A Rajasthan project wants to bring a new model to charity Class pass: the charity hopes to boost girls" schooling A series of dusty, isolated villages in India's desert state of Rajasthan seems an unlikely spot to test what could be one of the most radical new ideas in international development. But later this year, an alliance of global financiers and Indian charities will bring just such an innovation to a developing economy for the first time: social impact bonds. Such bonds have become fashionable in policy circles in Britain and the US, winning admirers as a means of getting private investors, from philanthropists to banks and individual companies, to fund social projects aimed at preventing tricky social problems such as stopping former prisoners from slipping back into crime. The investors get their money back, along with a return, but only if the measures work - a "payment by results" approach. It is still a relatively new idea, but one that seems to be effective: a pilot project in the English city of Peterborough, for instance, has cut prisoner reoffending by 6 per cent since 2010, while rates increased elsewhere in the country. The Rajasthan project aims to bring a similar approach to an emerging economy by issuing a bond to pay for services helping to educate young women. The move also has the potential to shake up approaches to aid that have long been dominated by governments and large charitable donor. By encouraging greater input from the private sector, a different model for aid and development could be established. The need is clear enough: nearly 4m girls in India go without schooling, resulting in poor literacy and grim economic outcomes. Such issues are especially severe in the region in which the bond is to be launched, where in some villages as many as three-quarters of girls become child brides. It's still very caste-ridden, very feudal. Everything the tourists love about Rajasthan - the traditions, the women in long veils, dresses and gold bangles - all of that can be bad for women," says Safeena Hussain, founder of Educate Girls, a Mumbai-based charity that will run the project on the ground. The bond's backers, which also include Instiglio, an American social enterprise, hope to raise about $500,000 for the project, part of which will fund an academic study to gauge its effectiveness. Funds will be put up by a private investor and be paid back - if it works - by a second funder, potentially a western aid agency. The project has not yet named its backers, but plenty of financial institutions, from venture capital funds to banks such as JPMorgan and UBS, have funded related projects. Success will not be easy, however. Early bond experiments in the west have tended to focus on small numbers of "problem" individuals. The assumption is that governments will agree to pay back investors in successful projects because of the huge social benefits that follow when, for instance, a drug addict is helped to kick the habit. The Indian trial is different, in that it aims to help about 40,000 pupils in 150 or so schools, many of which are poorly financed and badly managed. Equally, it is unclear if India's government will ultimately agree to become an "outcome" funder for similar projects - meaning a source of reimbursement to investors if everything works out - not least because these investors are meant to earn a profit, a fact that could prove unpopular in poorer countries. Yet the benefits could be substantial. Social impact bonds tap into new sources of funding, mostly from the private sector. They are transparent, in the sense that no one is paid until they deliver. And by focusing on outcomes they are expected to encourage innovation. "If you get it right, this approach can be quite powerful in delivering greater rigour and new perspectives to solve complex problems, although it's really not easy to do," says Ben Jupp, a director at Social Finance, a UK-based group that has pioneered the bond approach, and also examined its possible use in emerging economies. The real benefit is that they can bring together different people with different skills . . . while it could also appeal to a new generation of philanthropists in countries like India, who could be attracted by just this sort of innovative approach, which might be the most important benefit of all.