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:
I’ve tried to keep it simple with links and additional resources throughout.
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:
For Atma’s readers, I’ll be focusing on the IEOF, and the vehicles of SIBs/DIBs for now.
In any SIB/DIB there are four players:
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:
(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.
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:
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:
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:
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, 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.
