hearts & minds at work
Increasingly, companies recognise that they want to invest in the communities and institutions that make their success possible. This is beginning to make a huge difference to the lives of millions, not least through education.
Without the proper educational opportunities, children cannot realise their potential, and this has far reaching consequences. However, opportunities are not always provided, particularly in the constantly evolving global marketplace, and amid the background of geopolitical strife.
There is a shortfall in the funding necessary to provide adequate education for children worldwide – a gap that could be closed by making corporate giving more efficient.
The world’s first comprehensive study on global corporate CSR spend shows that the 2013 Global Fortune 500 companies spend US$20 billion per year on CSR. The report identifies 218 companies as having education-related expenditure, which (as is shown in Figure 1.1) equates to US$2.6 billion or 13% of the total Fortune Global 500 CSR budget.
The report shows that if the Fortune Global 500 committed 20% of their CSR budgets towards education initiatives, the total education CSR spend would nearly double to US$4 billion. The effect of this in human terms would be significant. There are currently 58 million primary school-age children out of school as a result of a funding gap of US $26 billion. Increasing education spending to 20% of CSR would enable more than 3 million additional children per year worldwide to study in primary school, if targeted properly.
The spend on education in priority areas such as Africa, where the need is by far the greatest, is only $1billion or 42% of the total Fortune 500 Education CSR spend. Therefore, only two in five dollars spent by the Fortune Global 500 on education CSR is spent on the countries and groups who need it most. Most of the total spend is in ‘non-priority’ areas within North America and Europe. Additionally, only 16% of education-related CSR spending went to primary education and only 14% went to secondary education.
Global education faces a huge challenge
UNESCO’s Education For All Global Monitoring Report (EFA GMR; 2014) states that 58 million primary school-age children are out of school, with a further 63 million adolescents not attending secondary school.
This makes lack of education a serious global problem. EFA GMR (2012) calculated that 200 million 15-24 year olds had not even completed primary school.
UNESCO reports that these numbers have hardly decreased between 2010 and 2013, and that progress has stalled or reversed in a number of countries. 250 million children cannot read or write, despite being in school; some 130 million cannot read or write even after spending more than four years at school. For example, USAID reports that 90% of the children in Mali, more than 50% in Uganda and 33% in Honduras cannot read a single word of connected text at the end of grade two. Finally, about 774 million adults, two-thirds of which are women, cannot read or write.
The number of out-of-school adolescents at lower secondary level in Sub-Saharan Africa has remained almost the same since 2000, while falling by around 45% in the rest of the world.
UNESCO states that the policies which lead to success in tackling these figures are underpinned by a strong political will in priority areas. Fee abolition for students, counterbalanced by school grants from governments, increasing education expenditure, social cash transfers, increasing attention to ethnic and linguistic minorities, overcoming conflict and an emphasis on delivering quality through the curriculum are all examples of policies which lead to success.
The ability to implement such remedies is undermined by a huge global education funding gap. Despite many low-income countries making commendable efforts to improve provisions for education, the countries most in need will be the hardest hit by reductions in donor countries’ spending projections. Country Programmable Aid – the portion of donors’ aid programmes over which recipient countries have a significant say – is expected to fall in 31 of the 36 low-income countries, mostly in Sub-Saharan Africa.
In 2010, the EFA Global Monitoring Report team calculated that after governments had maximised spending on education, it would still take another $16 billion a year of external financing to achieve good quality basic education for all in low income countries by 2015, ensuring the most marginalised are reached.
The failure of aid to increase sufficiently has left a huge shortfall which, coupled with inflation, resulted in a doubling of the funding gap by 2013. There were some improvements in domestic spending, offsetting the legacy left by donor failures. As a result, domestic spending amounted to almost half of the total resources needed for education. Even with such improvements, this meant that in 2013, $29 billion per year would be needed until 2015 to achieve basic education for all. Taking into account the US$3 billion provided by donors, this leaves a financing gap of US$26 billion.
Including equitable and good quality lower secondary education adds US$13 billion per year to the additional resources needed – a total of US$42 billion. Taking into account donor spending, the total financing gap becomes US$38 billion per year.
Excerpt from BUSINESS BACKS EDUCATION – A report written by a team at EPG Economic and Strategy Consulting and overseen by an Advisory Board composed of key figures at UNESCO, OECD and Ipsos MORI.