universal Education at the Brookings
Institution and chair of the Global Partnership for Education.
Emily Gustafsson-Wright is a fellow with the Center for Universal Education at the Brookings
Institution.
Michael Latham is Principal International Advisor at CfBT Education Trust, Asia
Acknowledgements
This framing paper was developed to ground discussions at the Annual Research Symposium of
the Center for Universal Education. The symposium was held on March 5-6th, 2015 in
Washington, DC, with the theme of “Non-State Actors in Education.” Questions for discussion
are included in the final section of the paper.
Many helped in thinking through the issues and framing of the paper. We are grateful to Tamar
Manuelyan Atinc and Rebecca Winthrop (Center for Universal Education), as well as Eliza
Erikson (Omidyar), Pauline Rose (University of Cambridge) and Prachi Srivastava (University of
Ottawa) for comments on earlier drafts of the paper. We also thank Steve Klees and many others
for their specific inputs and suggestions. We are indebted to Lindsay Read, Jordan Sandler,
Sophie Gardner, and Eileen McGivney for research assistance.
The Brookings Institution is a nonprofit organization devoted to independent research and
policy solutions. Its mission is to conduct high-quality, independent research and, based on that
research, to provide innovative, practical recommendations for policymakers and the public.
The conclusions and recommendations of any Brookings publication are solely those of its
author(s), and do not reflect the views of the Institution, its management, or its other scholars.
4
Introduction
Reaching education goals in the coming years will require sharp increases in
funding and better delivery. Despite a global focus on improving access to education, nearly
60 million children in developing countries remain out of primary school and increased
investments have not translated to better education quality or improved learning outcomes
(UNESCO 2015a). Even with an increase in domestic public expenditure, UNESCO estimates
that the financing gap for delivering good quality universal education from pre-school through
junior secondary levels by 2030 in low-income countries will be $10.6 billion, on average,
between 2015 and 2030—over four times the level currently provided by official donors ($2.3
billion) (UNESCO 2015b).
Closing acute financing and delivery gaps that prevent access to quality education
will be a major challenge, requiring all hands on deck. Domestic governments and
foreign donors will need to step up their game substantially, but fiscal and capacity constraints
are likely to prevent them remedying resource deficits on their own in the short term. Non-state
actors—mainly religious and charitable organizations, private (“foundation”) schools, and a
small number of for-profit schools—are already partially filling the gaps, although the precise
extent of their services and their impact is unknown.
Determining the appropriate role of non-state actors in education is a contentious
topic among specialists. Disagreements have revolved around serious normative issues,
including such basic questions as whether non-state provision is consistent with the principle of
education as a human right, and serious empirical questions relating to quality and equity
implications. This discussion has been blurred by definitional issues (i.e., what is non-state and
private education?); lack of clarity over distinctions between ownership, delivery, and financing;
a lack of accurate data on current and potential provision rates; and an insufficient base of
evidence from which to draw clear conclusions on the effectiveness of non-state engagement in
education. These problems have made it difficult to generate comparisons across empirical
studies, leading to significant variation in the interpretation of evidence. For some observers,
evidence has fueled concern that non-state education is violating human rights principles (e.g.,
the report by the United Nations Rapporteur on Education),
1 while for others it has provided
encouragement that non-state engagement can help address financing and delivery challenges
(e.g., Tooley 2009).
Our goal is to provide a neutral background to this debate and identify areas of
common ground. Beginning with some big picture facts, this paper develops a detailed
language around non-state actors in education. We then outline current issues and poles of
debate around engagement of non-state actors in education and provide an assessment of the
depth of available data and evidence. To close, we establish a typology and propose a framework
for discussions around the role of non-state actors in basic education and how these actors can
best contribute to the achievement of Education for All and the Sustainable Development Goals
(SDGs). Our paper refers largely to basic education, including pre-primary, primary, and lower-
1
UN (2014). Report of the Special Rapporteur on the right to education. Submitted to the U.N. General Assembly. A/69/402.
September 2014.
5
secondary, as this is the main focus of much recent discussion around the role of non-state
actors in education and an area of strong growth in developing countries.
I. Non-state education: A growing phenomenon
The rise of non-state education today is qualitatively different than historical
examples of non-state schooling. In nearly every country’s educational history, the first
formal educational opportunities for children were provided by non-state schools, whether
established by religious organizations, philanthropists, or private interests. However, these
schools were often elite and only accessible to the wealthy. In contrast, current non-state
provision (in all its forms) caters to a much wider range along the socio-economic spectrum in
nearly all developing countries. Some also argue that non-state forms of education are now
much more deeply embedded in all aspects of the education system including administration,
policymaking, formal, and non-formal education, leaving the entire sector much more
vulnerable to influence from non-state actors (Macpherson et al. 2014).
Official data on non-state education provision are likely underestimated. The United
Nations Educational, Scientific, and Cultural Organization (UNESCO) aggregates administrative
data from official Education Management Information Systems (EMIS) and other national data
collection systems. However, in many cases these data do not include unrecognized or
unregistered non-state schools. Estimations of provision rates based on existing official data
thus do not capture the full scope of non-state engagement and likely underestimate the size of
the sector.
2
Available data on non-state enrollments show they remain a relatively small
percentage of total enrollments but have increased rapidly in low- and middleincome countries over the past two decades. The share of non-state enrollments in total
primary education rose by almost 5 percentage points between 1990 and 2012, now standing at
16 percent in low-income countries and 12 percent in lower middle-income countries (Figure 1).
While the share in high-income countries has been relatively flat (around 11 percent), several
countries have recently adopted policies to encourage non-state engagement, such as charter
schools in the U.S. and academies in the U.K., which will likely effect rates in coming years.
Regions with significant increases in non-state enrollment include East Asia, Latin America, and
the Middle East and North Africa (Figure 2). Regional data for South Asia are not available (due
to the large number of missing observations), but official data from individual countries (e.g.,
Pakistan, India, and Bangladesh) highlight a strong presence of non-state actors in this region as
well. For example, in Pakistan more than one-third of primary education enrollments are in
non-state schools. Going against the trend, the share of non-state education in sub-Saharan
Africa has been relatively flat; while about 15 countries have shown strong growth (with Ghana,
Guinea, Angola, and Congo showing dramatic increases of over 15 percentage points), in most
countries the share of non-state enrollment has remained stable or has declined over the past
two decades.
2
For detailed discussion of the problems with official data, see Srivastava (2013).
6
Figure 1. Enrollment in non-state primary schools as a share of total enrollment,
by country income group (1990-2012).
Source: World Bank Edstats.
Figure 2. Enrollment in non-state primary schools as a share of total enrollment,
by region (1990-2012).
Source: World Bank Edstats.
0
2
4
6
8
10
12
14
16
18
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Percent Enrolled
Low income
Middle income
High income
0
2
4
6
8
10
12
14
16
18
20
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Percent enrolled
Latin America & Caribbean
North America
East Asia & Pacific
Sub-Saharan Africa
Middle East & North Africa
Europe & Central Asia
Central Europe and the
Baltics
7
II. Who are the non-state actors?
Non-state education is characterized by a diversity of providers, including religious
schools, non-profit schools run by NGOs or foundations, publicly funded schools operated by
private boards, community owned schools, and for-profit schools that operate as enterprises.
UNESCO considers an educational institution to be “non-state” if it is controlled and managed
by an NGO (e.g., religious group, association, or enterprise) or if it has a governing body that
primarily consists of members not selected by a public agency (UNESCO 2005). UNESCO—as
well as others—groups these various institutions under the term “private education.” Such
categorizations may have, unintentionally, contributed to the lack of clarity around the role and
impact of non-state engagement in education. In few other areas of activity are NGO activities
referred to as “private.” For example, when an NGO or charitable foundation provides water
supply to poor communities, this is not referred to as private provision, whereas in the
education sector it often is.
