 But thank you guys for coming here. It's obviously a beautiful day. We're competing with a lot of other sessions as well as the beautiful sign. And this is the post-lunch depth session at every conference. So I'm particularly excited about this group. We were just talking before this session a little bit about what we wanted to get out of this. And those of you here this morning, you heard me say that I really think at this point in both impact investing generally and social impact bonds specifically, there's a lot of hypers, there's a lot of haters in social impact bonds, and there are a few doers. And we really can learn from the doers more from anyone else at this point. And so not only do we get to lead, I mean, do we get to learn by doing from this panel? But what's really exciting is we are going to get to learn while doing because this deal hasn't even closed. And so there's a real spirit on this panel to share while this thing is happening, what is going on? What does it take to make it work? Where are the challenges? Why is it worth going through the hassle? So if you guys came to this panel to hear about how social impact bonds are going to change the world, be the most exciting and obviously breakthrough thing in the world, this probably is not the right panel for you. If you want to really be here to learn about what it's really going to take to realize the potential as something that is still very much in an experimental phase, I couldn't imagine you'd be with a better group here. And so what we have on the panel is the constellation of a deal, and we'll talk a little bit about the specific deal that is about to happen in the middle of happening in India. And on the stage, we have the investors, the people who will pay the investors if the deal works, the people who are going to be implementing the deal, as well as the people putting it together. So it's very much a live example of reasoning, learning from one specific story about what is happening with the potential of social impact bonds in their application to development. So before I get started, and I won't talk much, but just wanted to describe a little bit about the situation we're dealing with. Many of you know that in many countries in India, included, we know the payoffs in the short and long term to education. And specifically, the education of girls has huge payoffs to society in multiple ways, not only to the lives that they can lead, both of enrichment and empowerment, but also to the multiple effects that has in the long-term ability of that society to succeed. There's been a huge improvement in those outcomes in India, but there's still a long way to go, especially in specific geographies. So in the state of Rajasthan, Safina in the middle leads an amazing nonprofit organization that is actively putting many children into schools who otherwise would be completely out of the school system and not only getting them there, but once they are there, helping them to succeed, learn what they need to learn to make something of that education. So that's the starting point. And what we're gonna explore today is why for her team and for the people around this, around her, and we put her in the middle for a reason, a social and like bond is being put together to enable her to increase the work she's doing, ultimately to improve both the short-term outcomes of those girls and other children in the communities, chances of being educated for all those long-term benefits. So I'm gonna start, we're not gonna necessarily introduce people one by one, but we're gonna really try to have an interactive conversation. And the starting point, again, it's why Safina's in the middle is a question of, so as someone who leads a nonprofit has a very clear and compelling way to improve, to achieve your mission, why is a social and like bond something that you're exploring? And we'll get into the details of the bond as the story unfolds, but- So the development impact bond. Sorry, development impact bond, yeah. So why is it something that for you doing, why didn't you just keep doing what nonprofits do, which is raise money from grant makers? And then go to government and try and get paid as much as you could. So we started with this particular piece about two and a half years ago. So as a nonprofit, we've really been struggling to get this particular idea off the ground. And so call us mad. But it first started with DFID. DFID put out this girl education challenge and they said, part of this three or four million dollar grant, we could do it as a payment by results. This is the first time we'd ever even, I had ever even heard about it. But the idea really, really, really, somewhere appealed to me. Because at the end of the day, India has one of the worst indicators for gender, right? You talk about violence, you talk about education, you talk about child marriage, anything. India's almost like, you know, in absolute numbers, probably at the bottom. On the other side, we have 2.4 million NGOs in the country. You have the government investment and stuff, but you also have 2.4 million NGOs. But where is the impact? We have an NGO for every 400 people. And so this idea to me was how do you, as somebody who's committed to creating and changing lives of girls, how can you tie funding to pure impact or to outcomes? And the idea was, and we discussed it within the team and everybody felt really passionate about at least trying it. And so then we invested about two years developing the proposal, developing the ideas. And then finally this June, we got the investor outcome pair and everybody kind of together. So can you, in one or two senses, describe what are you setting out to achieve? What are the outcomes and what will it take for you? So how's the money working in this? What do you mean, how's the money working? So how much money are you raising and what outcomes do you seek to specifically achieve with that money? So again, in this particular deal, we haven't signed off on the exact things on the payment triggers and stuff. But for us as a service provider, as people on the ground, what we want to see essentially is that girls were out of school, should be in school, they should stay in school and they should obviously be learning, right? Those are the outcomes as far as we're concerned. Now we are grant funded, about 98% of it grant funded, this will probably make 2% of our funding, but we're hoping that this is what is really going to show us how you can tie the money to the outcomes, how you can fund future scale and that's what we hope it'll do. Great. So we're going to turn over to Faith on the corner. So Faith is with a London based foundation called the Children's Investment Fund Foundation. You guys have a lot of grant money. You give grants to organizations like Sofinas all the time and one of your focuses, hence the name, is Children. Why would you as a philanthropy not simply give her grant money and say, we're going to give you a grant to increase your program and put your program into more schools? We've heard from Sofina that she is motivated not just to see the program reach more students but