The voices of Urban Institute's researchers and staff
February 11, 2016

Development impact bonds: A new strategy for healthier moms and children

February 11, 2016

Every day, 830 women die from complications related to pregnancy or childbirth. Within the next 20 years, USAID wants to end preventable maternal mortality worldwide—a lofty goal given the gravity of the status quo. To achieve this outcome, USAID needs to expand existing services and develop innovative, measurable programs and practices.

Congress took a step toward supporting this goal through the Reach Every Mother and Child (REACH) Act, which, if passed, would promote evidence-based financing for USAID’s maternal and child health interventions. The REACH Act focuses specifically on improving the health of mothers and children in developing countries, and the prevention of maternal, neonatal (younger than 28 days), and early child (under age 5) deaths.

While this act focuses on a number of reforms to USAID, perhaps the most promising new idea is the authorization of development impact bonds (DIBs) for maternal, newborn, and child health. It’s the only congressional act that proposes this type of financing mechanism to support international development efforts.

What’s a DIB?

DIBs work similarly to pay for success deals, but don’t necessarily involve a financial role for the local government. Instead, philanthropies, a foreign government, an international governmental organization (such as the United Nations or the World Bank), or a private entity back the deal, paralleling their role in a traditional international development strategy. The only existing DIB launched in 2015 to promote education for girls in Rajasthan, India and was paid by the UBS Foundation and backed by the Children’s Investment Fund Foundation.

The DIB financing mechanism may contribute to more public accountability for the outcomes of specific programs, and the application of rigorous evaluation will contribute to the evidence base that shows what programs work. The model has the additional benefit of the potential for return on investment to the funder, making more dollars available for future projects.

What DIBs could mean for USAID

USAID would likely fund any projects authorized by the REACH Act. Though DIBs are a new approach to funding this sort of work, USAID will still need to confront long-held concerns about the viability of evaluation and data collection in the development context.

In addition to the need for cultural awareness, language skills, and sensitivity to local priorities, work in development can face more challenges than domestic projects due to the lack of strong institutions, governmental transparency, and data infrastructure for monitoring and evaluation.

Why DIBs make sense in this field

After 15 years of prioritizing the reduction of maternal, infant, and child mortality by international nonprofit organizations (Save the Children), international governmental organization programs (World Food Programme), foreign government programs (USAID), and host country governments (Guatemala), the baseline data for maternal and child health is firmly established.

Likewise, existing infrastructure for data gathering and recording means that a maternal and child health-focused project would be easier to monitor and evaluate.

For example, in Guatemala, the National Zero Hunger Pact program tracks the height and weight of all babies born in regions prioritized for high rates of poverty and malnutrition until they reach two years of age. With this wealth of baseline data, researchers and stakeholders will have better access to the information they need to assess whether future programs are making a measurable difference in children’s lives.

If implemented, DIBs could not only help USAID improve the lives of mothers, babies, and children, but ensure that these programs are grounded in solid evidence. If this effort is successful, USAID could use DIBs in other areas of development, contributing to a larger movement toward evidence and accountability throughout USAID’s work around the world.

An Indian woman plays with her child at the doorway of her house ahead of Mother's Day, in Allahabad, India, Sunday, May 6, 2012. Photo by Rajesh Kumar Singh/AP

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