Bringing new rigour to results-based financing
We work with donors and governments to design more effective and cost-efficient outcomes-based contracts.
This involves bringing together governments, donors, service providers and investors to design and deliver investment-backed outcomes-based programmes. We raise private investment, which bears the risk around whether outcomes are achieved. The involvement of external risk capital allows for more adaptive service delivery that responds to varied and changing local needs.
Our work spans a range of geographies including sub-Saharan Africa, South Asia, North Africa and the Middle East. Clients include the World Bank, DFID, USAID, Grand Challenges Canada and the Global Fund.
Investing in Social Outcomes: Development Impact Bonds
Reflections on the GIIN conference, Amsterdam 7 December
Introduction to Development Impact Bonds for USAID
Youth unemployment in the West Bank and Gaza
Social Finance has designed a Development Impact Bond to tackle youth unemployment in the West Bank and Gaza.
Unemployment in the West Bank and Gaza is very high, with over a quarter of the working age population unable to find jobs. Women face particular challenges, with female labour force participation at below 20 percent. Given the limited success of existing programmes in meeting these challenges, the Palestinian Authority is working with the World Bank to identify and implement an innovative and more private sector-oriented job creation programme. As part of this initiative, Social Finance has been asked to design a Development Impact Bond (DIB) that will more dynamically link training provision to employer needs.
The Development Impact Bond will bring in private risk capital to finance a results-based skills training and job development programme that is tightly meshed with employers’ evolving labour requirements. An adaptive approach that rapidly responds to employers’ needs will be incentivized by linking investor returns to independently measured training and employment goals such as sustained job placements. The total investment needed is expected to be $2-3.5 million.
The Development Impact Bond aims to provide about 1,500-2,000 young people with skills development that is tailored to economic opportunities and evolving labour market needs. The focus will be on those who are otherwise unlikely to obtain sustained employment, and with a target of 30 percent female participation.
Social Finance is working with DAI and the World Bank to deliver the Development Impact Bond for the Palestinian Authority.
Kangaroo Mother Care in Cameroon
Social Finance and the MaRS Centre in Toronto are working with Grand Challenges Canada to design a DIB to scale Kangaroo Mother Care (KMC) in Cameroon...
Low birth weight (LBW) and pre-term birth contributes to 60-80% of all neonatal deaths and is an especially pressing issue in Cameroon where the neonatal mortality rate is about 28 per 1,000 live births, and much higher within some regions. Pre-term birth is also associated with neurodevelopmental disabilities and cardiovascular disease later in life, thus negatively impacting Cameroon’s human capital development.
Kangaroo Mother Care (KMC) involves continuous skin-to-skin contact between caregivers and LBW and preterm infants, as well as exclusive breastfeeding. A large evidence base shows that when administered properly in low resource settings, KMC significantly reduces LBW neonatal mortality and leads to improved health outcomes.
Despite this evidence, access to KMC remains low globally. With funding from Grand Challenges Canada (funded by the Government of Canada), Social Finance and the MaRS Centre for Impact Investing are designing a Development Impact Bond to support the Kangaroo Foundation to scale KMC nationally in Cameroon through an innovative train-the-trainer model.
While the exact scale-up strategy is still being finalised, a DIB could fund KMC rollout to as many as ~25 regional hospitals and ~30 district hospitals in Cameroon, improving health outcomes for around 4,000 LBW infants each year. Critically, a DIB would provide strong incentives to test and refine the KMC scaling model through continuous data feedback loops and performance management systems. By putting in place a rigorous outcomes measurement framework, a DIB would thus provide a credible demonstration of a model for scaling KMC with relevance to other low- and middle-income countries with high LBW and pre-term infant mortality rates.
Picture credit: Fundación Canguro
Education Outcomes Fund
Social Finance is developing an Education Outcomes Fund to increase the availability and affordability of quality education across the world...
There is a disconnect between global education spending and learning outcomes. Despite billions spent annually, millions of children remain out of school and millions more leave school without the basic skills that would enable them to improve their lives and benefit their countries’ economies. The absence of clear links between spending and results leads to underinvestment in education which will make the Global Goal of quality education for all hard to reach.
An Education Outcomes Fund – supported by philanthropists, governments and donors – could have a game-changing impact on the availability and affordability of quality education across the world. It would pool funding to pay non-government education providers for improved education outcomes for priority populations in low and middle income countries. It would also seek to stimulate investment for providers who need pre-financing to participate. By providing a monetary payment for success, but not prescribing how that success is achieved, the Fund could stimulate innovation to enable the education of the world’s poorest children.
