Innovative Financing for Education: Arguments, Options and Implications

The integrated Sustainable Development Goals have prioritized quality improvements and expanded access to universal education through the secondary level. The global community’s struggle to implement the less ambitious Millennium Development Goals implies an urgent need to mobilize resources and develop the capacities necessary for the potentially transformative agenda to be realized. Downward trends in aid allocations to the sector and an estimated annual funding gap of $39 billion have mobilized the development community to identify innovative or non-traditional sources of financing for the sector. The Leading Group on Innovative Financing for Development identifies three features of innovative financing. It must be linked to global public goods, complementary and additional to traditional aid, and also more stable and predictable than traditional aid. Since the Leading Group on Innovative Financing for Development established a task force to explore opportunities in the education sector in 2010, much has been written and discussed about ‘promising’ instruments and financing arrangements but evidence of generating significant and sustainable additional funding at scale remains elusive.  Innovative financing has been presented as an opportunity to generate and leverage funding for the sector through novel mechanisms and partnerships as well as a potential means to improve quality in the sector.  It has also generated skepticism and is plagued by polarizing debates, largely around the assumed promise of the private sector in the financing and delivery of education as a public good. 
 
The Open Society Foundations entered this space in 2010, ushered in by our experience as a participant in the Liberia Education Pooled Fund, a partnership among a multilateral organization, a private foundation, and a developing country government that provided critical funding for education while also strengthening local systems and capacity in a fragile and conflict-affected setting.  We have since partnered with organizations and researchers to define the concept, explore the application of existing instruments, imagine alternative approaches, and map the landscape and activity for approaches such as impact investing. Our experience has revealed a need for increased dialogue and understanding across the various stakeholders in the sector, and, more importantly, for education activists and specialists to develop a deeper understanding of not only innovative financing, but development financing more generally. 
 
This course was designed to deliver an overview of the complex political economy of financing for education, including the range of actors and positions, and explore the current discourses and funding mechanisms and their implications for equitable access to quality education opportunities globally. Following a review of traditional sources of funding and the dynamics determining their current limits and future prospects, the course will move to introducing ideas for possible and non-traditional sources of finance for education. The course has been designed to allow for increased interaction with the stellar faculty and an opportunity to design instruments and advance current proposals.  In addition to the focus on specific instruments and approaches, the course will also entail a discussion of ways to increase domestic resources for education and the critical role of civil society in ensuring efficient and transparent instruments and processes for education financing.  Participants will develop a much deeper appreciation of the political economy in which education finance issues are embedded, the current dynamics regarding traditional sources of finance, current proposals for non-traditional instruments, and future directions in which this work can develop.