Atma’s Perspective on IEOF

Mary Ellen Matsui   |   20 November 2018



The GSG (Global Steering Group) is a global body convened in order to advance the space of impact investing and create a global “Impact Revolution”. The Chair GSG Sir Ronald Cohen released his manifesto “On Impact -a guide to the Impact Revolution” at the annual GSG Summit held October 8th and 9th in Delhi. GSG’s mission is to revolutionise global finance, by transforming “finance and investing to include risk, return, and impact by 2020”.

The GSG is working towards this by forming several “funds of funds” globally that using innovative finance tools will provide return and social impact for the investor. India has always led in the impact investing space. Taking the lead once again, last week Social Finance India (SF-IND) announced of two $1bn impact funds - one focused on providing debt to social enterprise and one focused only on education outcomes.

As an education NGO reading this you may be thinking this sounds like a huge opportunity, but what exactly is involved and how will this affect me. In this article, I’ve tried to answer the following:

  1. What are the two funds assembled by SF-IND?
  2. What do education NGOs need to pay attentionto?
  3. What are the challenges in the sector that will affect the success of IEOF?
  4. What is Atma’s perspective IEOF?

I’ve tried to keep it simple with links and additional resources throughout.

What are these Funds?

In October 2018 in Delhi at the GSG Impact Summit two $1bn Impact Funds for India. What are these funds and where is this money going to be going?

Both funds are coming together under the body Social Finance India (SF-IND) which is run by Chair Rajiv Lall, and Directors Ashish Dhawan and Vikram Gandhi. The goal of SF-IND is an intermediary created to transform the Indian Impact and drive achievement of social outcomes. SF-IND is forming two products, these are:

  • $1bn - Indian Impact Fund of Funds (IIFF) with focus on providing affordable debt to intermediaries and enterprises towards the achievement of the UN Sustainable Development Goals, COP Climate Goals and the Indian Government Priorities. The fund will be raised from a mix of institutional and retails sources (60%), and International NGOs and Aid Agencies (40%). This a long term and affordable fund with a 10-year term. You can read more about this fund in their business plan here.
  • $1bn - Indian Education Outcomes Fund (IEOF) will focus on improving education outcomes across India. Using Social Impact Bonds/Development Impact Bonds (SIBs/DIBs) as tools IEOF will catalyse the bringing together of public, private and NGO sectors to wards the achievement of specific meaningful education outcomes. The first close will be $100mn.

For Atma’s readers, I’ll be focusing on the IEOF, and the vehicles of SIBs/DIBs for now.

What are SIBs/DIBs?

In any SIB/DIB there are four players:

  1. Implementing NGO - NGO operating at scale to achieve outcomes, example - Educate Girls
  2. Outcome funder - philanthropic body or Government, example - UBS Optimus
  3. Investor - Impact Investor, example - Omidyar network
  4. Intermediary - diligence, impact assessor, and advisor, example - Dalberg

Each of these players is critical in achieving the end learning outcomes as targeted by the SIB/DIB. The SIB/DIB is actioned as follows according to the IEOF business plan:

  • Social Impact Bonds (SIBs)/ Development Impact Bonds (DIBs) employ private investment capital (from the investor) to pay for early intervention programs delivered by NGO service providers
  • SIBs/DIBs monetise social/ development outcomes by capturing the value between the cost of prevention now and the price of remediation in the future
  • The outcome funders pay investors their principal and a rate of return only if programs achieve predefined results
  • The distinguishing feature of a SIB is that the outcome funder is a government entity

(The above is taken from the IEOF Business Plan – see here). You can read about the world’s first education DIB in an article by my colleague Sneha Arora here.

How does this affect my organisation?

There are many moving parts to participating in a SIB/DIB. NGOs interested in understanding whether they might be eligible for a SIB/DIB, IEOF has outlined some very clear “essentials” in their business plan. Below we’ve summarised the top criteria:

Focus Areas of the Fund

Like any funding there needs to be a match between what you are doing and what the funder wants to fund. Programmes eligible for the IEOF, must viably address a historically disadvantaged population through one of the below themes to achieve the outlined outcomes at scale. (Scale here means across a district or state).

