Experimenting With Impact Bonds CMore than 10 years into the impact bond experiment, pandemic conditions have tested the financial tool’s effectiveness and sustainability. In the course of these trials, the market managed to expand and produce new case studies. It is no longer just the developed world experimenting with impact bonds.

“Ambiguous” Impact Bonds

Impact bonds, also known as social impact bonds, development impact bonds or pay-for-success projects, are a relatively recent financing tool for implementing public works, introduced in 2010 in the U.K. The basic premise is that private investors (for-profit or philanthropic) front the costs for public programs, receiving returns on investments from their government partners if programs meet performance targets.

These bonds are at times lauded as a “win-win” solution for policymakers and investors; a government protects itself from the cost of failed programs while private entities have the opportunity to profit from investments. Supporters also hold that impact bonds foster innovation and cooperation in tackling pervasive social issues. There can be a great deal of experimenting with impact bonds.

Detractors raise concerns about technical complexities posing a barrier to implementing these bonds and the associated programs. It can be difficult to find trustworthy investors with aligned interests. There also are more general concerns about ethics, accountability and transparency in these programs. These concerns apply both to government institutions and investors. Inviting private enterprises into public works might mean giving investors more control of public policy.

Impact bonds remain “ambiguous” with neither side being proved right or wrong. It is difficult to disprove either side and, because of a lack of control studies, it remains undetermined whether impact bonds themselves contribute to a program’s success. Impact bonds and research around them are relatively young, with only a small market to examine.

The Developing Market

The existing market still offers valuable insight. The Brookings Institution reported that there were 214 active impact bonds in 35 countries as of June 2021. These bonds became concentrated in developed countries like the U.S. and U.K. However, developing countries such as India and South Africa began experimenting with impact bonds as well.

Of 49 completed bonds globally as of July 2020, Brookings found that only two failed to meet performance targets and did not lead to repayment to investors. Of those that yielded returns in addition to repayment, the average return was $2.5 million. On the surface, this indicates that impact bonds are successful, but further study is still necessary.

In addition to the Brookings report, a study identified the number of impact bonds launched in different areas of intervention as of August 2020. Fifty-one bonds, the greatest number in any area, were launched in the employment and training sector. There were comparatively fewer bonds launched in the family welfare, health and homelessness sectors — around 30 to 33 each.

Twenty-seven bonds were due to be launched in the education and early childhood development sectors in 2020. These new programs all deferred start dates due to the pandemic. However, pre-existing bonds in both these areas were active throughout the pandemic.

Impact in the Developing World

The Quality Education India Development Impact Bond fared well in 2020, meeting targets and improving literacy and numeracy outcomes for more than 200,000 primary school students halfway through its contracted duration. The program was initiated in 2018 to meet the needs of marginalized students. As of 2018, only 74.4% of Indians were literate and most of them were men from urban areas. Girls in rural areas were the most disadvantaged in accessing education.

Two South African bonds ended in 2020. Bonds4Jobs was initiated in 2018 with the aim of helping unemployed youth find positions via training and more effective “job-matching” services. The unemployment rate in South Africa is staggeringly high, sitting at more than 30% at the end of 2020. Though the program ended early due to the pandemic’s negative economic impact, it successfully met its targets in its first year and nearly met its 2020 targets before shutdowns began. The bond delivered 7-11% returns to investors in addition to full repayment.

The other South African investment, the Impact Bond Innovation Fund, ended its program in November 2020 as planned. The program “provided home-based early learning services to preschool-aged children in two impoverished communities in the Cape Metro area: Delft and Atlantis.” Only one in three South African children attend preschool or Early Childhood Development (ECD) centers. In three years, the program recruited and retained more than 2,000 children in its early education programs. It struggled to reach its other targets, but experimenting with impact bonds provided South Africa with a useful test model for home-based early education, among other strategies.

Post-Pandemic Growth

Experimenting with impact bonds holds advantages. Studies posit that impact bonds would be a particularly useful tool in the education sector of a post-COVID-19 world. Within this sector, targets are more readily set and evaluated and there is strong appeal for potential investors. Furthermore, partnerships around impact bonds could help foster growth and development in student skills.

