1. Innovative Finance in Education :
Social Impact Bonds
Presentation by Manas Rath, 24th Feb 2016

2. Difficult to attribute
A Program
Inputs
Activities
Outputs
Outcomes
Impact
Easy to count
Difficult to measure
Difficult to attribute

3. Challenges for Donors Not clear about outcomes and impact
Inputs
Activities
Outputs
Outcomes
Impact
Not clear about outcomes and impact
Make multi-year commitments up-front
No exit
Scrutiny (e.g. Govt.)

4. Challenges for Service Providers / NGOs
Inputs
Activities
Outputs
Outcomes
Impact
Lack of program flexibility
Line item budgets
Ability to innovate
Team motivation

5. The Outcome? Donors: Service Providers: Small grants—“risk mitigation”
Stay with what’s Proven
Activity-level Control / Reporting
Service Providers:
Multiple Donors/Priorities
Path to scale?
Incentive for Innovation?
Invest in capabilities

6. Program Manager / Designer
Financial Structure
Buyer of Results
Impact Measurement 3 4
Investor
Service Provider
Beneficiary 1 2
Program Manager / Designer

7. Benefits... For Service Provider: For Buyer of Results Flexibility
Scalable instrument
Incentives to achieve Impact/Outcomes
For Buyer of Results
Pay for delivered results
Can increase funding
For Investor:
Potential for financial upside
Can replace grants
May support Service Provider actively

8. Examples Prisoner Recidivism
- UK: Min. of Justice, Rockefeller Foundation: (8.4)%
- NY: Bloomberg Philanthropies, Goldman Sachs
Diabetes Management
- Government of Mexico
Addressing sleep disorders in Uganda
- DFID

9. Process (1/2) Determine desired Outcomes Target audience
Absolute or Relative Goals
Mission creep
Appoint Program Manager / Designer
Program Design and Financial Model of options / costs
Identify Buyer of Results and Investor

10. Process (2/2) Negotiate agreements
Geography and Scale of Program (% of total budget?)
Formulae for Payments
Set total amount and split across Outcomes
(Price1 x Outcome1) + (Price2 x Outcome2) + ...
2 sets of payments
Timing of Payments
Who will monitor impact?

11. Pre-Requisites Tested and Proven Model
Experience with rigorous assessments
Good team in place
Learn and adapt

12. India : Girl Child Education1
200 Mn non-literate women 2
3.7 Mn out of school girls 3
40% girls leave before 5th grade 4
1% girls reach 12th grade 5
Awareness, economics, social norms, quality of education, infrastructure in schools

13. Educate Girls (EG) Right to Education Act, 2009 Rajasthan:
9 out of 26 Gender Gap districts
44% women literacy (men=76%)
Highest rate of under-age marriage (68%)

14. Educate Girls (EG) Established 2005
Now 6 districts, 550 empl., 8,000 schools, 1Mn children
The Program:
Community engagement
Door-to-door work
Enroll out of school girls
Improve infrastructure for girls
Engage SMC
Keep them in school
Volunteers to help teachers
Engage SMC
Improve learning outcomes

15. Educate Girls (EG) : Achievements
Bought 80,000 girls into school
Improved attendance from 62% to 87%
Improved learning outcomes for 350,000 children
Engaged 4,500+ community volunteers
Improved school infrastructure—27% more girls toilets

16. The SIB (1/2) Determine desired Outcomes
Reduce out of school girls (20%)
Improve learning outcomes (80%)
Appoint Program Manager
Instiglio (Cambridge, USA)
Program Design and Financial Model of options and costs
Growth plans
Operating model improvements

17. The SIB (1/2) Identify Buyer of Results and Investor
UBS Optimus Foundation (Investor)
Children’s Invest. Fund Foundn. (Buyer)
Negotiate agreements
18,000 girls, 140 villages, 166 schools
$422,000
Single payment to Investor
32% of upside as bonus to EG
Who will monitor impact?
IDinsight, SF

18. Watch Out Design carefully—what is goal?
Ensure no perverse interests (protect beneficiaries)
What –ve things could people do to achieve results?
Align performance metrics across team
Complexity: Tariffs, Thresholds, etc
Keep eye on changing costs

19. The End