to ultimately be accountable to more of those students actually staying in school and learning. So why do you as a funder not just make this easy on yourselves and just give her a grant? Why do this development impact bomb? That's a great question. I think one, we're continuously asking ourselves. I think we don't know yet, to be honest. I think we're not sure. For us, this was, you know, when the Optimist Foundation approached us with this opportunity a few months ago, it was a chance for us to put a dip our toe in to something that we've been thinking about and talking about for a long time. Sof has been, the Children's Investment Fund Foundation has been looking at a range of results based financing options and the development impact bond is just one of them. And to be totally honest, we would invest in educate girls as a direct grant. They're a great buy. We're very happy to be being part of this. What we're trying to achieve in this particular instance is a proof of concept. We're really interested if there's a more efficient, better way to spend money, we are all about finding that out. And part of the privilege of being a philanthropy with a lot of flexibility and no taxpayers to be accountable to is that we can spend a whole bunch of cash up front to find out what works. And so that's really what we're buying in this instance is not only great outcomes for girls in India, but we're also buying what we hope to be a proof of concept product that can be taken out and replicated and scaled. And at a minimum, we would love to know what are the missing pieces? What is more data? How do we add information to the market? And so we've also really invested where we are investing in a process evaluator. We have a board of advisors who are just really giving us a lot of feedback as much as possible. So yeah, that's what we're about right now. So to be clear, so Safina's group, Educate Girls, is going to extend this program, bring more children into schools, or otherwise out of schools, evaluate whether they are actually learning. And if they are, and if enough of them come into those schools, then the Children's Investment Fund Foundation will pay for those results. In the meantime, Safina needs money to run the program, and so an investor has to start this process by investing the money in the organization. And if this works, and if the evaluator determines that they made the outcomes they had sought after achieved, then the Children's Investment Fund will pay back the investor who has given the money to Safina. So that's how it's basically gonna work. And to my left is Faye, who represents the organization that has made this investment, which is the UBS Optimist Foundation. And again, the same question to you, as a foundation working with a bank, you easily could have just handed a grant to this organization. I'm sure you give grants to many similar organizations. Why invest instead in this structure? Yeah, so a couple points of background. One is that the UBS, the bank, has the largest, is the largest wealth manager in the world. So the bank has a lot of money under management. That's sort of one piece of background. A second piece of background is that the UBS Optimist Foundation, which is the corporate foundation, is kind of an unusual foundation. So I happen to be on the board of the foundation. I'm not on staff of this foundation. And it is a strategic foundation that gives in three areas, education, health and children's protection. And what we try to do is bring in the assets of our high net worth clients and deploy them philanthropically in our strategic philanthropy. So that's what we typically do. It's an unusual model for corporate foundation. It's very, lots of diligence, very serious, very results oriented. So we could do that. But what attracts us to this development impact bond is just exactly what Faith was saying, that there's an opportunity here, makes sense for a bank, there's a lot of money to play the investor role so that we can ultimately see if this is an instrument that will work for bringing more money to solutions for people who are in the bottom of the pyramid, we wanna be involved in that. And if it works, and if we can actually prove out this proof of concept close to being what we think it can be, then we think there's an opportunity to create a kind of ongoing instrument for our high net worth clients to invest in that we can help manage. Yeah, that's great. So I wanna come back later and ask you Faith why a foundation would be willing to pay investors in return, we'll get to that question later. But in the meantime, I just wanna turn to Michael, Eddie. So Michael is one of a handful of people around the world who have put out their shingle as social impact bond intermediaries. What him and his organization do is help connect investors, payers, and great organizations like Educate Girls to put these deals together. I guess I'll ask you why is this something you've decided to pursue professionally, generally? And then what is it taken to get this deal as far as it's been, not just the good news but some of the challenges as well? Well, that's a great question. On your first question, why are we committed and why do we think that social impact bonds can actually be adapted into development, actually actually stand potentially to serve a much greater use in development? First, my background comes from rigorous impact evaluation, an organization called Poverty Action Lab based out of the MIT, which does all sorts of build scientific evidence about what works and what doesn't in development using rigorous randomized controlled trials. Over the past 10 years, we've seen an explosion of rigorous evidence about what works and what doesn't. On the Poverty Action Lab website, over 400 studies about what are most effective programs, programs like Safina's as well as others, and also what can we learn from other programs? What we haven't seen though is that translation of evidence into policy. And ultimately, rigorous randomized controlled trials, they're great, but they're not an end to themselves. And there needs to be that translation into policy. So we see social impact bonds and development impact bonds as a fast track, as an accelerator to scale up evidence-based programs like Safina's. Of those four over 400 programs on JPL's website, only six have reached scale. And that's on the Poverty Action Lab website. That means that there's a tremendous potential. There's this gap between what we know works and what we actually do. Our goal with social impact bonds and development impact bonds is to close that gap and to ultimately bring more organizations like Safina to a greater scale to impact more girls as well as other social outcomes and change the way that social problems in developing countries are tackled. So that was as clear a description of why this is so exciting as I've heard. So now you get to the reality. Yes. Wouldn't that be amazing? We got 394 things at work that aren't getting funded. We have this instrument to make it happen. So tell us about what you've learned about how hard it is to do it in the context of this