OUTCOME INVESTING (OI) Results-based approach to designing and managing investments Strategy, Measurement & Evaluation © Bill & Melinda Gates Foundation |

INTRODUCTION  The foundation has streamlined the process and approach we use for making and managing investments, both grants and contracts.  The goal is to reduce non-value added time in processing investments and provide more time to think, innovate and build strong relationships with our partners, ultimately helping us to achieve better results for the people we serve.

Investment Workflow is the process we use at the foundation to make and manage investments, aiming to strengthen partnerships, set clear expectations, reduce opportunity costs and focus on outcomes. Outcome Investing is the approach we use within the Investment Workflow to enable a focus on measurable results. Outcome Investing has three defining characteristics that build over the four phases of the Investment Workflow. 3 INVESTMENT WORKFLOW AND OUTCOME INVESTING PHASE 1 CONCEPT DEVELOPMENT PHASE 2 PRE-PROPOSAL PHASE 3 INVESTMENT DEVELOPMENT PHASE 4 MANAGEMENT & CLOSE Outcomes at the Outset Upfront collaboration between the Program Officer and prospective grantee to articulate and align on the few, most important and measurable results. Logical Design Co-development of a larger set of logically-connected results (and associated measures) that are on the pathway toward achieving the investment outcomes. Managing toward Results Track progress towards achieving the investment results (not activities), and manage toward those results. Investment Workflow Outcome Investing © 2014 Bill & Melinda Gates Foundation | Generate IdeasDevelop Concept Identify Partners Develop Proposal Package Determine Funding Decision Develop Agreement Manage Investment Measure Progress

 The Investment Workflow process includes key Outcome Investing tools that help to enable a focus on results and measurement. Results Framework – captures the logical relationship between the expected investment results (outcomes and outputs), and the strategic goals to which those results contribute Results Tracker – supports planning for how results will be measured and tracked over the course of the investment timeframe Measurement and Evaluation Planning Module – enables planning for measurement of the expected results and for anticipated evaluations, including any needed resources or support © Bill & Melinda Gates Foundation | 4 IMPLEMENTATION OF OUTCOME INVESTING

OI practice – it’s about more than just the tools

© 2014 Bill & Melinda Gates Foundation | 6 Outcome Investing can help us drive towards clear, explicit and agreed upon outcomes, freeing up staff and grantees to do what they do best – collaborate to produce catalytic change. Specifically, OI enables: Clear expectations around what success looks like for the investment Greater flexibility for partners to innovate on how they will achieve outcomes Investments designed toward measureable outcomes More effective measurement for the foundation and our partners Clear Expectations Greater Flexibility Measurable Outcomes and Effective Measurement

© 2014 Bill & Melinda Gates Foundation | 7 The Outcome Investing approach is a partnership between the funder and grantee that starts by taking the time upfront to identify what success looks like. Although it can take time to do well, translating success into specific, measurable outcomes enables both sides to understand the expectations associated with an agreement (whether it’s a grant, contract or program-related investment). Clear Expectations Greater Flexibility Measurable Outcomes and Effective Measurement OI ENABLES…CLEAR EXPECTATIONS

© 2014 Bill & Melinda Gates Foundation | 8 We’re optimistic that moving away from a focus on activities can give partners the flexibility to innovate and problem solve, and enable a foundation approach that is more consistently about identifying catalytic solutions. Clear Expectations Greater Flexibility Measurable Outcomes and Effective Measurement OI ENABLES…GREATER FLEXIBILITY

© 2014 Bill & Melinda Gates Foundation | 9 Taking the time to specify and align around investment outcomes and the few, essential outputs required to produce them has positive consequences for measurement because the more specific the result, the easier it is to measure and check its alignment to strategy. Managing and monitoring progress with essential results data rather than ticking off process or activity-based milestones also provides grantees with more time to focus on achieving impact. Clear Expectations Greater Flexibility Measurable Outcomes and Effective Measurement OI ENABLES…EFFECTIVE MEASUREMENT