A. Non-state actors in education delivery
Evaluations of school provision must distinguish between the type of provider
(including ownership and/or management) and the type of financing. For example,
many non-state providers are publicly funded, making them distinct from providers that are
privately funded. So too, some schools charge fees and others do not. In other cases, the lines
between state and non-state provision are quite blurred, and non-state provision could also be
called state provision (Patrinos and Sosale 2007). As well, various school types, such as faithbased and community schools, benefit from a mixture of state and non-state financing. Finally,
schools that are mainly reliant on non-state financing (e.g., NGO schools) may also receive
funding from officials donors (Rose 2006).
Likewise, typologies must differentiate whether non-state schools are for-profit or
not-for-profit. The profit motive in education is the cause of much concern for opponents of
non-state engagement in education and has led to reluctance among some governments and
civil society actors to support non-state schooling in developing countries. As a result, some
“governments have banned the existence of non-state schools or have limited the number of
schools that can be established” (DFID 2013). It should be noted, however, that there are
various degrees of profit-making. As we show in the following section on education financing, a
growing number of investors are willing to invest at lower than market returns, emphasizing
social impacts over monetary gain.
Table 1. Non-state education delivery and financing of education.
Source: based on Patrinos and Sosale (2007) and Rose (2006).
Type of financing
State Non-state
Type of provider
State e.g. traditional schools e.g. adopt a school
Non-state
Not-forprofit
e.g. faith-based schools
community schools
charter schools
e.g. philanthropic schools
NGO schools
For-profit e.g. charter schools e.g. low-fee private schools
8
Adding an additional level of precision, typologies can further detail the
contractual relation between state and non-state actors. This more detailed typology
used by the Organization for Economic Co-operation and Development (OECD) highlights that
the distinction between state and non-state provision is increasingly blurred and cannot be
neatly classified. Most so-called private provision is actually better described as public private
partnerships (PPP).
Table 2. Non-state provision typology by ownership, contractual relation, and
financing.
Type of school Description Ownership Contract Financing
Non-state
schools
Owned by non-state actor and
financed typically through fees or
philanthropy (can be for-profit,
not-for-profit)
Non-state No Non-state
Non-state
funded
Owned by non-state actor and
managed with funding from
government (but not on a
contractual per student basis)
Non-state No State
Non-state
contracted
Owned and managed by non-state
actor with funding from
government based on contract
with funding depending on
certain conditions
Non-state Yes, with
government
State
Non-state
managed
State-owned but non-state
operated and managed (e.g.,
charters, academies, concession
schools)
State Yes, with
government
State
Market
contracted
State schools that are non-stateowned with contract, or publicly
owned with non-state
management; where funding
follows the student to the school
of their choice (vouchers)
State and
Non-state
(mixed)
Yes, with
students
State
3 An earlier, much more precise, definition of low-fee private schools was proposed by Srivastava in 2001. She defined such
schools as private unaided schools, financed entirely by tuition fees, with a monthly tuition fee at the primary level not
exceeding what a daily wage laborer earned in a day. This allowed for comparison across contexts and over time, and as a
proportion of household income. Unfortunately, this distinction has been lost as the literature has grown, and most studies do
not clearly define what they mean when referring to these schools. The term has been further misappropriated by “lowfee/cost” chains as a marketing mechanism (communication with Prachi Srivastava and Srivastava 2013).
Box 1. Low-fee private schools (LFPS) (or less accurately low-cost private schools)
3
Low-fee private schools are growing rapidly in the developing world and have attracted much attention.
While there is some confusion around the exact definition of LFPSs, most studies define it as a
privately owned and managed school that is not primarily dependent on government assistance or
donations (i.e., charge some fee) and, if currently dependent, has a clearly defined plan to become selfsustaining and fully fee-dependent within a specified amount of time (Baraket et al. 2014). While many
of these schools may seek to make a profit, the extent of this profit varies significantly across contexts
and countries. Costs are often kept low by hiring unqualified, female teachers on low wages (Rose
2006). To further drive down costs and increase margins through scale, entire chains of such schools
have emerged. In some cases this scaling has involved increased standardization of the schooling
experience.
9
Source: adapted from Lewis & Patrinos (2011).
When data on school type is combined with enrollment data, we see a wide variety
of engagement in non-state provision emerge in OECD countries (see Figure 3).
The figure highlights the difficulty involved in assessing non-state sector engagement. For
example, the church is heavily engaged in providing education in Ireland but the Irish
government considers religious schools to be public schools, and therefore Ireland appears to
have limited non-state engagement in schooling.
Figure 3. Countries by type of non-state engagement and private primary
enrollment (2012).
4, 5
Data Source: UNESCO UIS Database and OECD.
4
“Types of engagement” are not exclusive categories. Representation were ascertained by determining the degree to which the
private schools are used through measuring responses to the following five key questions: 1) Are private schools allowed to
operate? 2) Is public funding for private schools allowed? 3) Is there a contract that governs the use of funds transferred to
non-public schools? 4) Is the private operation and management of public schools permitted? 5) Does public funding follow the
student to the school of their choice? Each question was answered using OECD Education at a Glance 2010 school choice
indicators. OECD choice indicators do not cover question four, therefore expert interviews were used. Answering “yes” to
questions 1-3 automatically moves a country to the right. Questions 4 and 5 are non-sequential so answering “no” to 4 does not
mean a country could not also engage the private sector by using market-based contracts.
5
Note that this chart from the OECD also unhelpfully uses the word “private” to describe education provided by churches and
NGOs. One of the authors of this paper (Steer) benefitted from the education provided by the 50 percent of schools in Belgium
described as private. These are largely non-fee paying schools managed by the Catholic Church and financed by the state.
10
Information about different types of non-state providers (for-profit or non-profit;
with or without state financing) in developing countries is often missing, making it
more difficult to classify and analyze. In addition, non-state providers are often
unregistered, making it difficult for governments to monitor their activities. Box 2 provides an
example of school classifications in India. Many countries do not provide even this rudimentary
level of detail.
In addition to operating schools directly, the non-state sector also provides
education core services, again financed by state or non-state actors. These can range
from services such as professional development and quality assurance as well as auxiliary
services such as infrastructure purchasing and leasing, building maintenance, pupil
transportation, and school meals, which are often very costly for public schools. Examples
include:
Capacity Building Initiatives. These initiatives range from curriculum and pedagogical
support; management and administrative training; textbook provision; teacher training;
and the development of support networks, professional partnerships, and linkages.
Build-Operate-Transfer, and Build-Operate-Own Provision of infrastructure. The nonstate partner builds, owns, and operates the infrastructure facilities that the government
uses for running the school. The non-state partner is paid a fee over the period of the
contract, which is generally long term—between 20 to 30 years. Performance criteria for
maintenance of the schools are fixed. Based on satisfactory maintenance, payment is
made. The ownership and the asset at the end of the contract period may be transferred
to the government, or retained by the non-state sector depending on the terms in the
contract.
Quality assurance support. The non-state sector provides independent quality
assurance/monitoring mechanisms to evaluate the provider performance and program
outcomes. There are many mechanisms used around the world to assure quality—both in
the private and public sectors—ranging from the public sector organizations such as the
Education Review Office in New Zealand and the Office of Standards in Education in the
U.K., to private sector organizations such as the Educational Testing Service, Pearson,
Box 2. Classification of non-state schools in India.
Government aided non-state schools are privately managed and follow government
regulations on curriculum, timetable, school hours, textbooks, and eligibility criteria for
teacher recruitment. Up to 95 percent of funding can come through state “grants-in-aid”
including teacher salaries and recurrent non-teacher spending.
Non-state un-aided (recognized) schools are self-financing; however, they have registered
with government having fulfilled a minimum set of standards. This category of schools
includes a diverse range from India’s elite schools to English medium schools catering for
the emerging middle class.
Non-state un-aided (unrecognized) school s are self-financing schools not registered with
any government agency and they include the burgeoning low-cost private school sector.