particular deal, because you gotta start somewhere. Absolutely. And we started, as Safina mentioned, with with Educate Girls over two years ago. And it's been a long journey and there's been a lot to learn. We actually started working directly with governments and we found that it's working with governments, particularly without a proof of concept yet, is very, very challenging. And so we realized we actually need some first moves. We need some champions who will have the flexibility, who have the ability to take risks in how they're financing programs to be able to develop a proof of concept to show the government and to show the development finance institutions how this could work and to actually start generating some lessons. What we found in Saf is a tremendous partner who's willing to take that risk, willing to hold on to their cash until they actually observe results and pay based on those results. When we get into the nitty and gritty, we actually find, I mean, once we've actually brought everyone to the table, that's the first challenge, right? Now that we've got everyone at the table, we've actually started designing these contracts. And while social impact bonds and development impact bonds are new, it's important to recognize that they're not, they build on a long history of results-based financing instruments, right? And so what this long history of results-based financing instruments has shown us is that paying for results can unlock tremendous potential in implementing partners. But also if you do it the wrong way, you can actually create all sorts of perverse incentives, adverse consequences. There's a lot of ways that you can screw it up. So it's really important to be diligent about how we're measuring educate girls' impacts. Make sure we're measuring in a robust way. We're measuring the right things and we're providing educate girls with the right incentives to be able to have them focus on the impact that they really want to achieve. And that's a non-trivial task. That's great. So I want to get into, again, later on, just what is it going to take for this to succeed in a way that doesn't just meet short-term expectations, but really sets up your organization to be successful and to grow it. But you also said something, Michael, that I want to turn to Drew on, and that is the goal for everyone on this stage isn't just to have this one deal work. And I don't want to belittle and say little deal because it's a huge deal to get it done. But in different ways, you've all said, we are doing this because we believe it has had potential to create a new path that each of your institutions could follow. But to your point, when you're talking about development, a major source of capital in development is going to come from the development finance institutions, whether that's the grant-based ones, the World Bank or the IMF and the bilaterals and others. So Drew, who works in the World Bank in the development marketplace, you are the person this group is going to turn to and say, hey, this pilot works. Now you guys be pumping billions of dollars into these approaches. What is it going to take to convince your colleagues? What's it going to take for this or the other pilots of people in this room are probably working on to actually start to change how major flows of capital work in the development system? So first I just want to frame one thing about the Sib and the Dib just because I think that's very relevant about where an organization like the World Bank thinks about it. And I'll just use one simple definition of differences and there are a couple of other variations to it. But by the terminology the development impact bond is relying on development agencies or donors or funders to be the payer of record once the accomplishments happen. Where in most of the discussions on social impact bonds, the date have been the British government in the first one, the state of Massachusetts for the one here in the US and so on. It's always been a government agency. So what's an interesting thing here now what's happening with the development impact bond is governments, local governments are being left aside for a moment. They're not the principal payer. And I think all of us would agree that long term there's a lot of dollars in government and a lot of reasons why government should be involved in this and it's gonna be the first one to say I'd love to have the state of Rochester behind this but there's a big but is this issue of getting governments ahead of this and it's harder in the developing economies for multiple different reasons. One, they don't have the cash that the government of the British government might have. They don't have the other underlying assumption that there's gonna be cost savings because they're not even spending money on the stuff that Safina's doing because all of her programs, the data being grandfunded without any material government support. Think you said what, 98% of your money is grant money in terms of your capital structure today. So the question then as Anthony's framing is how do you get both development agencies and then ultimately governments involved because development agencies really are just an extension of working with governments and really putting in perspective the World Bank we do 30 billion dollars a year but our 30 billion goes to governments and so then the question is can we get governments behind this to use the money effectively and we'll come back to Michael's point which is it's totally logical it makes sense that they should do it but to really answer Anthony's question and why this panel is so interesting is there's still, it's a theoretical and an educational or academic discussion today for most people even though the Petersburg has been done and there's been now 20 odd done around the globe there's still not a formulaic answer to here it is this is how it gets done very easily so I think one first thing is gonna be you can list a couple of things there's gonna have to be a process that people understand governments are just not good at being told you know it's vague and don't worry about it just jump in and it'll all work fine it's just not where they start same thing with development agencies they do need to see a process the other one is the alignment of the outcomes to the Millennium Goals or any type of other metric that the agencies are using as their own benchmarks for this or the local governments the third is a vision that the local government will get involved I think it's gonna become one of the most critical things over time and I know that's again your desire in all of this is to really see this state of Rajasthan and other states really get behind it but they're gonna have to see that vision happen and really it's gonna need these other things the process you can explain to people you can show that it's actually achieving outcomes that people want and that there is then also then there's the cynical side of this which is what's in it for those impact investors why are they doing it does this align with the government goals and that clarity has to happen and see that actually there can