According to the IEOF business plan the focus areas and the targets outcomes are:

  • Primary learning:
    Improving learning outcomes in literacy and numeracy for children in grades 1-3 studying in government and affordable private primary schools
  • Ed-tech for upper-primary & secondary learning:
    Closing the achievement gap in Mathematics by using education technology for children in grades 6-10 (upper-primary and secondary sections)
  • Dropouts of girls in secondary:
    Improving completion rate of girls till class 10 in government and affordable private schools
  • School readiness:
    Enhancing school readiness and introducing a smoother transition to Class I through an accelerated early learning package
  • School to workforce transition:
    Enabling and facilitating a successful transition from school to the workforce for students in government & affordable private secondary schools
  • Disability inclusion:
    Enrolment Improving enrolment rates for Children with disabilities/ special needs
  • Disability inclusion-retention: Improving completion rate of students with disabilities till class 12
  • Disability inclusion-workforce transition: Successful transition from education to workforce for Persons with Disabilities

Outcomes Focused Programme

In order for you to qualify for the SIB/DIB, your programme must have clearly defined outcomes that it will achieve. An example given by IEOF: “number of children with improvement in test scores above X”. In order to demonstrate this, your organisation will need to have significant monitoring and evaluation infrastructure, and processes. In a best-case scenario, the organisation has had a third-party assessor confirm the impact results of the programme. Strong organisational capacity is essential to manage your NGOs participation in a SIB/DIB. Key components of organisational capacity required for participation in a SIB/DIB are:

  • Efficiency of programme delivery - cost per student needs to be within acceptable limits
  • Team capability to execute the proposed programme and achieve proposed outcomes
  • Regulatory compliance - ability to accept foreign funds, and good financial standing
  • Ability to manage financial and reporting requirements ability to manage the financial and reporting requirements

What are the challenges in the sector that will affect the success of IEOF?

There are many NGOs operating in the education space, but the capacity to execute as required by a SIB/DIB is still limited. I personally see the key challenges that IEOF will face as follows:

Organisations lack the capacity to meet requirements

Atma’s core work is to build the capacity of education NGOs. Many are still challenged by lack of funding and talent that will allow them to build a sustaining organisation. At Atma our key priorities with our partner NGOs are:

  • Building strong leadership teams
  • Systems and processes that will help the organisation’s scale
  • Building a funding pipeline
  • Articulating impact through reliable and externally verifiable data

These are still key areas where NGOs are lacking capacity, but they can’t do it alone. Donors need to provide dedicated capacity building support to NGOs that will allow them to address these key need areas allowing them to grow and create longer-term impact.

Models that won’t scale independently

Most of the NGOs that we interact with through Atma are looking to achieve scale via partnerships. Partnerships are mainly seen as happening via existing channels created by larger NGO. These smaller entities do this by leveraging the larger NGOs direct implementation programme or their government relationships. Through these types of models, scale is achieved by providing training and knowledge partnerships to the larger NGOs stakeholders. Yet, the availability of larger NGOs that are actually doing direct implementation at scale is limited. Smaller NGOs who are looking at the potential of a SIB/DIB will need to reassess their models in order to scale to a regional or statewide service footprint. To do this, organisations can directly build capacity in both operations and their ability to interface with government. Another alternative for smaller NGOs is to form collaborations that will be able to address these issues at a state or district level.

Need for both monitoring and evaluation & impact assessment

While impact measurement was not a top of mind issue in the recent past - NGOs are now investing more heavily in understanding the change they are creating. The need for this is both externally driven, by donor reporting requirements, and internally driven, by strategy. In order to increase eligibility for SIBs/DIBs organisations must have strong monitoring and evaluation systems that allow them to track incremental outcome gains, and adjust their programme strategy to enhance the achievement of the required outcomes. While third-party assessors are an in-built part of all SIBs/DIBs, the NGO themselves needs a team that is as robust, if not more so, in their ability to measure and report impact.

Additionally, organisations will need to have proof of concept to be eligible for a SIB/DIB, a good to have prerequisite for which is a completed third-party impact assessment. To get here organisations need align their donors to this need or seek out donors to support third-party evaluations of their programmes.

Atma’s Perspective on IEOF

Atma, when we were founded in 2007, was founded with the mission of increasing capacity of education NGOs to deliver more efficient, effective and sustainable education to children from low-income backgrounds. We saw then, and we continue to believe today that NGOs are an important part of last mile education for the country’s most vulnerable children. The IEOF is an incredible opportunity catalyse our mission and accelerate the growth of our partner NGOs. We are excited to work with you, our partner NGOs, to build your capacity and move you towards being able to access funds for scale like the IEOF and other DIB/SIB opportunities. Together we can achieve the targeted education outcomes.



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