Source: Bangay and Latham (2013)
11
and Kaplan in the United States and the Center for Educational Measurement in the
Philippines that provide testing and assessment services that help track school
performance.
B. Non-state actors as providers of finance
There has been a recent surge of interest in non-state actors as sources of finance
for education. First, there is a desire to find additional sources of finance to help complement
government resources and fund the sizable financing gap. Non-state finance is seen as an
increasingly important source of finance, especially at a time where official aid is declining and
domestic revenue-raising efforts are still falling short of need.
6 Second, recognizing the
disappointing results in achieving some of the Education for All goals (e.g. pre-primary, quality
learning), there is an interest in new approaches to development assistance taken by some of the
non-state actors, such as venture philanthropists and impact investors, which are perceived by
some to be more efficient and results-driven. At the same time, there is a concern among some
in the education community that commercial investors are aggressively entering the education
field and taking advantage of openings in developing country markets.
In analyzing non-state actors as financers of education, it is necessary to
distinguish between two major categories: non-state charitable giving and nonstate investing. These forms of financing complement and interact with state financing,
official donor, and household spending in different ways. Charitable gifts (also referred to as
private gifts or grants) have an explicit social motive and no expectation of financial returns.
Gifts are the most traditional form of philanthropy and are primarily provided by corporations
(CSR), foundations, and individuals through contributions to civil society organizations (CSOs)
and religious organizations. Charitable giving has been rising in recent years, driven by rising
national incomes and corporate profit levels, and by initiatives of wealthy philanthropists who
have increased the visibility of private giving (Henon 2014).
While charitable giving remains the most important form of philanthropy by non-state actors, a
new class of investors has emerged that has blurred this distinction between charity and
investment. These include new actors, new financial techniques, and a new micro-level
approach. Traditional charitable organizations, such as foundations, are increasingly using both
grants and investment tools to meet their goals in various sectors, including education.
The split between charitable giving and investment should be considered on a
continuum rather than as a dichotomy (see Figure 4). While charitable giving
necessarily has a strong social motive, investors can range from those that primarily seek social
returns to those that primarily seek financial returns. At the far end of the specturm rests
commercial investment, including teacher training and for-profit schools, that seeks the kind of
6
Following the progress made at primary level, the need for resources and results is further intensified by the growing number
of students progressing to secondary and tertiary education cycles.
12
returns that might be seen when investing in a market portfolio. Falling somewhere closer to the
middle, however, is a new type of investor—a group called impact investors—that aims to
generate social as well as financial returns and are willing to accept lower financial returns than
could be garnered in more traditional commercial investments (Noble and Drexler 2013).
Figure 4. Non-state actors as financiers.
A wide range of investment types fall within impact investment. Some investments are
focused on social value and assume only a minimal financial return. Others fall much closer to
the commercial investing end of the spectrum, while still placing a great deal of emphasis on
impact. Blended value investments fall somewhere in the middle and anticipate a sizeable
financial return together with substantial social return (see Figure 5).
7
7
A recent survey of 125 impact investors across sectors found that 54 percent of those surveyed target competitive market
rates of return, 23 percent target below market rate but closer to market rate returns, and 23 percent target capital
preservation. Eighty percent indicated that financial returns are essential to impact investing while 71 percent indicated that
determining the social impact of the investment is essential (Saltuk and Idrissi 2014).
Charitable
giving
• Maximize social
impact
• No financial return
Impact
Investing
• Emphasis on social
returns
• Some financial
return (from return
of principal to
interest income or
financial return
upon liquidation)
Commercial
Investing
• Maximize financial
return
13
Figure 5. A wide range of social investment types.
Create
social value
Create
financial
value
Charitable
giving
Revenue generating
social investment
Socially
driven
commercial
investment
Traditional
commercial
investment
No trading
revenue
Potentially
sustainable
>75%
revenue
Breakeven
from
revenue
Profitable
surplus
reinvested
Profit
distributing
socially
driven
Profit
distributing
finance
driven
Impact only Blended Value Finance
First
Source: adapted from OECD (2014b).
Impact investments were initially developed by private foundations and high net
worth individuals and families, but are attracting an increasingly diverse set of
actors. A recent survey of impact investors revealed that development finance institutions were
now the largest suppliers of funds for impact investing (42 percent) followed by fund managers
(34 percent) (Saltuk and Idrissi 2014). Development finance institutions entered the space
through investments in micro-finance, which is a subset of impact investing focused on
economically active low-income families (Martin 2013), but are expanding in scope. For
example, the International Finance Corporation (IFC), a member of the World Bank Group that
makes commitments across sectors in the form of loans, equity investments, and guarantees,
recently shifted its focus to the world’s poorest countries. Large financial institutions such as
banks and pension funds have been more hesitant to join but are now also gradually taking
interest. Official donors, as well, are showing increasing interest. For example, the United
Kingdom’s Department for International Development (DFID) recently established the DFID
Impact Programme, which aims to catalyze the market for impact investments in South Asia and
sub-Saharan Africa through support to the broader eco-system and the creation of an impact
fund that supports businesses that reach low-income individuals (DFID 2015).
New financing mechanisms are opening up opportunities for collaboration across
non-state and state actors. Impact bonds (see Box 3), for example, harness private capital
towards social services such as education while maintaining a focus on achieving outcomes.
With these bonds, the theory is that performance management expertise from the non-state
sector has the potential to improve quality and equity, though it remains to be seen whether or
not this mechanism is able to achieve efficiencies at a larger scale than at the individual project
level (Goodall 2014).
14
Box 3. Impact bonds for education.
The social impact bond (SIB), or pay for success financing (PFS, as it is generally known in the
United States), is a type of impact investing mechanism in which private capital is used to
finance social services with repayment from the government being contingent on the
achievement of an outcome. “Development impact bond” is a term used for a social impact
bonds in low- and middle-income countries where a donor agency or a foundation makes
repayments once the outcome is achieved, as opposed to the government (although some
combination of government with a third party is also possible).
To date, there have been nearly 40 SIB and DIB transactions contracted globally for social
services ranging from reducing prison recidivism (the target of the first social impact bond) to
foster care avoidance to malaria. Few impact bonds focus on education, with only one focusing
on education in a developing country—an investment in girls’ education in Rajasthan, India
(Instiglio 2015).
The main benefits attributed to impact bonds are: 1) a shift of focus to achievement of outcomes;
2) the financing of preventive services with future benefits and potential cost savings; 3) the
circumvention of rigidities in government budgets and politics; 4) a reduction in risk for
government and service providers; 5) the encouragement of innovation in service provision and
data collection; 6) responsiveness and adaptability in the implementation of interventions; 7) an
alignment of interests across multiple parties; and 8) help in achieving scale through potential
reallocation of (government) resources towards social service delivery once results and potential
savings are demonstrated.
The evidence of impact bonds’ ability to achieve better outcomes remains to be seen as only a
handful of programs have reached the point of repayment. Nevertheless, lessons from existing
transactions should be used to explore the potential for innovative financing mechanisms to
harness private capital for education.
C. Non-state giving and impact investing. What does it add up to?
Achieving the Education for All and ambitious Sustainable Development Goals
(SDGs) will require significant scaling of financing and delivery. Even with an
increase in domestic public expenditure, UNESCO estimates that the financing gap for
delivering good quality universal education from pre-school through junior secondary levels by
2030 in low-income countries will be $10.6 billion, on average, between 2015 and 2030—over
four times the level currently provided by official donors ($2.3 billion) (UNESCO 2015b). And of
course, even if fully financed, education systems also need to deliver the quality education
expected. Systems of education need to work effectively and efficiently to transform resource
inputs into meaningful outcomes.