be an alignment and that of course is that broader discussion about impact investing in general and does it align with social outcomes and government mandated social outcomes so these things have to just kind of come together and then we can see it really taking off and a few dollars that we have available to put into it I think just picking up on your last point I think so much of what we are all about in this room is a fundamental belief that there are new ways for us to reorganize how we work that because you're in a non-profit doesn't mean you shouldn't be sitting out on a banker and because you're a banker doesn't mean you shouldn't be sitting out on the foundation and it does require us not just your work but impact investing generally to enable people who are unused to working together to work together in new ways and frankly if the old ways of working worked it wouldn't be worth the headache but there's a real sense here and I think in the audience and around this room that we can do better but along the way you have to figure out ways to work together you have to get your lawyers to write documents foundation lawyers are not used to sitting down and writing term sheets with bankers and so forth so just a question to anyone on the panel how has this experience forced you to work in different ways with someone in this sort of system either you individually or your institution and what's been the challenges whether either for yourself or for your peers and again have there been any positive surprises? So I'm gonna answer your question with someone indirectly I was thinking the other thing to add to Drew's point is that and this is something that we're really trying to capture is that and it's off discussed in the SID context and definitely in the development impact context is that what are the real transaction costs of doing this and that's also gonna matter in the longer term for a developing government down the line why is this worth it not just waiting to get some World Bank money and do whatever they wanna do with it why would they do this versus something else and so one of the things that I think has been and you're right this has been way more work than I had ever imagined when we sat down with Optimus and Instiglio and Safina a few months ago I was like oh this is done deal man this is gonna be my easiest program and it has been both logistically challenging it is academically challenging it is organizationally challenging we're asking our organization SIF is what we call an engage funder that means we monitor very closely all of our programs usually I'd be breathing down Safina's neck asking her why isn't that working and how are we gonna measure it and to take a step back and say okay we're just gonna agree to these terms and then I'm gonna walk away for three years that is a huge shift for us as a donor particularly as a philanthropy and so but at the end of the day I think that also offers such a huge opportunity if we could diversify our portfolio such that I was managing a couple of big programs more closely like that and then we had a few million, 10 million, 20 million dollars where we walked away for a couple of years that is so much more efficient human capital use but right now what we're seeing is that the transaction cost of doing that is really, really high and someone's gonna have to pay for that and we're happy to do it right now but I think what we wanna learn in the long term is what are the routes to lowering those transaction costs and there's gonna be some set that doesn't matter the size of the deal could be 250 million could be 225,000 it's gonna be the same thing and so I think we're gonna have to understand what the margins are and when it's worth it and when it's not Sofina the same question to you you know I'm sure when you first thought of this idea you run an organization where you wanna be focused on outcomes, funders tend to tell you just to count outputs that's frustrating now there's this way to finally get your funders aligned in the same thing you wanna do I'm sure that idea was most beautiful at that moment and then it just got complicated so how's that been, that experience and where is the tension and complications? I have to say there is tension in that I mean I think there's just so many people and a couple of the parties are still not on the table like the outcome evaluator and stuff so we're still waiting for other people to join it so it is very very very complicated I think it is exhausting because it's 2% of your budget but the amount of work it's taking but we've had two years head start so we've been so committed onto this that what we did last year was we got a little bit of money and we actually started testing saying okay so while the deal is being put together what does it really look on the ground in terms of implementation because you're right, right now funders pay us on our log frame or on your whatever and they say this is the input of the activity and these are the outputs you're gonna get to and that's how you're funded now I am currently working in seven and a half thousand schools of million children I wanna reach four million children but that's where I am and just think about it it's carpet bombing a large area with that same strategy now in the real world that doesn't necessarily create impact every school has a different need like we know with our children's school we say toilets are an issue for girls toilets yes but sometimes you can build a toilet and you can still have girls outside of the school because it's probably something else that's really holding back so what's been really and this is the positive kind of it's very challenging but the positive thing when we actually started to play around with how would you implement this on the ground if this was a real transaction we realized that you have to give your field staff this results based approach and you have to give you train them on everything so it's like they have this arsenal they have all the tools they have everything that's required to make a change but then they become so results focused and they can decide well here it is going to be the school but here it's the politics between and so you've got this great dynamic stuff happening on the ground which traditional grants don't allow you to do they fund you to simply do this carpet bombing it's this pill so it's the same pill to every child to every school to whatever and so for us that's been very, very exciting and I think for people who work on the ground they're the bosses they know they can recognize and they don't have to be told because of this grant agreement that this is all you do so even though it's very complicated and it's very difficult and it's exhausting when I see that coming up how they can sit down with the community and make their plan and they can do whichever order whichever thing, whichever combination of stuff they wanna do and we've had very, very, very good results we're getting actually seeing much better and much faster improvement in those particular blocks than we do elsewhere so that's why I find this completely like, you know