Guiding Principles for Education Finance

The USAID Education Policy’s focus on “sustained, measurable improvements in learning outcomes and skills development” is at the heart of USAID’s work in education finance, and USAID’s interest in education finance is focused on sustainability.  

As the Policy’s guiding principles express, USAID is committed to supporting the sustainability of local systems — both public and private — to enable them to provide education in the present and the future. The Policy’s six guiding principles are:

1.  Prioritize Country-Focus and Ownership
Country focus starts with understanding education and related systems, as well as a country’s education priorities and outcomes and its commitment to education and capacity to deliver (key elements of the Journey to Self-Reliance).  USAID might support this through a country-level political economy analysis of the education sector, as well as analyzing governments’ budgets, public expenditures, service delivery, and conducting activities to map the array of stakeholders in education finance.

2.  Focus and Concentrate Investments on Measurably and Sustainably Improving Learning and Educational Outcomes
For both governments and donors, information about the cost of achieving results is critical.  USAID can enhance its internal capacity to effectively analyze, design, assess, and adapt education projects to meet cost-effectiveness and sustainability criteria. USAID designed Cost Reporting Guidance for USAID-Funded Education Projects (2018) as a tool to improve tracking of the cost of USAID’s activities and interventions. It’s meant to help USAID increase transparency around its education expenditures, address cost-efficiency and sustainability in program design, and set and manage expectations with partners. This information on cost can also contribute to the evidence base on financing equitable and inclusive national education systems.

3.  Strengthen Systems and Develop Capacity in Local Institution 
USAID can seek to strengthen the capacity of local systems around education finance-focused objectives, including, mobilizing resources for education, using resources effectively and sustainably, ensuring resources reach schools and students, considering equity and inclusion in resource allocation and use, and addressing challenges such as conflict and crisis situations as they arise.  USAID can partner with formal, public systems as well as non-formal, private systems so that stakeholders throughout the education system have the tools, institutions, and resources they need.

4.  Work in Partnership and Leverage Resources
Examples of education finance programming that USAID can undertake to support this principle include harmonizing funding for education so that stakeholders are using their resources in the most effective, appropriate, and sustainable way; mobilizing additional financing from donors, domestic governments, and the private sector; better leveraging and coordinating existing financial resources; and working with partner governments to test and rigorously evaluate education finance innovations and encourage local leadership and ownership. USAID may also seek to pilot innovations in financing, such as pay-for-results approaches, such as results-based funding or conditional cash transfers. 

5.  Drive Decision-Making and Investments Using Evidence and Data
Key questions — such as how much financing reaches schools and students, and how schools are managed and governed — are critical to financing equitable and inclusive national education systems. USAID will seek to accelerate and advance knowledge and evidence, particularly around the four priority areas in the USAID Education Policy. USAID and partner governments need data and evidence to make informed decisions about how to invest limited resources, and how to sustain and scale-up programs. 

6.  Promote Equity and Inclusion
Governments and households may cite cost as a key obstacle to educating girls and people with disabilities. This ranges from household economics and social and cultural norms, beliefs, and attitudes that keep female students and students with disabilities out of school or cause them to drop out, to governments that cite the financial cost of inclusive education as the reason for maintaining segregated education for students with disabilities. USAID can advocate for and invest in greater policy dialogue around inclusive education as well as bring attention to how equitable and inclusive education can build long-term economic growth.

Contact Education Finance expert Suezan Lee to learn more.