An important starting point when analyzing the role of non-state actors is to
recognize that the largest portion of non-state spending is by households. This
15
includes direct spending related to attending schools such as school fees, spending on uniforms
and school supplies, and ancillary services (transport, meals, etc.). It can also include indirect
spending such as private tutoring and other extra curricular activities. Household spending on
education can be substantial and a barrier for the poor. There is an astonishing lack of data on
total spending on school fees and other household spending on education, and only rough
estimates are possible. A survey in 15 African countries suggests that average total household
spending amounted to 1.7 percent of GDP, equivalent to a little under half of public expenditure
(at 3.7 percent of GDP).8 Shares vary by level of education. Household expenditure on education
as a percentage of total public spending was 33 percent at primary and 68 percent at lowersecondary education. Spending also varied considerably by country. In Benin, households spend
10 times as much on education as a share of total household spending in comparison to Chad
(Foko et al. 2012). Very rough estimates—assuming that these sample African countries are
representative of low-income countries generally—would suggest that households spend around
$16 billion in low-income countries on basic and lower-secondary education, in comparison to
the $36 billion9
that governments spend.10
Much attention is being paid to charitable giving and impact investment as key
complements to state financing to achieve the Education for All goals. This is because
of their potential to reduce the financial burden on households due to their charitable or
concessional character (impact investments often have below market returns), their explicit
focus on promoting social impact (including reaching poor populations) and, in the cases that do
generate financial returns, the amount of capital available could be many times larger than
philanthropic or government budgets.
It is difficult to estimate precisely how much non-state charitable giving and
impact investing is being devoted to global education. There are several challenges in
deriving this data, resulting in various studies coming to different conclusions. First, studies
have used different definitions of basic terms that have led to discrepancies in calculations.
Second, data are simply not available. This is especially true with regard to giving by non-state
actors since many donors wish to remain anonymous or may be reluctant to release full data on
their giving or investments.
11
Recognizing data are incomplete, we summarize some of the available estimates in Table 3.
8
This includes school fees, school supplies, and other spending.
9
Government expenditure is estimated at $25 billion for basic education and $11 billion at lower-secondary level (UNESCO
2013a).
10 It should be noted that in some countries, household incomes and spending are significantly enhanced by remittances. Total
remittances to developing countries are estimated to be nearly three times the size of official development assistance, and in a
number of developing countries remittance flows represent more than 10 percent of GDP, twice the average 4-5 percent of
GDP spent on education. Remittances are used for household consumption and investment, including in education.
11 Note that the problem with lack of good data on non-state financing is not limited to just the education sector, but to other
areas of development as well (Henon 2014).
16
Table 3. Available estimates on charitable giving and impact investing
Destination Charitable giving Impact investing
Total to all countries N/A $46 billion* (Saltuk and Idrissi
2014)
Total to education in
all countries
$8 billion (D. Capital Partners
2013)
$3 billion (D. Capital Partners
2013)
$1.4 billion* (Saltuk and Idrissi
2014)
Total to developing
countries
From OECD countries:
$30 billion (OECD 2014a)
$45 billion (Henon 2014)
$59 billion (The Center for Global
Prosperity 2013)
$32 billion* (Saltuk and Idrissi
2014)
Total to education in
developing countries
Major foundations:
$135 million (van Fleet 2011b)
Major corporations:
U.S. Fortune 500: $0.5 billion (van
Fleet 2011a)
Global Fortune 500: $1.1 billion
(Dattani et al. 2015)
CSOs:
$2 billion (rough estimate based
on Henon 2014)
Domestic giving (emerging):
Multilatinas: $0.6 billion (van
Fleet, 2012)
$1 billion* (authors estimate
based on Saltuk and Idrissi 2014)
*Total amount of assets under management in 2013 in survey of 125 investors, of which 3 percent was devoted to
education.
Estimates of total giving from charitable institutions or individuals in OECD
countries to developing countries for all sectors vary between $30 billion and $60
billion. Estimates vary in part due to different definitions of private giving as well as
underreporting, which could result in an underestimation of amounts.12 The United States
provides the highest share of private gifts, at 67 percent, according to one study (Henon 2014).
However, despite varying estimates, it is clear that private grants have become an important
source of development finance. Such grants are equivalent to about 25-45 percent of total
official development assistance (ODA), which stood at $135 billion in 2012; 5-10 percent of total
foreign direct investment; and around 10-15 percent of remittances (OECD 2014a).
12 A study of by the Hudson institute compares OECD figures on private giving in 14 countries (as reported by member countries
of the OECD) with other sources and finds figures reported to the OECD hugely underestimate the actual value of donations to
overseas causes (The Center for Global Prosperity 2013).
17
While there is clear growth in the field of impact investing, reliable estimates of
the total size of investments do not exist, especially in terms of investments in
developing countries or directed to education. The most comprehensive survey of 125
investors (with assets under management of $10 million or above) by J.P. Morgan and the
Global Impact Investing Network (GIIN) found that those investors had $46 billion in impact
investments under management globally, of which $32 billion was invested in developing
countries. The same study also highlighted that new impact investments totaled $11 billion in
2013 and investments were expected to grow by 19 percent to $13 billion in 2014 (Saltuk and
Idrissi 2014).
Education in developing countries is of relatively low priority for charitable giving
by foundations and corporations, amounting to only around $1 billion. While data
are highly incomplete, one study estimated major foundations and Fortune 500 corporations
spent about $500 million and $135 million, respectively, in 2011 on education in developing
countries (van Fleet 2011b). Another more recent study estimates total corporate spending
(corporate social responsibility) on education priority areas13 in developing countries by Fortune
500 companies to be $1.1 billion—just under 10 percent of their total corporate social
responsibility spending on education (Dattani et al. 2015). Weak data as well as variation in
country groupings and methodologies make it difficult to compare estimates. Data suggest,
however, that grants to education are more limited than grants to other sectors. U.S.
foundations, for example, directed 9 percent of total international giving to education in 2010,
compared to 41 percent to health (Foundation Center 2012). Interestingly, education features
much more strongly in domestic grant-making and was the top-ranked field by share (at 23
percent) in total foundation giving in 2011 (Foundation Center 2013).
Besides foundations and corporations, education in developing countries is also
supported by charitable giving from individuals who often channel their gifts
through civil society organizations, including religious organizations. Estimates of
the size of this giving for education do not exist. We do know, however, that foundations and
corporate giving only account for just over one-third of total private development assistance
(Henon 2014). Assuming this also applies to education, it is likely that an additional $2 billion of
charitable giving through individuals and CSOs in OECD countries is directed towards
education, suggesting that charitable giving to education is roughly equivalent to ODA to basic
education. Finally, the most recent survey estimates total global impact investment in education
at $1.4 billion in 2013, of which an estimated $1 billion may be invested in developing countries
(Saltuk and Idrissi 2014).
14 Figure 6 provides a summary of non-state charitable giving
estimates compared to the total cost of achieving basic education for all.
13 Defined as spending on pre-primary, primary, and secondary education in Africa, Asia Pacific, and Latin America.
14 About 70 percent of total impact investments are allocated in developing countries. Applying this same percentage to
education generates an estimated $1 billion of impact investments in education in developing countries.
18
Figure 6. Non-state financing of basic and lower-secondary education in
developing countries compared to the total estimated cost of universal access ($77
billion).
Source: author estimates based on Dattani et al. (2015), UNESCO (2013a), Foko et al. (2012); *includes
pre-primary, primary; lower-secondary and basic life skills for youth and adults (UNESCO 2013a);
**estimates for total education; breakdown by level is not available.
Foundations and individuals in developing and emerging economies are becoming
increasingly notable sources of finance for education (e.g., the MTN Foundation in
Nigeria and the Bharti Foundation in India) (Bellinger and Fletcher 2014). Illustrating a wider
trend of increased giving by emerging economies, of the 15 countries showing the largest
increase in the 2013 giving index, only one was a high-income country (CAF 2014). Recently,
African philanthropists and social investors gathered for the first African Philanthropy Forum in
Addis Ababa to share knowledge and coordinate efforts. Anecdotal evidence suggests that
donors in emerging economies are more interested in supporting education than their OECD
counterparts. For example, a survey of Arab donors found that their cultural and religious
traditions—Islamic guidelines strongly encourage giving to education (Jalbout 2014)—provide a
strong foundation for greater engagement in the future. Similarly, a 2011 survey of the 100
largest Latin American multinationals estimated their giving to education in the region at a total
of $600 million (van Fleet & Zinny 2012). Equally, a recent survey of Indian philanthropists
shows education as the most important cause for support (Bain & Company 2015). Further
engagement with donors in developing and emerging economies could present an opportunity
to grow philanthropic flows to education.