So just a similar question to you because it sounds like what you're describing is a way that a for-profit investor more typically invests it's invest money into a management team within investment pieces and trust them to some pretty large degree that they know what to do with the money and will make you money is very different than how foundations tend to operate which is fund someone to do a set of things they agree to do and prevent them from deviating for you and some of you know Fay is quite a legend in foundation world and I'm not gonna ask you to put on that hat as someone representing a bank foundation has that dynamic, how is that dynamic shifted the conversation among the bankers? Is this something that they are then more able to understand because it's closer to their work and is that positive or I'm sure there's also some dangerous elements of oversimplification? Well, you asked a lot of questions there I'm gonna answer one of them I think you're back which is I think one of the surprises at least to me in this process was that our clients are all staffed they all have managers who help manage their money and those professional staffers the people who manage the family offices and so forth they're the ones who interact with the bank around how you manage your money but around their philanthropy it's the it's the high net worth an ultra high net worth people themselves and so what's been really interesting to me in this process is how excited the people the real people behind the money are to get close to these potential deals to get close to this potential instrument and to actually see it work in a process and in a way that is familiar and they trust it and they trust the seriousness and the diligence and the results orientation and they also really like that it's doing good and they want and there's all I think we already see some evidence of some pent up demand and appetite and the potential to really unleash many more resources and so you never know we talked about the skepticism of government and then you've got the private investors seemingly very enthusiastic and trusting a process that they know that they're familiar with and I think that's a huge point earlier are there processes that you can enumerate and elaborate and in the banking role in the investment side they are because they're so familiar yeah so how do you all balance the desire to just start learning by doing getting it done with something else you've articulated which is a sense that there's a bit of a mic you're under a microscope you want to not just do this deal but show all these constituencies that there's 99 more down the road that they should be doing how do you get that balance right because I suspect in the days when you just want to get started that's maybe every day but I'll leave it there and maybe Michael as someone who's dealing I know and maybe talk a little bit beyond this one deal what else your firm is working on and are you seeing dynamics that are different in other context right well we're really thinking about this deal as a proof of concept to achieve much greater impact at scale so we want to make sure that this deal is really well done and that's why we're really putting our heads down and focusing on making sure that this deal is right at the same time we're still seeing tremendous interest and demand from this from governments and yes it's sometimes hard you find a champion in government who might be really enthusiastic about this and then they need to work within an institutionalized bureaucracy which sometimes might be restricting them right and a lot of particularly in low and middle income countries a lot of I know it doesn't seem exciting but a lot of impact happens through or impact happens or doesn't happen through procurement and procurement in low and middle income countries is oftentimes structured around avoiding corruption for very good reasons right that types of rigid procurement systems are part of one of the barriers that prevents us from scaling into other and other areas at the same time we do see governments like the government of Mexico who we've been working with to structure a performance-based contract around diabetes management services preventing secondary complications associated with diabetes there are innovative forward thinking governments that do want to try out these tools and are looking to proof of concepts such as subpoenas and educated girls and what SIF is doing in order to learn and be able to say okay how do we do this right there's a really important learning element here that I think in this first deal that SIF and UBS have been really diligent about focusing on that we're gonna document what we're doing we're gonna do a process evaluation and understand what's working, what's not working because this is ultimately trying to demonstrate something that we want to then replicate in other areas yeah and I think one of the things that we do work in my organization in the US and we assume that this is a more efficient way to procure therefore it will get support and I sat down with a mayor's office one of the biggest cities and she said you know I just came from my head for German officer he's been yelling at me for an hour about the social impact bond because the premise is you all think you're gonna be better at figuring out how to turn that money into outcomes than we are but this is what this guy's job is so Drew to turn it to you I mean you're at an interesting place because you're at the World Bank but you're also the development marketplace which in a way was set up to kind of make that case in the World Bank from the beginning before you were there the development marketplace was in some way a challenge to the World Bank bureaucracy to say you aren't sitting in Washington and your country offices finding out everything that needs to be funded we can do it in a more bottoms up way which I think is similar spirit to this so how do you get the procurement bureaucrats who are your colleagues to embrace the idea that not just this is a new way of doing things but that it in a way disintermediating them is one of the most exciting things that could be done it's again it's just a challenge of there is no constituency for efficiency and I think sometimes we make a mistake that a more efficient way of working will inevitably get supporters but again a lot of your colleagues would consider themselves to be quite expert at knowing who to fund rather than letting this sort of system make that decision bureaucracies okay I work at the World Bank full disclosure so I say this as someone who's I'm not in judgment no the it is an interesting challenge because the development agencies really work best at scale right away you know give them big infrastructure project it works and resonates very well because it resonates with the finance minister of a given country that we work with directly right so I mean that's our main client is a finance minister so walking to a finance minister and say we've got a a $300,000 $500,000 discussion will be about that long it's over but so one of the key things that's gonna have to