Social Finance Israel
SOCIAL IMPACT BONDS

 

   Drop out from higher education is a phenomenon that has profound economic and social ramifications. Globally, approximately one third of students beginning their bachelor’s degree studies

do not complete their education. 

HIGHER EDUCATION

Social finance Israel, in collaboration with the Rothschild Caesarea Foundation, presented  to the leaders of the G8 Task Force an innovation in the approach to reducing drop out rates from higher education, funded through Social Impact Bonds, promoting Israel as hub of social innovation.

Drop out from higher education is a phenomenon that has profound economic and social ramifications. Globally, approximately one third of students beginning their bachelor’s degree studies do not complete their education.

Evidence strongly demonstrates that students from weaker socio-economic backgrounds are most likely to drop out of bachelor degree studies. If these disadvantaged students are to successfully complete their higher education – and, thus increase their chances of economic and social mobility – many will require medium to light academic and social assistance throughout their studies.

In addition to the social consequences, dropping out also has negative economic outcomes, both for the individual and for the institution. From the individual's perspective, in the short-term, education has two associated costs: the financial cost of attending the institution, as well as the opportunity cost of not investing available time and financial resources into other avenues. Both of these are forgone once the student decides to drop out of their education.

Moreover, in the long-term, dropping out translates to a loss of income as a result of diminished future earning power. In the US, for example, those with bachelor's degrees are expected to earn almost $1 million more, over their lifetime, than those with a high-school diploma.

Empirically-proven successful programs have been developed around the world in order to reduce drop out rates from higher education institutions. However, no evidence-based methodology has been consolidated to address the issue, leading to difficulties in creating generic best practice models that are effective and replicable, yet suitable to different populations.

Following the Rothschild Caesarea Foundation`s experience and initial results in implementing an economic model to reduce drop outs from higher education, Social Finance Israel and the Rothschild Caesarea Foundation have worked together to develop a model by which Social Impact Bonds may be utilized in the funding and implementation of an intervention program to alleviate this crucial social problem.

Social Finance Israel expects to begin implementing this Social Impact Bond for the 2014/2015 academic year across several institutes of higher education.