ECD Development Impact Bond.

Focus Area

Cross Cutter

Innovation Lever



Proof of Concept


Closed, Active

The Impact Bond Innovation Fund (IBIF) is a South African outcome-based financing mechanism that seeks to improve early childhood learning and development outcomes in the Western Cape. This innovative financing mechanism represents the first Social Impact Bond focused on Early Childhood Development (ECD) to be launched in the Global South.

The Problem.

Current investment in ECD in South Africa is a fraction of the amount required to ensure access to quality Early Childhood Development (ECD) services for the approximately 4 million young children under the age of 6 who live in poverty. Greater investment and more coordinated financing is needed from both Government and private sectors.

The Innovation.

The Impact Bond Innovation Fund (IBIF), a Social Impact Bond (SIB), is the first ECD-focused transaction of its type in the Global South. It is being implemented as a public-private partnership to determine the feasibility of this approach to financing for early childhood development initiatives in the South African context. 

Work on the SIB began in 2015 and it was launched in September 2018.  It seeks to improve the cognitive and socio-emotional development outcomes of more than 2000 children in the low-income communities of Atlantis and Delft, in the Western Cape province of South Africa, over the course of three years. The transaction will support an existing home visiting programme targeting 3 to 5 year olds, delivered by the Foundation for Community Work (FCW).

through its Family in Focus (FIF) programme. FCW has over 40 years of experience working within the ECD sector in the Western Cape and is a long-term partner of the Western Cape Department of Social Development (DSD).

The DSD has entered a matched funding arrangement with ApexHi Charitable Trust, a private sector outcome funder to augment the available funding for the programme.  Private investors will invest US$540,000 up front to fund FCW’s ECD programme over a three-year period. They will be repaid with a return on their investment by the government department and private outcome funder if and when improved social outcomes are achieved over the three-year bond term.

How it works

The IBIF investors are made up of a coalition of two local, established, and socially-motivated investors- The Standard Bank Tutuwa Community Foundation and Future Growth Asset Managers, and the international impact investment and venture philanthropy community through LGT Venture Philanthropy (LGT VP). 

Bringing the IBIF transaction together is an Intermediary partnership between m2m and Volta Capital, a global financial intermediary at the forefront of developing Impact Bond transactions. As the intermediary partners in this transaction, m2m and Volta have structured the transaction, raised investment funds for the up-front cost of the implementation by FCW, and will conduct programmatic performance management, output and outcome monitoring, and general oversight and reporting services over the life of the transaction.

Why we invested.

Not only is there limited funding available in the ECD sector, but funding is characterised by a charity mindset and a set of typical stakeholders (e.g. government and NGOs). An impact bond is an innovative financing mechanism that brings the private sector to the table in a sustainable way. Profit and purpose can meet.

In a sector with limited available funding, an outcomes-based funding mechanism increases the likelihood that money is well-used, achieving the desired impact. 

The Project Team

Pre-launch and Strategic Partners:

The Bertha Centre for Social Innovation and Entrepreneurship played a key role in the design and feasibility phase and is the strategic advisor to the government in support of the transaction.

Social Finance UK helped with preliminary design work and modeling for the transaction in a contextually relevant manner.

The Lego Foundation provided early stage development funding for the transaction.

De La Harpe Consulting and Eversheds Sutherland South Africa have provided the Intermediary partnership with legal, registration, and contracting services towards the completion of the transaction.

Two of the investors – LGT VP and The Standard Bank Tutuwa Community Foundation, also provided valuable pre-launch funding to the Intermediary partnership.