The evidence

Paying for outcomes delivers results

The shift to outcomes in government and philanthropic funding is already having a significant impact on the lives of people most in need. By measuring and paying for outcomes that benefit society and provide value for government and donors, we can ensure that resources go to what drives the greatest impact.

 

One innovative financing model to drive better outcomes are Impact Bonds - where socially motivated investors take on the financial risk of not achieving outcomes. This frees up delivery providers to focus on the implementation of the program and ensures that public and philanthropic funds only pay for what works.

 

There are now 160 programs in more than 30 countries, tackling issues such as education, maternal health, homelessness, youth unemployment and recidivism. Over the past few years, Impact Bonds have expanded to low-middle income countries. Some are already delivering tangible results, illustrating the impact that this approach can have in addressing some of the most difficult social issues.

New education outcomes initiatives

There are new education outcomes initiatives due to launch in 2019/ 2020 that will address employment skills, computing skills, and math matriculation for school leavers, as well as improving provision and standards of early childhood education in South America, the Middle East and Eastern Europe.

 

As one example, the World Bank recently approved a US $73.85 million Development Impact Bond to increase access to and improve the quality of early childhood education in Uzbekistan. The project anticipates that by the end of its completion in 2024, about 40% of children aged 3 to 7 will be enrolled in preschool educational facilities, and that more than 1 million children will be attending preschools equipped with improved learning environments.

For additional information on the effectiveness of outcomes funds, read this recent Education Development Trust paper, which highlights several of the above case studies.

Case studies

Educate Girls, India

Educate Girls launched the first Development Impact Bond in Rajasthan’s Bhilwara district in September 2015. Rajasthan has particularly acute educational challenges. 1 in 10 girls ages 11-14 in the state are not enrolled in school, and less than a quarter of rural children in Grade 3 can read a Grade 2-level paragraph or solve a subtraction problem.

 

The program was measured against two outcomes: learning gains of boys and girls in grades 3-5 and enrollment of out-of-school girls.

 

Results at the end of the three-year program showed impressive results:

 

  • 116% of the final enrollment target achieved

  • 160% of the final learning target achieved

 

In the final year, learning levels for students in program schools grew 79% more than their peers in other schools – almost the difference of an entire additional year of instruction

 

The success of the program led to Educate Girls being named the first “Audacious Project” recipient in Asia. Using funding from the project – a massive philanthropic effort launched by TED – Educate Girls will expand to 35,000 villages across India, working to enroll the 1.6 million girls who are currently out of school.

Colombia Youth Employment Initiative

The unemployment rate in Colombia remains high at 9% and is even higher among vulnerable populations, such as young people and women, who are more likely to work in Colombia’s large informal sector. The armed conflict in Colombia has exacerbated labor market inequalities.

 

The first Colombian Social Impact Bond was launched in 2017 in Bogotá, Cali, and Pereira to provide sustained employment for vulnerable youth and in particular individuals internally displaced because of armed conflict. Results released after two years of implementation showed that:

  • 899 people were placed in formal jobs (117% of 766 expected outcome beneficiaries);

  • 677 people were retained in their jobs for three months (88% of 766 expected outcome beneficiaries); and

  • 309 people were retained in their jobs for six months (60% of 514 expected outcome beneficiaries).

Quality Education in India

The US $11 million Quality Education India Development Impact Bond has reported a 30% increase in the number of children achieving its benchmark learning outcomes in its first year of activity. The four-year program aims to improve numeracy and literacy outcomes for children aged 5-11 across 600 schools in Delhi and Gujarat.

 

It is funding the delivery of teaching enhancement programs to 600 schools, reaching more than 100,000 students aged 5–11. Based on an independent evaluation of more than 12,000 students, the program has resulted in almost a third more students achieving basic literacy and numeracy skills, and 40% of the target schools demonstrating significantly higher improvements in proficiency.