Subsidies are a financial contribution provided by the government to a non-state school (e.g. private of faith-based schools) for educational services. Subsidies program can take various forms such as per-student subsidy or unconditional grant (e.g. block grant, which remains flat and constant irrespective of changes in student enrolment as it is related to, for example, salaries of a given number of teachers in a school).
One example of such an arrangement is provided by the Fe y Alegría (FYA), a non-governmental organisation (NGO) initiative with religious foundations. The FYA had humble beginnings in Venezuela in 1955 with the primary objective of providing quality education to children and adults in disadvantaged areas in order to fill gaps in public provision. This organisation has since spread to 17 Latin American countries, as well as to parts of Africa and Spain, and is known to have reached more than 1.4 million children in 2006. Each FYA central office enters into an agreement with the respective country’s government that teacher salaries will be paid by the state. This means that while teachers are selected by FYA, they are subject to the laws and regulations of a public teaching career. FYA is, however, required to raise additional funds through local and international efforts to cover costs associated with infrastructure and the implementation of any innovative educational programmes. The FYA model is also sometimes described as an example of “a privately managed education system funded on a shared basis” (Osorio and Wodon, 2014)
The pre-2009 evidence on subsidies summarised by Patrinos et al. (2009) identifies very limited robust empirical evidence on arrangements where the government subsidises a private provider to deliver education services.
Source: Aslam, M., Rawal, S., & Sahar, S. (2017). Public-Private Partnerships in Education in Developing Countries: A Rigorous Review of the Evidence. Ark Education Partnerships Group.