happen both for my colleagues and for the local governments one is coming back to something so there's gotta be a level of transparency here one of the great things that the World Bank actually has done over the years and one of the new global practices that we put together is around governance and governance isn't just about whether there's corruption but also about the subgroups in it are procurement and things like this so this starts a product like the social impact bond development impact bond weaves in really really well with the World Bank's recognition that transparency better procurement procedures are what are gonna make governments more efficient coming back to your comment about the cost benefits it gets much clearer as well you can start really seeing whether the numbers are adding up so right now I think all of these things are gonna start coming together and people are gonna see the value proposition because most people respond and react to what does it do for their job and their ability to perform in their job so for the World Bank staff it's really gonna be about their ability to go to a finance minister and say long term if you do this in scale this is what it can do for you so again the question will be and Safina's gonna be suffering through this in the carpet bombing description where does it go to scale how does it go to scale and can you walk back into a government or and therefore a development agency can you do this not with just educate girls in Rajasthan but everybody that's working across India and the X millions of young girls that are not getting educated or other education factors and of course we know that this is highly replicable from what we're already seeing across sectors carbon financing tremendous area in the developing countries which would be a perfect product for using this so I think we're gonna see a real good alignment of that once people understand its ability to scale the time and cost needed to get there and whether it's manageable but if you look at the experience of the UK government what they've done they've been in the US now everything has really moved towards a hockey stick you get through those 18, 24 months of pain of doing it not of thinking about it and trying to get people on board so it's a four year enterprise for Safina but for the two years of implementation it's gonna move more towards the potential for a hockey stick cause other things starts to come together and if it can make people's lives easier about wow you're spending your dollars better it will start coming together I think one thing I would say too this makes me sound like a tiny rain cloud but I sort of thought I am more positive on all of this on those repairs I think the other thing we talked about this before is I think it highlights some of the gaps in data and when we start talking about scale on that level we're talking about right now we're gonna reach a few hundred schools and that's data we can manage we can lay down that infrastructure but when we're talking 40,000 schools and we're relying on that data and then paying out based on that data that's a whole different ball game and I think one of the things that this is able to highlight on a micro scale is where those gaps are in reliable data and I think that will open up hopefully a whole other discussion which will be important to have the World Bank on board for important to have the bilaterals on board for and to say if we're gonna go down this road filling in some of these data gaps supporting the governments to fill in these data gaps is gonna be absolutely critical because otherwise you're not gonna get people to pay especially as you get bigger and bigger and bigger I think so can I say something? Two things one is that means you really have to invest in infrastructure for measurement which is probably independent of the government so you need to involve government but also have independently verifiable data and systems for collecting it and synthesizing it and making sense of it so I think that's a really good point the other point I was gonna make about what's unique about and special about this particular development impact bond is that it's targeting the bottom of the pyramid so called the poorest people the most vulnerable and most social investment vehicles as far as I understand it tend to target middle income low to middle income populations which is really different so it's a proof of concept not just for the mechanics but also for the incredible potential of transformation in terms of people who are most vulnerable and their lives and futures so I think that's just a dimension of this bond that we haven't really talked about that I think is really special and important to highlight that this unlocks not only more resources but more resources going to those who need it most and sorry if I can just add one more thing here because you talked about data and stuff the other thing it does is that funders are funding education projects right across but you're funding a $10,000 intervention for a rural school or it could be a $500 but this will actually give you almost like a price point to say you bought an enrollment outcome for is it $500, $5,000 or whatever and you can actually compare those and maybe learning outcome learning outcome so you'll actually be able to contract different service providers and really be able to compare because right now you can't compare, right? It's like apples to oranges I do gender sensitization what is the value of that in terms of outcomes versus I do, I don't know I distribute supplies or I build infrastructure but actually then you'll be able to put a price on different outcomes and compare and really and that's where the scale can come in the funding can come in I would the razor sharp focus on impact for that last girl so it's kind of fun So we're gonna take questions from the audience in a few minutes before I get there I did promise that I would ask a question that may be a little annoying to face so just to remind you guys amazing work going on in India the Optimist Foundation which they said is a foundation of a major bank whose clients are the richest people in the world I don't say that, but I do who certainly have more money than any of us and I'll leave it at that so they are gonna give money to Safina's organization if she achieves the outputs the foundation created in London that faith works for is going to pay the investors back with a financial return they're gonna make a profit so around here we might all take for granted that investors are a morally legitimate and economically effective force for good in the world go 100 meters in any direction and people are gonna think that's ridiculous so I suppose the question I said to you was if this works you are gonna take money out of your foundation and give financial return not just returning the money but profits to some of the richest people in the world how does your foundation get comfortable with that and maybe it's because of where you guys come from specifically but that's a big part of what we're talking about here and that's one quick answer and then we'll