77
36
16?
3 3? 1?
0
10
20
30
40
50
60
70
80
90
Total cost* Domestic Public
Spending
Household
Spending
ODA Charitable
Giving**
Impact
investing**
Billion (USD)
19
III. What is the role for non-state actors? Arguments and
evidence.
Discussions of financing and delivery needs have not adequately addressed what
role different actors could and should play in fulfilling these needs. While the Dakar
declaration states that “no country seriously committed to Education for All will be thwarted in
their achievement by lack of resources,” there is no clear agreement as to how these resources
would be mobilized or what role different actors would play. The Fast Track Initiative (now
Global Partnership for Education) was established with the idea that it would be able to identify
and fill gaps, but despite good effort major resource challenges remain. However,
disappointingly, 15 years after Dakar, educational progress in many countries is indeed held
back by lack of resources.
Education agendas are not prioritized and there are no accepted comprehensive
plans to deal with resource shortfalls. This leaves a number of challenging questions: In a
world of scarce and sometimes ineffectively used resources, how can equitable quality education
be achieved in the short and long term? What is an appropriate role for state and non-state
actors? Answers to these questions vary widely depending on the respondent’s background and
discipline.
Child rights activists, motivated by the Universal Declaration on Human Rights
and the Convention on the Rights of the Child, have called on governments to
fulfill their responsibility in delivering the Education for All agenda. They have
emphasized education as a public good and “the State as a custodian of the quality of education”
(UNESCO 2014). But in the face of a failure of public bodies to provide adequate finance and
delivery capacity, the role of non-state actors as potential providers of basic education and the
role of some form of cost recovery at higher levels of education still need to be clarified.
By contrast, many economists have treated education as an investment that
benefits both individuals (i.e., as a private good) and societies (i.e., as a social
good) (e.g., Psacharopoulos 2014, Psacharopoulos and Patrinos 2002, Montenegro
and Patrinos 2014). Education produces benefits for societies that go beyond the benefits to
the individual being educated. Because education has these important externalities, it requires a
public subsidy to ensure that it is “produced” in socially optimal quanitities. When available
resources and capacity limit countries’ ability to deliver free education across the board, (social)
rates of return analyses are used to help prioritize allocation of scarce public resources. Using
this evidence, economists have recommended directing public resources towards lower levels of
education where social rates of return are the highest. Mixed models including some public and
private financing are generally proposed for higher levels of education justified by higher ratios
of private to social returns.
In response to the growing demand for non-state actors to engage during the past
decade, a number of specialists have highlighted the potential benefits and costs of
non-state actors in education. Arguments in favor or against, summarized in Table 4, often
focus on a number of key principles, including those promoted in international human rights
20
law such as the Convention on the Rights of the Child and global declarations and goals such as
and the Education for All goals:
- Access and scale. Basic education should be compulsory and freely available to all
children. Secondary and higher education should be accessible to all, with appropriate
financial assistance in case of need.
- Quality. Education should enable students to acquire basic skills of literacy and
numeracy. In addition, education should “develop the full human personality and
respect for human rights.” The focus on education as an enabler of social justice has been
re-emphasized in the SDGs. This is important as it is this role of education that some feel
non-state education puts under threat (MacPherson 2014).
- Equity. Education should be accessible to each child regardless of ethnic, gender,
disability, or socio-economic background.
- Cost effectiveness and efficiency. Education should be provided using the most
effective delivery methods at the lowest costs. Cost effectiveness considerations should
be understood in relation to the goals that need to be achieved (including quality and
equity). For example, it may cost more per unit to reach marginalized groups.
21
Table 4. Arguments in favor of and against non-state engagement in education.
Arguments in favor of non-state
engagement
Arguments against non-state
engagement
Access and Scale
The public sector is not able to keep pace
with demand for education. Charitable
giving and non-state investments can help
mitigate financial constraints. Non-state actors
can also help provide much needed capacity to
deliver education.
The public sector is responsible for
providing and financing education.
Financing gaps need to be closed by raising
domestic tax revenue and international donor
finance. Non-state support can only be a
temporary stop-gap measure.
For-profit actors (investors/providers)
reach scale and maximize profit at the
expense of teacher pay and quality of
learning.
Quality
Competition and choice. The non-state
actors can compete with the state sector for
students. This provides incentives to increase
the quality of education.
Accountability and results focus.
Partnerships with non-state providers can
include measurable outcomes and
requirements for the quality of education. This
can raise the quality of education.
Information asymmetry. Poor households
do not have enough information to be able to
judge quality of schooling and benefit from
competition (and if they do may not have the
means to pay for it). Competition can
undermine public schools and may not yield
quality or innovation.
Weak accountability. Higher learning
outcomes are achieved because the non-state
actors attract more advantaged children. Legal
frameworks and accountability mechanisms
are too weak to enforce results-based
partnerships.
Equity
Flexible and innovative approaches of
non-state actors allow them to reach
population groups governments are
unable to reach. Innovations can be scaled
through the public system.
Targeted support can guarantee
equitable access to non-state schools.
Government can support publicly funded
students in non-state (for-profit) schools (using
vouchers, for example) often at lower per
student cost than in the public sector.
Business and social impact can go
together. New class of impact investors are
focused on social outcomes and reaching lower
income brackets.
Free public schools can have higher
indirect costs than low-fee private
schools.
Non-state schools cannot reach the poor
without state subsidy, making them a
public responsibility.
- For-profit non-state actors have no
essential interest in delivering education to
the poor.
- Non-profit actors cannot deliver services
on a national scale without relying on a
public subsidy.
Non-state schools attract children from
better socio-economic backgrounds,
whose parents can afford the fees, and
perceived social status from attending those
schools is signaled to employers.
State subsidy schemes (e.g., vouchers)
are ineffective and lead to inequalities
even in countries with strong regulation.
22
Cost effectiveness and efficiency
Flexibility (e.g., in teacher contracting
and innovation). Non-state actors have more
autonomy in hiring teachers, organizing
schools, and introducing program innovations.
Risk-sharing. Engaging non-state actors can
increase risk-sharing between the state and
non-state sector. This can increase efficiency
and channel additional resources to education.
Effects on wider education system. Nonstate schools can undermine the effectiveness
of the public education system. Leaving public
schools to cater to the poorest and least
educationally advantaged at high cost.
Risk-sharing. Students and families bear the
burden of risk in risk-sharing schemes, not
non-state or government actors.
Perverse incentives. Cost savings rest on the
inappropriate and unsustainable treatment of
the teaching workforce, particularly women.
They also go at the expense of quality by, for
example, employing unqualified teachers or
excessively standardizing education.
Source: Rose (2006), Lewin (2007), Patrinos et al. (2009), MacPherson et al. (2014), Sandefur and Watkins (2012).
A. Strengths and weaknesses of non-state actors in delivery
Findings of recent meta reviews on the impact of non-state actors on key outcome
criteria highlight the evidence supporting or refuting arguments is highly mixed.
Two recent meta-reviews (Day Ashley et al. 2014, Wales et al. 2014) have assessed available
evidence on the impact of non-state actors on quality, equity, and cost effectiveness of education
provision.
15 Table 5 summarizes some of the primary findings.
Table 5. Selected findings of meta-studies on private and non-state provision.