An early critical step to practicing Outcome Investing is to align with our partners on the few, measurable outcomes that define what success looks like. When we talk about outcomes, we mean the key changes we expect to see within the timeframe and context of the investment. Outcomes are the ‘so-what’ of our work. © Bill & Melinda Gates Foundation | 10 HOW TO CRAFT A QUALITY OUTCOME Verb Indicating Change What ChangesWho Changes Additional Specificity (when relevant/feasible) Examples: Increased Decreased Improved Reduced Adopted Established Used Integrated Examples: Coverage Behavior Knowledge Technologies Models Data Systems Policies Examples: Individuals Communities Populations Governments Examples: Where you expect to see this change? (include geography) By when you expect to see the change? (include date) How much change you intend to see? (include target)

© Bill & Melinda Gates Foundation | 11 EXAMPLE INVESTMENT OUTCOMES Verb Indicating Change What ChangesWho Changes Additional Specificity o Improved early care-seeking practices for pneumonia and diarrhea among caretakers of children under 5 years old from two regions in Nigeria by year 3 of the project. o Adoption of national sanitation and hygiene policies and strategies (including non-sewer basic sanitation) in four countries classified as fragile by o Increased use of self-paced math programs among 25 school districts in California by 2018

© Bill & Melinda Gates Foundation | 12 TERMS & DEFINITIONS Primary Outcomes Output Intermediate Outcomes The overall change(s) in technologies, systems, populations or behaviors the investment seeks to achieve within the investment timeframe The goods, services, events or deliverables produced during an investment The changes in technologies, systems, populations or behaviors that need to be achieved to realize the primary outcome(s) BMGF Strategic Goals Activities The actions taken or work performed to produce goods, services, events or deliverables The 3-5 year results of a BMGF initiative, sub-initiative or portfolio to which the investment contributes most directly Investment Results

© Bill & Melinda Gates Foundation | 13 EXAMPLE RESULTS CHAIN Primary Outcomes Output Intermediate Outcomes Increased sales of produce by smallholder farmers in the major production zones of West Africa by year 5 At least 400 village-level demonstrations of hermetic produce storage bags held in the major production zones of West Africa by year 3 Increased sales of hermetic produce storage bags by merchants in the major production zones of West Africa by year 4 BMGF Strategic Goals Activities Train bush technicians to effectively hold village-level demonstrations of hermetic produce storage bags Improved market enablers that allow smallholder farmers to interact more efficiently with markets Investment Results

© Bill & Melinda Gates Foundation | 14 CHARACTERISTICS OF QUALITY RESULTS Aligned with strategic goals Distinct from activities Logically connected to each other Measureable Achievable within the investment context A set of investment results should be …

© Bill & Melinda Gates Foundation | 15 QUALITY RESULTS ARE…ALIGNED WITH STRATEGIC GOALS Aligned with strategic goals Distinct from activities Logically connected to each other Measureable Achievable within the investment context A set of investment results should be … The results will help contribute to the achievement of the foundation’s strategic goals

© Bill & Melinda Gates Foundation | 16 QUALITY RESULTS ARE…DISTINCT FROM ACTIVITIES Aligned with strategic goals Distinct from activities Logically connected to each other Measureable Achievable within the investment context A set of investment results should be … The results tell us what is either produced or achieved by the investment, NOT what the investment will do

© Bill & Melinda Gates Foundation | 17 QUALITY RESULTS ARE…LOGICALLY CONNECTED Aligned with strategic goals Distinct from activities Logically connected to each other Measureable Achievable within the investment context A set of investment results should be … The results have a causal, or if/then, relationship between one another

© Bill & Melinda Gates Foundation | 18 QUALITY RESULTS ARE…MEASURABLE Aligned with strategic goals Distinct from activities Logically connected to each other Measureable Achievable within the investment context A set of investment results should be … The results are clear, specific, and measurable

© Bill & Melinda Gates Foundation | 19 QUALITY RESULTS ARE…ACHIEVABLE Aligned with strategic goals Distinct from activities Logically connected to each other Measureable Achievable within the investment context A set of investment results should be … The results can feasibly be achieved within the timeframe and the resources available

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