take questions so I think that's a really great question I guess the short answer is that we feel that our values align with those of the Optimist Foundation and what they're trying to achieve and the way they're trying to achieve it and we trust them I think the medium term answer is that it's a means to an end so as we've all said here my goal would be that some new aid down the line to Rajasthan government is the outcome payer here and that they would be understanding what they're buying what the price point is that they'd be able to go to a market and say we're gonna buy learning outcomes for girls we can compare that kind of thing and I think if there's an investor return to that, that seems like a pretty good buy from where I stand and as I said the privilege of being philanthropy is that we can take that risk but I do think our starting point is that we trust the Optimist Foundation I think we believe in their values and what they're trying to do and we feel aligned to them Does this come up for you or your board, Safina? What? This question, why do we want to get in bed with investors and they can't possibly have the good intentions we have? The investor by the way is still giving me a grant so I can't actually, as a non-profit in India I can't accept investment so it is still structured to me as a grant so my board's not ready my board's very committed to this because they know that we're gonna go to 30,000 schools we're gonna go to four and a half million children and this will be the way to sort of unlock the capital that we will require but like I said, it's everything that we're all doing is just see it as creating the template Template that others will just take and run with essentially, right? And everybody's investment, commitment and passion is for that and to see if that template works so in the short term if they're paying them an interest, blah, blah, blah I kind of feel like it's a little immaterial the thing is India's got the CSR rule now 2% of all corporate money is going they would be the natural investor so there's just so much that you could do and play with that's an important journey to take I also think I was just gonna say, Faye, I think the other thing is that part of Optimus's model also is that those financial returns have the option of being put back into the foundation so that doesn't mean that necessarily those donors are gonna, the investors are gonna get that money back they can put it back in So I was gonna say two things on that one is I'm gonna take my Optimus hat off for a moment so I'm not gonna say this with the Optimus hat on but so with just the Faye Tversky hat on I'll say that a lot of resources in philanthropy have been wasted so if there's a way so you can tweet that on the Faye Tversky hat so if there's a way to make philanthropic resources be smarter, better, have greater impact great, so that's the direct answer but the other thing from putting my Optimus hat back on faith is exactly right so one of the things we're considering we haven't made a decision is creating a recycled development impact bond fund that people can contribute to the returns come back into it but then get reused and recycled so that it's actually a very efficient way to bring more resources in and keep them in And I just really wanna quickly touch on this cause we work with a lot of different governments who raise a lot of these questions at the end of the day this has to be about cost effectiveness about greater value for money more effective public spending more bang for the buck ultimately it's not as much about the Optimus foundation or the investor it's about how much bang am I getting for the buck and the ability of the government to be able to transfer away that performance risk and only be paying for results that provides tremendous value and it's that value which is being catalyzed by the investor but ultimately the investor is just again a means to an end to more effective cost effective programs Thanks so much so we only have a few minutes left I saw there were some enthusiastic questions so I just ask you to stand up say who you are, where you're from and then pose a question either to a panelist or to all of us and if you are posing a question in the form of a three minute speech I'll cut you off so one, two, three and we'll take all three just for efficiency and then the panels will figure it out so go ahead I was gonna do ladies first Oh sorry No Please stand up Hi I'm Emma Tomkinson My question for you is you keep talking about a proof of concept but what is the concept you're trying to prove? Is it about the service? Is it about the separation of outcomes payer and investor? So what's the point of difference here that you're gonna emphasize and sort of sell on? That was a great question Thank you Emma My name's Andrew I'm with Escalera we're some doers trying to do a paper success in Southern Mexico so we admire you congratulations One of our bottlenecks is the outcome payer and so my question is directed at faith you brought up this concern about we understand you wanna prove the concept what advice would you have to other foundations or grant makers that are trying to consider making an outcome payment commitment for this transitionary purpose but also in the long term what's your advice to them about doing this or what is your advice to a service provider like ourselves in approaching foundations looking that might be interested in doing the same thing Great, thanks and then last question in the back Hi, I'm Jay, Jablonel I'm curious, we work in an impact investment group and I'm curious we can be either a payor or a cedar so be curious for me to hear I don't wanna compromise any of the terms of your deal but it's very interesting for me to think about since it's a proof of concept what you're actually using as numbers for expected return or profit that you would allow as a cedar or criteria for when you get your money back So, okay, so thanks so much so three questions so Emma was a great question you all talk about proving the concept what is the concept is it financial innovation is it evidence-based policy and there's lots of things we've been throwing around second question from Andrew how would you approach a foundation trying to get them to perhaps change how they've always done things and then I think your question about specifically what are we talking about I'd say maybe this deal I know the deal hasn't been struck and there's a Swiss banker involved so we wanna be super discreet so I'm not sure that the panelists can share the details but maybe some of you who are aware of some of the general terms that are out there or what the boundaries of that conversation have been that would be helpful so I leave it to you guys to take any one of those in any order in terms of success to address Andrew's question success can be measured along a number of dimensions we're looking actually each party comes to the table with a very different definition of success so UBS Optimist Foundation is very much interested as Faye was mentioning about creating an investable asset for the bottom of the pyramid Faye is