Private schools Non-state religious and
philanthropic schools
Quality – student
learning
Moderate evidence that private schools
outperform public schools—however,
many studies do not control for socioeconomic background creating
ambiguity about the true effect
Moderate evidence that non-state
schools outperform public schools;
notably in improving school readiness
for marginalized groups; and for
philanthropic schools working with the
state
Equity – access
for the poor and
marginalized
Inconsistent evidence that private
schools reach the poor; but consistent
evidence that private schools operate
in rural areas.
Inconsistent evidence on whether poor
are able to afford private school fees.
Strong evidence that non-state schools
target their provision to the poor
Cost effectiveness
– cost of
provision
Moderate evidence that private schools
have lower costs of education delivery
due to lower salaries of teachers.
Inconsistent evidence that private
schools are vulnerable to closing down.
No studies focused on cost
effectiveness
15 The review also considered a number of other variables including demand variables such as affordability, choice,
and accountability, as well as variables related to the enabling environment.
23
Source: Day Ashley et al. 2014, Wales et al. 2014.
Note: “Weak,” “moderate,” and “strong” refer to the degree of consistency in findings across studies
(using a diversity of methodological approaches). Strong evidence means 75 percent of studies are
clearly supporting/refuting the hypothesis, moderate evidence means 50-75 percent are clearly
supporting/refuting the hypothesis, and weak evidence means findings are inconsistent with less than
50 percent of the studies supporting/refuting the hypothesis.
The studies highlight a number of important problems with available evidence, which affect our
ability to draw conclusions about the true impact of non-state provision on equity and quality
indicators (Day Ashley et al. 2014, Wales et al. 2014):
- Rigorous quantitative studies, including those with randomized designs, are
limited, especially in developing countries, making it near impossible to draw
conclusions with regards to the relative performance of non-state versus state schools.
Compounding this issue, most studies do not control for socio-economic status or other
external variables and evidence is particularly poor when it comes to philanthropic and
religious schools (i.e., non-state schools that do not rely on fees for operation), where most
studies seem to rely on qualitative or secondary data in which external variables are often
not controlled for. In addition, while some rigorous studies exist, meta-studies have tended
to aggregate rigorous and less rigorous evidence, often introducing noise in conclusions. To
draw generalizable conclusions around the impact of particular types of non-state provision,
a more consistent and rigorous set of studies will be needed.
- The literature on non-state provision in developing countries is concentrated in
a handful of countries in South Asia and some in Africa. Over half of the studies on
non-state schools examine cases in India and literature on religious schools is heavily
concentrated on madrassas, limiting applicability to other development contexts.
- Limited evidence exists around the impact of the system as a whole (including
public and non-state providers) to deliver quality education in an equitable way (a notable
exception includes insights from specific contexts such as Nepal; see Joshi 2015). There is a
lack of conclusive evidence on the relationship between state and non-state providers; what
factors drive their collective performance; and whether non-state schools reduce or increase
the quality of public schools.
In addition, we note that very few studies (including the referenced meta-reviews)
explicitly consider the variation in ownership, management control, and financing
arrangements for different non-state schools. For example, while a broad distinction is
made between private and religious/philanthropic schools (Day Ashley et al. 2014, Wales et al.
2014), no clear distinction could be made based on the source of finance or degree of cost
recovery in non-state schools.16 As well, only three (all in Pakistan) of the 59 studies considered
in the review examine the impact of state subsidies on quality and equity (Day Ashley et al.
2014). As a result, there are still legitimate questions as to which approaches best use public
finance to leverage non-state actors’ involvement in different contexts (e.g., public contracting
or voucher/choice models) or how the cost-effectiveness of for-profit, non-profit, and public
16 For the private review, authors sought to identify cost recovery but were not able to due to lack of evidence (correspondence
with author).
24
providers serving low-income populations compares to education provision in traditional public
institutions.
Finally, while many studies analyze the differences in state and non-state
provision in terms of quality and equity, fewer analyze the enabling conditions
that may have played a role in determining outcomes, both positive and negative.
17
There is a critical need for more evidence on how and under what circumstances non-state
actors (or state actors, for that matter) contribute to quality, equitable, and efficient education
service delivery—particularly in low-income settings. Equally, studies suggesting negative effects
could be explored to determine what barriers would need to be overcome to produce more
positive results.
B. Strengths and weaknesses of non-state financiers
There are very few comprehensive studies on the impact of non-state charitable
giving and non-state investments in the field of education, making it difficult to draw
conclusions about their contribution to achieving Education for All goals. There are many
challenges associated to the measurement of impact, compounded by differing views as to what
impact even means. For example, investors often use the term “impact” to signal success in
targeting specific parts of the population by poverty level (which, in itself, can vary greatly in
measurement), gender, or setting (urban/rural) (DFID 2015). Missing in many studies is an
examination of impact relative to a counterfactual. However, this can prove difficult due to
challenges in separating the financing mechanism from the intervention itself. Similarly, beyond
these direct impacts on outputs and outcomes, there can also be impact on the broader
education system and on the financial ecosystem that may have indirect impacts on education
outcomes. The IRIS database of the GIIN is one attempt at tracking the reach of impact
investors globally. Nevertheless, this system does not take into consideration impacts on
outcome metrics such as learning or health indicators. In addition, it depends on self-reporting
by impact investors themselves.
Charitable giving is small compared to total costs of education but similar in scale
to ODA. Like ODA, then, it has the potential to be used smartly to reach the most marginalized
or unlock other sources of finance (by sharing risk) to achieve greater scale.18 The modest size of
philanthropic support to basic education is a major reason why some people are advocating
drawing in greater volumes of private capital into basic education through impact investments.
But, the potential for impact investing in education also remains untested. A number of studies
have pointed to challenges in “growing impact investments,” including identifying sustainable
and scalable investment opportunities (Martin 2013). And while this idea has been successfully
applied in micro-finance, investments in education, especially basic education, may be
particularly challenging. A recent report identifies a number of special challenges to attracting
non-state financing to education (Filipp and Lerer 2013). They include:
17 Batley and Rose (2011) is one of the few examples summarizing evidence from a project that did try to identify enabling
conditions.
18 See OECD Development Cooperation Report for recommendations on how public grants and concessional financing can
unlock other sources of finance (OECD 2014a).
25
- A long investment timeframe. The effect of a dollar spent on health and infrastructure is
generally apparent over a shorter period of time than the same amount of money spent
on education.
- Value chain complexity. There are many actors involved in the delivery of education
including financiers, governments, suppliers, and service providers. Interventions can be
funded along multiple points in the value chain, or even targeting the whole value chain.
- Predominant role of the public sector. Education is largely funded by governments.
Other sectors have a higher degree of private engagement than education.
- Complex rate of return metrics. It is not always clear how returns on investment in
education are best measured. Investors generally have a preference for outcomes that are
more easily quantifiable and within a shorter timeframe, which can be a challenge in
education.
- Higher burden of evidence. In education, the burden of evidence is learning outcomes,
which may be more difficult to achieve than more affordable products, for example, in
the case of microfinance.
Evidence suggests that charitable giving through foundations and CSOs tends to be
focused on low-income countries, while corporate giving tends to be focused on
middle-income and emerging markets. Resources from corporations are generally
targeted towards regions of business or strategic interest. One study, for example, highlights
that emerging economies—China, Brazil, India, Chile, Mexico, and Argentina—are often the
most frequent recipients of giving from the technology sector (van Fleet 2011b). However, data
on the degree to which non-state actors are targeting the most marginalized is highly
intransparent and need to be interpreted with caution.
While regional data on education impact investing are meager, a survey of impact
investments across all sectors shows North America receives the highest amount
of investment, at 22 percent, followed by Latin America and the Carribean (LAC) at
19 percent and sub-Saharan Africa (SSA) at 15 percent. Only 3 percent of the total
investments are in education, however, and there are no data on investment specifically in
developing countries (Saltuk and Idrissi 2014). A Dalberg study reports that education impact
investors focus their investing in SSA and LAC, in addition to South Asia (D. Capital Partners
2013). Within these regions, most impact investors tend to focus their attention on middle- and
upper-middle-income individuals (see Figure 7). According to Dalberg, these regions show
potential for impact investing because they have large vulnerable populations who aspire to
improve their lives and are faced with public education systems that are either of poor quality or
are inaccessible (D. Capital Partners 2013).
