How it works

 

EOF will pool grant funds to scale up proven and / or innovative services from non-state actors that support state priorities in education, by paying for the results achieved.  Development Impact Bonds (DIBs) will be used to attract upfront capital and drive performance and innovation.

 
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1.    Set learning objectives and commit outcomes funding: Government sets learning objectives in collaboration with EOF.  Donors with aligned priorities make commitments for the achievement of these objectives

2.    Define outcomes payment metrics and commission providers: EOF will set metrics in line with these objectives, and establish a price for each targeted outcome. This will create a ‘market for outcomes’ in which service providers bid for contracts and are selected based on their suitability, ability to demonstrate impact, and cost efficiency

3.    Invest and build capacity: Impact investors support service providers with upfront working capital at risk and performance management, to help them drive results

4.    Deliver services and achieve outcomes: Service providers scale their programs and achieve outcomes for beneficiaries, with the flexibility to adapt and innovate when scaling to new contexts

5.    Evaluate results: Independent evaluators measure outcomes against pre-agreed metrics

6.    Pay for outcomes, if achieved: EOF pays service providers and impact investors their principal plus a modest return, on the basis of the outcomes that have been achieved

 

Read our concept note for a detailed description of EOF and its core value proposition


If you'd like to learn more about applications of impact bonds in developing countries, read Brookings' report Impact Bonds in Developing Countries: Early Learnings From the Field