very interested about demonstrating this model to be able to replicate in other areas and Educate Girls is of course interested in improving their impact so it's that but even though we each have a different definition of success it's the alignment of interest that is really what brings us together around more effective programs and more performance driven service providers like Educate Girls and I'll push a little on that I don't know if it's as much alignment in the sense that I think it's just like any capital markets deal when you have different parties coming to the table they're all coming from different motivations and different organizational priorities and they have to stick with that they're not going to change per se so it's not like everybody's going to sit there at the end of the day and put Saphine on their shoulders and say we have succeeded it will be, it will be I have figured out a way to leverage foundation dollars I have figured out a way to implement a transaction in an efficient cost present I've had a chance to reach girls in a way that no one else has and so actually there's a healthy dynamic here happening of friction of each trying to push to slightly different parts of it and like any capital markets deal it gets done when everybody gets what they need out of it and what we're getting is transparency we're getting better documentation outcomes we're getting better outcomes for girls and so on so it is all of this friction coming together in my perspective so it's a little less alignment and healthy friction to get to something that everybody can live for for their slightly different mandates that's a good way to put it Ken, was there, do you think there's another way to put it like in what your question was that the proof of concept is how you can tie money to final outcome for me it's like how do I make outcome-based budgets how do I do outcome-based performance management so for them it's you know what is the price point that you're buying it on or what's the return that you should get for whatever and stuff but it's really about those two pieces as far as I'm concerned is how much is the money and what's the... So we're not gonna be able to compete with this beautiful bird for a second but just quickly any thoughts on the question of how would you approach a foundation trying to get them to participate in a different way maybe you want to take that one? Sure, yeah, so I think that's a great question, Andrew. Without being too discouraging I think, oh, my rain cloud here, it's a tough early days right now I mean I think one of the issues is that smaller organizations, smaller foundations are just gonna have very different budget cycles like putting something, we are lucky to be able to say we can put this money aside for three years because we don't have to spend down and that's also one of the things the UK doesn't have the 5% spend requirement that the US foundations do so that's a particularly privileged position that we're in so I think, and especially when you start talking bigger and bigger I think that what I would recommend to you is to look for as much thought partnership as you can and get the deal as close to done as you can I think one thing that I sort of alluded to this has been a lot of work and we have a lot of in-house expertise we have in-house legal counsel I have in-house M&E people I have all these resources I can draw on and this is like a quarter of my time and if you're a smaller foundation you just don't have that kind of resourcing to make those decisions so I think one thing that I would say is that if you're looking for an outcome payer you wanna come to them with an intermediary and an investor as close to done on that and say, here's what you're buying this is what we're asking you to buy and maybe expect less in terms of that thought partnership from an outcome payer that would be I think where I... So I know we have to run I'm just gonna ask for your indulgence for a few minutes so I think most of the panelists can stay if you have specific questions come up and ask them but they're lightening around maybe 30 seconds what is the question you wish you had been asked and either answer it or ask it of another panelist Okay I have this one ready though sorry that's interesting I wish that somebody who had asked I think how do we know if this isn't working that to me is what I'm still not clear on is that we're talking about whole there's a whole range of instruments out there we talked today about the dib is one of them just giving a unrestricted funding with some money for impact evaluation is another way to do this like there's a whole range so at what point are we gonna say this nascent market isn't working this is not worth it the transaction costs are too high and I think that for me is I still haven't found out what that cutoff point is yet so I think that's something that I think is a good question that we should all be asking ourselves and try to be open and honest and also to add on that where is this more likely to work or where this is less likely exactly there are a lot of different ideas floating around of development impact bonds in a lot of different areas our priors about where it's gonna work and we have a theory of the way the world works and where I mean it's important to have that fear I should say I don't think that it's necessarily given that everyone does have that theory about how it is that development impact bond is gonna actually change the way that services are delivered and we really wanna be focused on because we're not gonna have a lot of time to be able to test a thousand different areas and a thousand different providers we wanna be focused about where are the areas that we believe that it's most likely to work how is it going to work and tested those areas we're able to learn as fast as we can and be able to produce some evidence that this is working better or maybe this isn't working better and we need to pivot and try a different approach and this again it's an experiment and we need to be open to that I wish that somebody had asked about do we, there are many areas that need philanthropic attention that can't be measured in the precise ways that we're proposing to with this development impact bond but do we think that the development impact bond experience will help unleash the generous impulses of our ultra high net worth citizens of the globe so that they will not just be generous as investors but also generous and even maybe more generous as philanthropic givers I just want to ask a question Quickly, last words from the two of you guys I see other people are coming in So the one that I alluded a little bit to earlier is the question where is the local government if this is such a great idea and this is their population we're working with why are they not right here at the table saying we're behind each of these and last words, Safina, from you I don't have you have a lot of work to do when you get back to implement this I'm really good at that I'd like to thank the panel and I thank you guys all for joining us and it's great to be able to learn while doing it