26
Figure 7. Grants and investments in education by investor type and beneficiary.
Source: D. Capital Partners (2013) published by Open Society Foundations.
Data are scant but surveys suggest that charitable grants (in particular by
corporations and some foundations) and impact investments are not well aligned
with Education for All goals. A recent survey shows that only 30 percent of total education
corporate social Responsbility (CSR) during 2011-2013 was focused on primary and secondary
education, while more than 50 percent was devoted to higher education and vocational training
(Dattani et al. 2015). Comprehensive evidence on the focus of foundations does not exist, but the
Carnegie Corporation and the Ford Foundation, who give the most to education, directed more
than 80 percent of their grants towards scholarships and support for higher education in 2010.
Exceptions include the Open Society Foundation, the Children Investment Fund Foundation,
and the Bernard van Leer Foundation, which pay particular attention to early childhood, and
others, such as the William and Flora Hewlett Foundation, which has long supported programs
to improve the quality of basic education (UNESCO 2013b).
The landscape of private financing is highly fragmented with a multitude of small,
often uncoordinated projects, suggesting a relatively weak cost efficiency. For
example, 50 percent of companies that provide corporate grants in Latin America reported that
they did not coordinate investments at all (Van Fleet and Zinny 2014). Deal sizes related to
impact investing in education also remain small and vary across thematic area of investment.
The largest deals relate to support for service providers at an average of $10 million, followed by
technology at $5 million. Investment in K-12, tertiary education, teacher training, and content
were all reported to have average deal sizes of under $1 million (D. Capital Partners 2013).
27
Education funders tend to focus on school infrastructure and providing services
rather than looking at the broader education system. A recent study shows that the
most prevalent type of impact investment is in physical capital, such as school infrastructure,
followed by direct investments in human capital (e.g., student loan programs, vocational
training, and teacher training), and technology and service models. The area least invested in is
the development of educational systems. Greater impact on quality, equity, and cost
effectiveness could potentially be achieved if private funders focused more on eco-system
investment, such as back-office management systems that reduce teacher absenteeism (D.
Capital Partners 2013).
IV. In search of common ground
An overarching message from our analysis on the appropriate role for non-state
actors is that it is not a “black and white matter” but one of degrees—and highly
dependent on context. In evaluating the contribution of non-state actors, a number of areas
of common ground seem to emerge. The following propositions are intended to frame this
common ground.
Basic education should be freely available and accessible to all
Basic education should be freely available to all children, regardless of the type of
provision or financing arrangement. This implies that in the medium term, a combination
of state and non-state charitable resources would need to be found to finance basic education
provision. This leaves a question about what can be done in the short term in those countries
where sufficient resources do not exist. In the first instance, domestic resource allocations could
be examined to determine whether existing resources are being spent in a way that maximizes
social returns, and whether there are areas (e.g., higher education) where partial cost recovery
could help create fiscal space. In many countries, the allocation of resources is highly
inequitable. By prioritizing higher levels of education some low-income countries spend a
significant share of their resources on wealthier and more advantaged children. A recent study
by UNICEF estimates that in low-income countries, 46 percent of public spending is allocated to
educate the 10 percent of students who are most educated. In lower-middle-income countries
the percentage is 26, and in high-income countries, 13 percent (UNICEF 2015).
Non-state actors in education are highly heterogeneous and
generalizations are dangerous
Non-state actors in education are best characterized along a continuum rather
than as a dichotomy. Any discussion or analysis of the impact of non-state actors would
ideally need to include a clarification of ownership, management (including accountability), and
financing arrangements. The distinction between state and non-state actors is increasingly
blurred and identifying what combinations of state and non-state engagement are most fruitful
could be helpful.
28
Based on a combination of provision and financing typologies, the following
framework could be considered (Figure 8).
Figure 8. State and non-state actors on a continuum
Note: FP = for-profit and NFP = not-for-profit.
Rules of the game are more important than actors
The distinction between state and non-state is less important than the set of
institutions and the “rules of the game” to which actors of the system respond and
the degree of collaboration between state and non-state actors. The issue is not one of
favoring one modality at the exclusion of another, but rather finding an appropriate
combination of options that enhance service delivery of the whole system, for everyone and in
particular the poor. The significant variability in research evidence suggests that the impact of
non-state actors in education depends greatly on government strategy, the regulatory
environment, the design of the partnership between state and non-state actors (including
accountability relations), and the capacity of the government to oversee and enforce its
regulations and partnerships.
To date, there are few rigorous or quantitative tools to assess the quality of the
enabling environment, which affects policymakers and analysts’ ability to judge
the degree to which non-state engagement could produce positive outcomes, and
what interventions could help improve outcomes. A few initiatives have emerged in
No fees
State
financed
State
provided
e.g., public
schools
No fees
State
financed
Non-state
(NFP)
provided
e.g., faith
schools
No fees
State
financed
Non-state
(FP)
provided
e.g.,
charters
No fees
Non-state
giving
Non-state
(NFP)
provided
e.g.,
foundation
school
Low fees
Non-state
investment
and
provision
(NFP/FP
impact
first)
e.g., LFPS
Market
return fees
Non-state
investment
and
provision
(FP/finance
first)
e.g.,
private
schools
29
recent years, including the Africa Private Schools Investment Index and the World Bank’s
SABER19 framework for engaging the private sector in education (Lewis & Patrinos 2009).
Non-state actors must be regulated carefully
Governments have a responsibility to ensure that all children can receive a good
education whatever the delivery or financing mechanism. For both state and non-state
schools, mechanisms and regulations need to be put in place to ensure the best quality
education is produced with available funds. For non-state actors, these regulations include
processes for entry and exit. In addition, financing and quality assurance arrangements also
have to be established (Fielden & LaRocque 2008).
Entry. Ensuring the supply of high-quality non-state providers requires a level playing
field and clear rules of engagement. Governments will need to clarify rules of
engagement across a range of issues highlighted in Table 6.
Table 6. Rules for engagement for non-state actors.
Rules on engagement Rules on inputs Policies on services
Accreditation
Registration
Licensing
Approval to operate
Teacher certification
Curriculum requirements
Reporting requirements
Transportation
Textbooks
Testing
Nursing and health
Technology
Professional development
Exit. The flexibility gained from engaging non-state actors is realized only when there
are systems for challenge and sanction. Effective intervention systems display the
following characteristics. First, education authorities must have clear mechanisms for
intervening where there is under-performance. This should be informed by regular
monitoring, sensitive data systems, and quality assurance processes. Where there is
serious failure, education authorities should be able to intervene swiftly with high-stake
sanctions (including school closure). Market conditions and a regulatory environment
should allow for additional, high-quality providers to take over failing provision quickly
and efficiently.
Quality Assurance. Effective quality assurance systems allow policymakers to hold
non-state actors to account. They include clear lines of accountability at the teacher,
school, and system levels. This is combined with a defined role for national and local
inspectorates; clear expectations and standards for every school in the system, and a
transparent process for ensuring schools know what is expected of them. Ideally, the
19 SABER collects and analyzes policy data on education systems around the world, using evidence-based frameworks to
highlight the policies and institutions that matter the most to promote learning for all children and youth. SABER can be
accessed at http://saber.worldbank.org.
30
inspection process is evidence-driven, focusing particularly on student-level data and
open to engagement of key stakeholders, including the wider public.
A balance will need to be struck between regulating sufficiently to manage de facto
growth of non-state actors and regulating lightly to enable innovation in achieving
education outcomes. One of the major arguments for engaging non-state actors in education
is their ability to innovate. This may include giving non-state actors freedom to adapt the
curriculum to suit their student populations or devise local policies to ensure high standards of
discipline, providing teachers with autonomy over teaching methods to stimulate personalized
learning, and providing budgetary freedom to pursue strategic priorities and reward highquality staff.
