mothers2mothers at the heart of groundbreaking “Social Impact Bond”
Raising resources. Measuring impact. Fostering collaboration between government, business and civil society.These are three of the greatest challenges to sustainable development, and today, mothers2mothers (m2m) is proud to share that we are at the heart of a project – the first of its kind – that helps to address all three in an integrated way, with an explicit focus on Early Childhood Development (ECD) in the Western Cape Province of South Africa.
Along with a group of partners, we are announcing the launch of the “Impact Bond Innovation Fund” (IBIF)—an outcome-based financing mechanism that will seek to improve early learning and development outcomes for more than 2,000 children in the Western Cape. While the details are complex, the concept is quite simple—private investors put up resources to fund the project, and the Government only pays if the programme achieves pre-determined, measurable outcomes. This “social impact bond” (SIB) model is gaining traction in other parts of the world, but IBIF is the first SIB in Africa and the global South to be focused on the critical area of ECD. If successful, it could pave the way for future public-private collaborations of this kind.
m2m has played a leading role in making the transaction happen, and will continue to oversee performance management, in partnership with Volta Capital (formerly D.Capital), as bond intermediaries. Together, m2m and Volta structured the transaction, raised investment funds for the up-front cost of implementing the ECD programme, and will lead monitoring and evaluation over the next three years. The programme is implemented by the Western Cape Foundation for Community Work (FCW), which has over 40 years experience working in the ECD sector in the Western Cape. The government entity at the heart of the transaction is the Western Cape Department of Social Development (DSD), which entered into a matched funding arrangement with ApexHi Charitable Trust, a private sector outcome funder. Funding IBIF is a strong partnership between two local, established, and socially-motivated investors—The Standard Bank Tutuwa Community Foundation and Future Growth Asset Managers- and, representing the international impact investment community, LGT Venture Philanthropy (LGTVP). These private investors will be repaid with a return on their investment by DSD and ApexHi if and when defined outcomes are achieved over the three-year bond term. Another organisation that has played a critical role in IBIF is The Bertha Centre for Social Innovation and Entrepreneurship at the University of Cape Town’s Graduate School of Business. The Bertha Centre developed the IBIF concept three years ago and now is playing a strategic advisory role to the government in support of the transaction. Our full press release has further details.
m2m is excited to be part of this groundbreaking initiative in South Africa. We hope it will prove a model to unlock further funding, encourage cross-sector collaboration and improve measurement of development efforts. Even more importantly, we are looking forward to IBIF giving thousands of children the opportunity to thrive, not just survive, and reach their full developmental potential.