This week I have the opportunity to present at the Annual Conference of Bond, the UK network for organisations working in international development. I will be discussing Chance for Childhood’s experience of finding ‘new routes to financing our programmes’ and fundamentally how the social change we have instigated through our pilot projects can be better sustained and scaled at national and even international levels.
Though many of our recent moves to pursue slightly less trodden paths of financing may appear to be an innovative strategy to sustain our organisation, I want to be clear that our pursuit of impact far outweighs our pursuit of organisational sustainability. Our ultimate goal must continue to be extinction and if we lose sight of the impact, we are most definitely in the wrong job (and sector!).
We recognise that we are only one of many thousands of actors working to deliver monumental development goals within the next decade. However, with 58% of children and adolescents in primary and lower secondary school age not achieving minimum proficiency in reading and mathematics, and the proportion of prisoners held in detention without being sentenced remaining almost constant in the last decade, we continue to see a vital role for our strong focus on inclusive education and justice for children. If only we could reach more of the children who need our support…
In the last four years, by working with community-based organisations, local NGOs and civil society, we have successfully piloted Uganda’s first community-led diversion programme for young offenders. This award winning project, called Right2Change, forms the cornerstone of our zero-tolerance policy towards children and young people being held in adult prisons, or for indefinite periods awaiting sentencing. The results of this pilot across three remote post-conflict districts have been ground breaking. To date 3,200 children have been diverted from detention, 83% of whom are now receiving legal counsel (from 3% prior to our intervention) and the reoffending rate among our Right2Change model is staggering low at less than 1%. This is an enormous triumph when compared to the 42% reoffending rate amongst children and young people in the UK in 2017.
Despite seeing huge success in scaling our work at policy level in Rwanda (our disability detection tool is about to be validated by the Rwandan government and rolled out nationally), we have as yet been unable to replicate this scaling in our programming and particularly in our justice work. This is partly due to this area being under-funded in the development sector and particularly due to a lack of political will in the countries we work. This road block has been a huge driver of our decision to explore new routes to financing, scaling and sustaining our work.
Despite the (calculated) risks involved in treading new ground, we proceeded down the road of exploring what social finance might be able to offer us, acknowledging that you learn by doing and really taking advantage of our agility as a small/ medium-sized NGO with little bureaucracy, an impact-driven board or trustees and an innate desire to innovate, test and learn in order to deliver better outcomes for the vulnerable children we support.
Spearheaded by the CEOs and our Innovation Lead, we set about researching the social investment space, building our knowledge and developing an understanding of what’s being tried and tested in the UK – and what models could be applied to international development, specifically the justice sector. Before long, our networking and knowledge gathering were exhausted, and it was time to put our money where our mouth is.
Two new directions: our Challenge Fund and a social franchise
Firstly, we designed a Challenge Fund to pilot our role as an ‘investor’ that would see us make strategic investments into innovative ideas, supporting early stage ventures and visionary social entrepreneurs with repayable, non-repayable or blended finance. This approach was critical to deliver social finance to changemakers who are unable to access capital to pursue their ideas making it difficult for young people with new ideas to see them to fruition. This in turn will generate new evidence on successful strategies to deliver impact in children and young people’s lives.
Secondly, we looked to access investment to scale our Justice for Children work by developing a business model for the Right2Change community-based rehabilitation and diversion programme. After a few months of intense work, including engagement with an external Social Franchise consultant (Wessex Social Ventures), extensive market research and consultation with social enterprise and social financing experts, we were ready to take our business model to an investor in the form of a social franchise. It was revolutionary for us to fully understand the financing options which allow risk to be more evenly shared between the investor and investee. We concluded that a blended finance solution with a Revenue Participation Agreement would be the most effective way to ensure that our start-up costs were covered through grant funding and that our repayable finance would be hedged against our future net revenue.
Just as our discussions with parties interested in our social franchise picked up, we were able to launch the first round of our Challenge Fund to five fantastic initiatives. Our esteemed judging panel, Chibwe Henry (Comic Relief), Joanna Heywood (Big Society Capital) and Maryanne Ochola (The Aspen Network of Development Entrepreneurs), selected innovative projects whose access to finance is notoriously difficult. Interestingly, 20% of applicants to our Challenge Fund applied for blended or repayable finance which amongst social entrepreneurs and early stage ventures in Uganda and Rwanda was an interesting indicator of the appetite for and knowledge of repayable finance.
Our experience of social finance continues…
We can’t wait to evaluate the social and financial returns that our Challenge Fund has made in due course. And, as we speak, we’re developing our Right2Change social franchise model with the aim of being ‘launch ready’ by September 2019.
We still have a lot to learn but the four big lessons our move towards social finance has taught us are:
- Don’t ask for repayable finance if you can get a grant instead.
- Knowing your risk appetite is critical.
- Social finance isn’t just for large NGOs.
- Failure is OK, so long as there is learning.
So to conclude, I’d like to challenge my colleagues working in the development sector… Are you asking critical enough questions about the most effective ways to sustain and scale positive development outcomes? Are you merely looking at innovative ways to finance your programmes as part of an initiatives to create financial stability for your organisation, or are you focussing on impact as your primary goal?
If you’re an international NGO and want to learn more about whether impact investing could help you achieve more impact, then join BOND’s Impact Investing Group.
Joint CEO of Chance for Childhood and Steering Committee member of the Bond’s Impact Investing Group