The world’s first-ever Development Impact Bond has been issued to support education of girls in India. This proof of concept financing could open a new channel of funding for the international development programs.
Modeled on social impact bonds or pay-for-success programs, the Educate Girls Development Impact Bond funded by the UBS Optimus Foundation will earn its return only if educational outcomes in terms of literacy and numeracy among girls are achieved.
Phyllis Costanza, CEO of UBS Optimus Foundation, explains, “Our aim is to establish a proof of concept’, showing potential donors and investors how development impact bonds can contribute to societal gains while also still offering financial returns.”
“What’s different about the Educate Girls Development Impact Bond is that is 100% focused on the outcomes achieved,” she adds. “It’s not just about getting marginalised girls into school; it’s about keeping them there – and ensuring they make real progress in literacy and numeracy.”
“Investors are increasingly looking for ways to do good with their money and the development community is placing a greater emphasis on results: the Development Impact Bond sits at the nexus of these two trends. If this experiment works, then future impact bonds could go on to create investable solutions for the underserved and those at the bottom of the pyramid,” Costanza concludes.
On Thursday, August 6, 2015 at 2:00 Eastern, Costanza will join me for a live discussion about this innovative new financing mechanism for international development. Tune in here then to watch the interview live. Post questions in the comments below or tweet questions before the interview to @devindthorpe.