We are working with the International Commission on Financing Global Education Opportunity and the Global Social Impact Investment Steering Group to develop a detailed plan for the structure, management and launch of an Education Outcomes Fund. A Fund implemented at scale would create a market of providers and investors to ensure equitable and quality education to the world’s poorest children and young people. Social Finance is seeking partners who share our vision of harnessing the power of private sector capital, innovation and efficiency to deliver quality education.
To learn more, take a look at our Education Outcomes Fund Briefing Note
Sleeping Sickness in Uganda
Social Finance has designed a Development Impact Bond to reduce sleeping sickness in Uganda..
Sleeping sickness threatens 9 million people in Uganda
East African sleeping sickness is an acute and often fatal illness. Uganda is the only country where both the East African and West African forms of sleeping sickness exist. There is a significant risk of overlap between the two strains within the next ten years, which would have potentially serious health and cost implications since the two strains are difficult to differentiate clinically, and a correct diagnosis is essential before treatment can begin. The parasite that causes East African sleeping sickness in humans also has a significant impact on cattle health and productivity. This affects farmers’ incomes and livelihoods, restricting household income and socio-economic development in south-eastern and northern Uganda.
Cattle are the main parasite reservoir for East African sleeping sickness in Uganda, which is then transmitted to people via tsetse flies. Social Finance has designed a Development Impact Bond to provide an initial mass treatment programme in order to substantially reduce the parasite prevalence in cattle in 50 at-risk districts. In parallel there is a focus on driving an increase in effective insecticide spraying by farmers in high risk areas to ensure longer-term control of reinfection.
By controlling the parasite in cattle, a Development Impact Bond would significantly reduce the incidence of East African sleeping sickness in the population of Uganda. Not only will this improve the life expectancy and productivity for those at risk of infection, it will also unlock substantial livestock gains in terms of improved health and productivity.
Innovative Finance for Resilience
With support from The Rockefeller Foundation, Social Finance has conducted an analysis of the funding landscape for disaster prevention and resilience...
Global stresses are increasing in frequency and magnitude. The financing currently available is insufficient to help communities prepare for and recover from these shocks. In the Sahel and Horn of Africa, poor rainfalls have too often turned into preventable livelihood crises. New forms of financing must move beyond post-crisis humanitarian assistance and grant-funded models to put long-term resilience outcomes at the centre of programming.
Outcomes-based funding links payments to evidence that development programmes have made communities more resilient to the next impending disaster. It could increase the effectiveness of funding for resilience activities because it shifts risk away from risk-averse donors, creates space for community-level actors to discover what works and adapt programmes accordingly, and puts in place incentives to measure outcomes over time and grow an evidence base of what works.
With support from The Rockefeller Foundation, Social Finance conducted an analysis of the funding landscape for disaster prevention and resilience. The analysis of resilience funding highlighted opportunities for new kinds of funding to have an impact. We concluded that there is scope for outcomes-based funding to increase the resilience of poor communities to shocks like drought. This has a broader impact in that the approach is easily applicable to other global shocks and stresses.
Rhino Impact Bond project
Escalating poaching in Africa and Asia is threatening to push rhino populations over a tipping point...
Poaching in Africa increased by 150% per annum over the last 5 years
Rhino poaching is currently at a crisis point. By the end of 2015, the number of African rhinos killed by poachers had increased for the sixth year in a row with at least 1,338 rhinos killed by poachers across Africa in 2015. Namibia lost 80 rhinos to poaching, up from 25 in 2014 and just two in 2012. In Zimbabwe, it is reported that at least 50 rhinos were poached in 2015, more than double the previous year. Threats are also rising in Asia. Effective rhino conservation requires strengthening of site-based protection globally. Global conservation of rhinos is important for both biodiversity and economic development.
Social Finance worked with ZSL, the United Nations Development Programme and the United for Wildlife partners to design a Development Impact Bond focused on securing the long-term future of rhinos globally. The DIB allows for sharing of best practice models and innovative solutions. It covers all aspects of tackling the illegal wildlife trade, including strengthening protection on the ground, increasing enforcement along commercial transport routes, and strengthening relationships with local communities. In each case, partners are creating long-term solutions that both reduce the imminent threat of poaching and build the capacity required for sustained recovery of livelihoods and biodiversity.
This project creates a roadmap to reducing poaching that initially focuses on rhinos, but in time could be applied to protect all high value species. It harnesses the power of private finance to drive a fundamental change in how we approach conservation.