This hypothesis will be tested as the market continues to develop alongside new bonds and associated programs. With further experimentation, especially in terms of evaluating program success, impact bonds will continue to shift and change until there is an accurate picture of their titular impact.

– Mckenzie Howell
Photo: Flickr

Inspirational Quotes by Humanitarian Oprah WinfreyBorn to an unmarried teenage mother in 1954 and raised on a farm in Milwaukee, Mississippi, by her grandmother, Oprah Winfrey’s childhood is the epitome of early life adversities. Winfrey’s experience with sexual abuse, racism and poverty forced her to recognize that she needed to change her perspective on life. She decided to positively transform her life and make the most of it. Winfrey is most known for her talk show, The Oprah Winfrey Show. However, this was only one of the philanthropist’s many successes that led her to become the first female African American billionaire in North America. Below are a few inspirational quotes by humanitarian Oprah Winfrey.

Wise Words from Oprah Winfrey

1997 Wellesley College Commencement Address

“Turn your wounds into wisdom.”

Winfrey followed this quote by acknowledging how life will always be a continuous roller coaster and mistakes will be made along the way. Winfrey’s life story is an example of how wounds shouldn’t define who you are. Instead, the vital aspect of life is how you respond to it. The year following her commencement speech in 1997, Winfrey created a public charity open called Oprah Winfrey’s Angel Network. The charity’s purpose is to encourage people to use their own life to impact others positively.

2007 Howard University Commencement Speech

“My integrity is not for sale, and neither is yours.”

This quote defines Winfrey’s belief that you should never sell yourself out, no matter what happens. She highlights that everyone should always believe in what they stand for. Additionally, Winfrey emphasizes that people should follow their dreams and encourage others to do so by doing precisely that herself.

 Watch the full speech here.

2008 Stanford University Commencement Speech

“Every right decision I’ve made—every right decision I’ve ever made—has come from my gut. And every wrong decision I’ve ever made was a result of me not listening to the greater voice of myself.”

Winfrey tells the graduating class to do whatever they set their minds to. She then encourages them to trust their gut feelings and remember to have no doubt when their time arises. In addition to positively impacting millions of people, the humanitarian work Winfrey has done exemplifies that her advice is reputable and she knows what she is doing.

Watch the full speech here.

2018 Commencement Speech at USC Annenberg

“It will take more than you alone to pull 40 million Americans out of poverty, but who will you be if you don’t care enough to try?”

Upon delivering this quote, Winfrey mentions a conversation she had with Maya Angelou. They discussed the school she had established in South Africa, Oprah Winfrey Leadership Academy, which Winfrey believed would be a part of her legacy. But, thanks to Angelou, Winfrey soon learned that her legacy would be the impact she had on every person, not her charity work. This changed her perspective forever.

2018 Golden Globes Future of Women Speech

“Speaking your truth is the most powerful tool we all have.”

During this speech, Winfrey honored and showed her respect for each woman who had experienced forms of abuse and was courageous enough to tell their story. Moreover, her charitable work and foundations demonstrate her determination to encourage women and girls to hold their heads high.

2018 Interview with Reader’s Digest

“I believe every moment is a building block and another step in your journey to being who you are meant to be, and who you are meant to become.”

During this interview, Winfrey recalls meeting Nelson Mandela for the very first time. She describes meeting Mandela as a “defining moment” where she was inspired and enlightened. As a result of this experience, she created the Oprah Winfrey Leadership Academy for Girls in South Africa. The school was the first-ever graduating class consisting of 72 young girls.

Winfrey created the nonprofit Oprah Winfrey Leadership Academy in 2007 for young South African girls suffering from a lack of essential educational resources. The school offers a high-quality education system for grades 8-12 so young girls may have the opportunity to expand their educational background. Consequently, this increases their chances of becoming great female leaders in any career field. More than 400 of the academy’s graduates decided to continue their education by attending college, and in 2018, the graduating class consisted of 58 girls.

The Impact of Winfrey’s Words

Winfrey continues to impact young girls by remaining heavily involved within her foundation. Furthermore, she encourages women worldwide by reassuring them that they have the power to overcome life’s adversities. Not only are inspirational quotes by humanitarian Oprah Winfrey inspiring but they also teach one a few life lessons.

Montana Moore
Photo: Wikimedia Commons