Equity by Design: Financing Early Childhood Development for the Most Marginalised
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This is the first blog in the insights series from the Working Group on Innovative Finance for Early Childhood Development (ECD), co-convened by the Education Finance Network, the Education Outcomes Fund, the Brookings Institution and the Early Childhood Development Action Network (ECDAN). Over a period of seven months, the group brought together experts from twenty-five organisations for five in-depth discussions on the opportunities and challenges of applying innovative finance mechanisms in ECD interventions.
Inequality in early childhood development (ECD) remains one of the most persistent barriers to inclusive growth. Around the world, millions of young children - including nearly 60 percent in low-income countries - still lack access to early care and learning opportunities. These early gaps shape life trajectories, contributing to poorer physical and mental health, lower levels of learning outcomes and fewer opportunities to thrive.
While the benefits are well established, financing for early childhood care and education (ECCE) still falls short of the scale required to reach all children, with low- and middle-income countries facing an estimated USD 354 billion investment need by 2030 to achieve universal pre-primary education. Governments, donors and implementing partners recognise the urgency, yet fiscal constraints limit public spending. In low- and middle-income countries, education often competes with other priorities for scarce funds. New approaches are therefore needed to complement and reinforce public investment.
Innovative finance can offer new ways to mobilise different sources of funding, drawing on strategic sources and flexible delivery mechanisms to strengthen education systems where traditional funding falls short. Approaches such as blended and outcomes-based financing combine philanthropic resources, catalytic capital and technical assistance to expand access to ECD. But innovation alone is not enough. In development finance, innovation rightfully captures attention, yet it is the intention and design that ultimately determine impact. How initiatives are structured, targeted, and measured decides whether they close gaps or deepen them.
Equity has too often been treated as an outcome to measure rather than a principle to design for. Education systems track enrolment and test scores but rarely address the inequalities that shape who gains access in the first place. When funding assumes uniform costs or capacities to serve children, it inadvertently favours better-resourced providers and those children who are easier and less costly to reach.
To change this, inclusion must guide how budgets are allocated, incentives aligned, and accountability applied. This means placing fairness at the heart of financing and understanding that reaching children with disabilities, living in extreme poverty or in remote or conflict-affected areas requires greater investment and flexibility.
Deliberate Design Changes Outcomes
In practice, equity-driven design is about using existing tools more intentionally to reach the unreached. This can involve adjusting per-child funding to reflect the higher cost of delivering early learning in underserved areas, providing flexible financing so community-based centres can improve quality, or linking payments to outcomes that measure inclusion rather than enrolment alone.
The following early childhood initiatives, explored through the working group series, illustrate how equity-focused financing can translate design principles into real impact.
In Rwanda, Nkuza Neza, an outcomes fund, embeds equity directly into its financing model through an inclusion premium for children with disabilities: a higher per child payment linked to child development outcomes targets. By recognising the additional costs of inclusive education, the model incentivizes inclusion and makes it viable rather than a perceived burden on budgets. Assessing progress at the group level instead of individual scores further reduces pressure to exclude children whose development may differ. It also identifies children with functional disabilities, ensuring they are visible in data and supported in learning. In parallel, inclusion-focused training for service providers supported them in helping caregivers adapt play and learning for every child. Together, these efforts turn inclusion into a measurable goal.
In Mahama Refugee Camp, also in Rwanda, Kumwe Hub co-designed a blended finance initiative demonstrating how equity-focused financing can create lasting impact even in fragile settings. Using philanthropic capital and a model that allows parents to contribute gradually, the refugee-owned daycare strengthens both early learning and livelihoods by enabling mothers to work while their children access quality early learning opportunities. The centre became self-sufficient within 16 months, demonstrating that when financing is intentionally designed for inclusion and sustainability, early childhood investments can generate both social and economic returns; transitioning from aid dependency to self-reliance. This proven model is now expanding to additional refugee camps across Rwanda and East Africa.
Innovative financing mechanisms developed in health and humanitarian sectors (as explored in the Working Group discussions) also show strong potential for ECD. These innovations can expand access to credit with more tailored financial structures, deeper operational collaboration, and performance-linked funding to address persistent barriers in scaling and sustaining ECD interventions.
Community-based mechanisms such as table banking and Savings and Credit Cooperative Organisations help close financing gaps for social enterprises, including informal micro-ECD centres such as stokvels in South Africa, chamas in Kenya, and susus in Ghana. These locally organized, member-driven systems mobilise significant resources annually across Africa and beyond. They rely on trust, cultural traditions and social capital rather than collateral, making them inclusive and accessible. In practice, members put money into a shared pool on a regular basis and then take turns receiving payouts or small loans. These mechanisms are primed for scale as millions already participate; domestic ownership is already in place and there is flexibility to align with education and health expenses. This collective management builds trust and accountability, showing the potential for community-driven finance to make early childhood services more resilient and equitable.
Designing Finance for Fairness
Each of these examples underscores that inclusion is achieved through deliberate action, ensuring that resources reach those who need them most so every child has the chance to learn and belong.
Delivering on the promise of ECD requires more than additional funding. Regardless of whether financing comes from public budgets, blended finance, or outcomes-based partnerships, how financing initiatives are designed and directed is ultimately what determines who benefits.
Equity by design – the decisions that define who is included, who benefits and how results are measured – transforms finance into a driver of fairness and resilience. When funding reflects the true cost of reaching every child, it strengthens not only learning outcomes but also community trust and social cohesion. Innovation can open opportunities, but intention ultimately shapes impact.
This blog was written by Louise Albertyn, Senior Associate at Education Outcomes Fund and Pacifique Kwizera Irumva, Director of Kumwe Hub
Disclaimer: This article reflects insights shared within the working group and the personal opinions of the co-authors.
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