Interview with Abha Thorat Shah - Executive Director at the British Asian Trust

Can you give us an overview of the British Asian Trust’s work on impact bonds? What are the main motivations or drivers for the British Asian Trust’s interest in this approach? 

Founded in 2007 by a group of visionary British Asian business leaders & HRH The Prince of Wales, the British Asian Trust is entrepreneurial and innovative in its approach to tackling poverty and inequality in South Asia (India, Pakistan, Bangladesh and Sri Lanka). We believe traditional approaches to philanthropy and development will not, alone, solve the challenges of the region. This is our key motivator coupled with the desire to drive a focus on outcomes and support the achievement of the SDGs in the region.

In 2018, we launched, in partnership with the UBS Optimus Foundation and the Michael and Susan Dell Foundation, the ambitious ‘Quality Education India Development Impact Bond’ (DIB) to address the education crisis in India and the significant gap in financing to achieve the Sustainable Development Goals. This DIB aims to improve learning outcomes for hundreds of thousands of children, unlock new impact capital and create a paradigm shift in education financing in the region.

Our learnings from this DIB, coupled with a growing interest from our South Asian diaspora supporter base in innovative finance and outcomes-based models, encouraged us to launch a separate Social Finance team at the Trust in 2019. This team is focused on developing outcomes financing solutions for development challenges in the region and driving successful collaborations between the private, public and not-for-profit sectors. We are currently developing two new outcomes funds in South Asia, building a new ‘outcomes readiness’ programme and playing the key role of a market maker by investing in research, knowledge building and working with various stakeholders to collectively address the issues faced by the region. 

As we face the Covid-19 pandemic together, more than ever before, we are realising the critical role that flexible financing approaches focused on outcomes can play to ensure that children continue to learn and people acquire skills to take them into gainful employment. This is quickly becoming a core part of our offering to partners in the region.  

What is unique and most valuable when it comes to impact bonds from the perspective of service delivery organisations? (perhaps reflecting on comparison with more traditional funding models such as grants)

In our experience we have seen the following advantages of impact bonds for providers. (a) flexible financing that is not tied to specific budget lines and output indicators -this enables the provider to drive the programme and takes away the requirement of renegotiating deliverables constantly with their donors (b) an adaptive learning approach that enables them to pivot models as they work on the problems they seek to address. The relentless focus on outcomes and use of the evaluation data carefully enable providers to learn from their data and makes it integral to their approach. M&E moves from something that happens at the end of the programme to something that is an active component of programme management. (c) finally, impact bonds can allow providers to work with several donors on the same outcome and hopefully cut down the cost/duplicate reporting requirements that goes with several separate grant agreements.

From your experience what are the unique challenges of developing outcomes-based funding approaches in South Asia? 

South Asia is home to over a quarter of the world’s population, and that brings with it a problem of scale – few innovations are taken seriously before they can address a challenge at scale. Globally, most impact bonds tend to address a few thousand beneficiaries, whereas in India we must prove these mechanisms work for large programmes - at least hundreds of thousands of beneficiaries - for them to act as proof of concept for funders - especially the government. This is a key challenge and a real focus of our work.

However, we are helped by several ecosystem ‘enablers’! For example, (a) there are multiple not-for-profit organisations and social enterprises leading programmes and driving change (b) our local governments are willing to engage with non-state actors and work collaboratively to drive social change. (c) we have engaged philanthropists and foundations keen to drive new approaches and a growing interest from the CSR market. (d) finally we have great technical teams in evaluation, programme design and several other areas – all critical for the growth of the approach and to ensure that there is wide and appropriate use of these tools. 

Despite this, the market is nascent and needs time to evolve and adapt these tools for local solutions. Other operational solutions and issues of scale will also have been solved as the tool is used more widely and Government engagement and involvement grows. 

How has the British Asian Trust been working with local stakeholders to build an ecosystem for outcomes funding in the region? What have been the greatest challenges? 

This has been a key area of focus for us, particularly in India where our current DIB is located. In India, we have been leveraging our learnings from the DIB and other wider programmatic work to support the development of the market. More specifically (a) we have been sharing learnings and knowledge via our partnership with the Center for Universal Education at Brookings and the research that is currently ongoing with Ecorys on the efficacy of DIBs vs grant funding. (b) Supporting not-for-profit organisations to build systems and expertise in measuring/delivering outcomes. This work is currently focused on the education sector as we are keen to build the pipeline of service providers who are ‘ready’ for outcomes funding contracts. (c) Working with local Government stakeholders by sharing evidence and learning from our work in India and beyond. (d) working on driving new outcomes funds where we equally focus on specific design issues but also create/enable legal systems/contracts that in time can be used more widely.

As more and more organisations and governments become interested in outcomes-based approaches, what is needed to ensure the learning from all these different places is captured and shared?

As the market grows, there is a need for more independent research and academic organisations that are able to parse out the learnings and disseminate them. There is also a need for an impact bond database that can track the deals, and details related to them. Finally, as the government comes in, there will be a need for standard contracting templates, toolkits and guidelines for working with them. In the post Covid era we also need to share best practices and approaches that can be incorporated at country level.