National dialogue can help provide clarity
Since non-state actors are a reality in most countries, policy dialogue and national
strategies may help clarify the role of non-state actors both in the short and long
term. In many developing countries, governments are willing to tolerate non-state actors but
they are less keen to explicitly encourage non-state engagement as this may be interpreted as
governments forgoing their responsibility (Rose 2006). As a result, the place of non-state actors
in national education delivery is often ill-defined and their activities take place in a policy
vacuum. In order to ensure non-state actors contribute positively to the national agenda for
educational development, it is important to define what role they should play in it (Fielden and
Larocque 2008). This could include providing broad guidelines around the type of actors (or
state and non-state contractual arrangements) that are allowed to operate as well as more
specific guidelines around how these actors should help achieve access, quality, equity, and cost
efficiency goals.
31
V. Questions for discussion
1. Is the proposed typology (Figure 8) helpful in thinking about the non-state actors in
education? If not, why not? How could it be improved?
2. Given state (including donor) finance and delivery capacity are inadequate to reach global
Education for All goals, is there agreement that in developing countries state and non-state
actors will be present and need to work together to achieve the goals?
a. Which non-state actors should be involved?
b. At what levels of education?
c. On what timeframe (short, medium, or long term)?
3. What are the key elements needed for regulating non-state provision and financing? How
can this regulatory capacity be developed?
4. What do we not know that we urgently need to know? How can we find it out?
32
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36
VII. Annex: UN Declarations and Goals
Several international declarations have specified the kind of education that is
required for progress. The Universal Declaration on Human Rights (1948) provides a
powerful foundational statement around the universal right to education, the role of education
in the development of human personality and respect for human rights, as well as the individual
right of parents to choose among different educational options. This was reinforced in the
Convention on the Rights of the Child (1989). Both documents provided a basis for subsequent
education-specific declarations. The Education for All Frameworks for Action agreed in Jomtien
and Dakar called for expansion of early childhood education, free and compulsory quality
primary education, expansion of and equitable access to youth and adult literacy programs, and
elimination of gender disparities in primary and secondary education. The Millennium
Development Goals (MDGs) reinforced two of these goals: universal access to primary education
(MDG 2) and gender equity in primary and secondary education (MDG3). Building on the
MDGs, an agenda with much greater attention to quality and equity has been adopted in the
recently confirmed Sustainable Development Goals.
Universal Declaration of Human Rights – Article 26 (1948)
1. Everyone has the right to education. Education shall be free, at least in the
elementary and fundamental stages. Elementary education shall be compulsory. Technical
and professional education shall be made generally available and higher education shall
be equally accessible to all on the basis of merit.
2. Education shall be directed to the full development of the human personality
and to the strengthening of respect for human rights and fundamental
freedoms. It shall promote understanding, tolerance and friendship among all nations,
racial or religious groups, and shall further the activities of the United Nations for the
maintenance of peace.
3. Parents have a prior right to choose the kind of education that shall be given
to their children.
Convention on the Rights of the Child (1989) – Articles 28 and 29
Article 28
1. States Parties recognize the right of the child to education, and with a view to
achieving this right progressively and on the basis of equal opportunity, they
shall, in particular:
(a) Make primary education compulsory and available free to all;
37
(b) Encourage the development of different forms of secondary education, including general and
vocational education, make them available and accessible to every child, and take appropriate
measures such as the introduction of free education and offering financial assistance in case of
need;
(c) Make higher education accessible to all on the basis of capacity by every appropriate means;
(d) Make educational and vocational information and guidance available and accessible to all
children;
(e) Take measures to encourage regular attendance at schools and the reduction of drop-out
rates.
2. States Parties shall take all appropriate measures to ensure that school
discipline is administered in a manner consistent with the child's human
dignity and in conformity with the present Convention.
3. States Parties shall promote and encourage international cooperation in
matters relating to education, in particular with a view to contributing to the
elimination of ignorance and illiteracy throughout the world and facilitating access to
scientific and technical knowledge and modern teaching methods. In this regard, particular
account shall be taken of the needs of developing countries.
Article 29
1. States Parties agree that the education of the child shall be directed to:
(a) The development of the child's personality, talents and mental and physical abilities to their
fullest potential;
(b) The development of respect for human rights and fundamental freedoms, and for the
principles enshrined in the Charter of the United Nations;
(c) The development of respect for the child's parents, his or her own cultural identity, language
and values, for the national values of the country in which the child is living, the country from
which he or she may originate, and for civilizations different from his or her own;
(d) The preparation of the child for responsible life in a free society, in the spirit of
understanding, peace, tolerance, equality of sexes, and friendship among all peoples, ethnic,
national and religious groups and persons of indigenous origin;
(e) The development of respect for the natural environment.
2. No part of the present article or article 28 shall be construed so as to interfere
with the liberty of individuals and bodies to establish and direct educational
institutions, subject always to the observance of the principle set forth in paragraph 1 of the
present article and to the requirements that the education given in such institutions shall
conform to such minimum standards as may be laid down by the State.
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Education for All Goals
Goal 1
Expanding and improving comprehensive early childhood care and education, especially for the
most vulnerable and disadvantaged children.
Goal 2
Ensuring that by 2015 all children, particularly girls, children in difficult circumstances and
those belonging to ethnic minorities, have access to, and complete, free and compulsory primary
education of good quality.
Goal 3
Ensuring that the learning needs of all young people and adults are met through equitable
access to appropriate learning and life-skills programs.
Goal 4
Achieving a 50 per cent improvement in levels of adult literacy by 2015, especially for women,
and equitable access to basic and continuing education for all adults.
Goal 5
Eliminating gender disparities in primary and secondary education by 2005, and achieving
gender equality in education by 2015, with a focus on ensuring girls’ full and equal access to and
achievement in basic education of good quality.
Goal 6
Improving all aspects of the quality of education and ensuring excellence of all so that
recognized and measurable learning outcomes are achieved by all, especially in literacy,
numeracy and essential life skills.
Open Working Group Proposal for Sustainable Development Goals
Goal 4 - Ensure inclusive and equitable quality education and promote lifelong
learning opportunities for all
1. By 2030, ensure that all girls and boys complete free, equitable and quality primary and
secondary education leading to relevant and effective learning outcomes
2. By 2030, ensure that all girls and boys have access to quality early childhood development,
care and pre-primary education so that they are ready for primary education
3. By 2030, ensure equal access for all women and men to affordable and quality technical,
vocational and tertiary education, including university
4. By 2030, increase by [x] percent the number of youth and adults who have relevant skills,
including technical and vocational skills, for employment, decent jobs and entrepreneurship
5. By 2030, eliminate gender disparities in education and ensure equal access to all levels of
education and vocational training for the vulnerable, including persons with disabilities,
indigenous peoples and children in vulnerable situations
39
6. By 2030, ensure that all youth and at least [x] per cent of adults, both men and women,
achieve literacy and numeracy
7. By 2030, ensure that all learners acquire the knowledge and skills needed to promote
sustainable development, including, among others, through education for sustainable
development and sustainable lifestyles, human rights, gender equality, promotion of a culture of
peace and nonviolence, global citizenship and appreciation of cultural diversity and of culture’s
contribution to sustainable development
a. Build and upgrade education facilities that are child, disability and gender sensitive and
provide safe, non-violent, inclusive and effective learning environments for all
b. By 2020, expand by [x] per cent globally the number of scholarships available to developing
countries, in particular least developed countries, small island developing States and African
countries, for enrolment in higher education, including vocational training and information and
communications technology, technical, engineering and scientific programs, in developed
countries and other developing countries
c. By 2030, increase by [x] per cent the supply of qualified teachers, including through
international cooperation for teacher training in developing countries, especially least developed
countries and small-island developing States |