Harnessing the power of learning in Outcomes-Based Financing for Early Childhood Care and Education

One year ago today, we published a paper arguing that the time was right to explore Outcomes-Based Financing (OBF) for Early Childhood Care and Education (ECCE) programmes on a larger scale. Our goal was to spark a conversation about how OBF could lead to smarter investments in the critical early years of a child's development. We also extended an invitation to organisations and individuals to join us on a collaborative learning journey, exploring both the potential and challenges of applying OBF to ECCE.

What we didn’t anticipate when we launched this learning journey was just how much we’d learn about learning itself—yes, it’s a bit meta. This realisation hit home thanks to Dr Arushi Terway of the Network for International Policies and Cooperation in Education and Training’s (NORRAG) masterful facilitation of a panel discussion on learning partnerships at the Social Outcomes Conference 2024. Last week, I had the privilege of joining this panel alongside distinguished colleagues Dr Dhir Jhingran (Language and Learning Foundation), Dr Vikas Maniar (Tata Institute of Social Sciences) and Sietse Wouters (UBS Optimus Foundation), as well as Jacqui O’Hanlon, Dr Matthew Collins, and Dr Lynsey McCulloch of the Royal Shakespeare Company. In this blog, I’ll discuss some of the key insights on learning that I shared at this panel. I also recommend looking at the event highlights, where you can find a video recording of the panel here.

Setting the stage  

Over the past year at the Education Outcomes Fund (EOF), we have been working closely with the governments of Rwanda, Sierra Leone and South Africa to establish outcomes partnerships for ECCE in these countries. We are setting up outcomes funds that are multi-stakeholder partnerships that aim to align key stakeholders under one common framework. The shared goal of these outcomes is to provide quality ECCE to young children so that they acquire the broad range of skills necessary to enable them to thrive at school and in life. So far, these efforts have brought together a diverse group of funders committed to using OBF to improve young children's developmental outcomes (see footnote 1). Recently, we launched the selection processes to engage implementing organisations and impact investors in these partnerships.  

Outcomes funds are still a relatively new tool in the realm of innovative finance. To our knowledge, the outcomes funds in Rwanda, Sierra Leone and South Africa will be the first dedicated solely to ECCE programmes. More broadly, OBF in ECCE is largely uncharted waters compared to sectors like basic education or skills training. Globally, there have been only about twenty ECCE programmes using OBF and many of these didn't progress beyond the design phase.  

Given this context, EOF is committed to actively engaging in a continuous learning process throughout the programme cycle, not only to enhance our own programme design but also to grow the collective knowledge base of the OBF and ECCE communities. By doing so, we aim to contribute to future programmes’ effectiveness and impact.     

Does ‘doing’ automatically lead to ‘learning’?  

From the outset, our team at EOF knew that they were facing steep learning curves on multiple fronts, with tight timelines requiring them to learn on the job. Yet, after six intense months of hands-on work, it became evident that doing doesn’t automatically translate into learning. This realisation led our experts to experiment with different processes to reflect on their experiences and extract meaningful insights. Since then, we have created many more opportunities for reflective learning, both internally and with our partners in government, as well as with technical experts. These reflections have deepened our belief in the power of learning through reflection, especially when navigating uncharted territories.  

The key to unlocking collaborative learning across teams  

Ironically, while we recognised early on that simultaneously working on three outcomes funds for ECCE would present immense learning opportunities, it took several months and numerous trials with different collaboration models to effectively harness this potential. What eventually worked for our programmes teams was dedicating two full months to technical analysis, collaborative learning and collective problem-solving in small, cross-programme groups focused on specific design challenges. Additionally, some team members were assigned to work on multiple programmes, which allowed them to transfer learnings across programmes more effectively. Over the next six months we'll be publishing a series of briefs to share our reflections, learnings and decisions on these challenging technical design issues.  

We are acutely aware that we must continue honing our reflective learning skills throughout the implementation of the programmes financed under these outcomes funds. Over the past year, our experts have grappled with several technical design challenges, many of which kept them awake at night. Despite extensive research and consultations, several design decisions had to be made even though there were significant unknown factors. To address this, we’ve built opportunities for course correction into the fund’s design. As we learn more during programme implementation, we’ll use this new knowledge to refine and iterate on these design features. 

Four puzzles that kept EOF experts awake at night  

Measurement puzzle: accurate and reliable measurement of outcomes is essential for the success of outcomes-based contracts. Measuring early childhood development (ECD) outcomes accurately and comprehensively is challenging and costly. Using process indicators such as the quality of the physical environment or the nature of teacher-child interactions presents its own challenges. The limited evidence on how different process-related factors interact, and in what sequence, makes it difficult to fully understand their impact on long-term ECD outcomes. Furthermore, measurement tools must be tailored to the specific local context and designed to accurately assess relevant factors, such as the needs of children with disabilities.  

Attribution puzzle: accurately attributing changes in outcomes to the interventions funded by outcomes funds is critical for the mechanism’s effectiveness and credibility. In ECCE, the impact on ECD outcomes often shows small effect sizes and takes time to manifest. Moreover, children’s developmental pathways are non-linear and unique, further complicating the task of linking observed improvements directly to ECCE interventions.    

Target setting puzzle: setting realistic yet ambitious targets in outcomes funds relies heavily on having context-specific outcomes data from similar programmes. When such data is scarce, an iterative approach to target-setting is deemed appropriate. However, this approach requires careful management to balance collaboration with contract management. The risk lies in either unintentionally constraining ambition and missing opportunities for greater impact, or in transferring excessive risk to implementing partners and supporting investors.  

Pricing puzzle: pricing outcomes correctly is vital to avoid misaligned incentives and to prevent public backlash over perceived overpayments. Key inputs for accurate pricing include reliable data on the costs of ECCE interventions and context-specific information to calculate the social returns on investment. The limited availability of such data makes pricing outcomes a particularly challenging puzzle to solve.     

The art of collective learning  

Navigating the largely uncharted waters of designing outcomes funds for ECCE programmes felt, at times, like setting sail without any nautical charts. While we knew that others had ventured into these waters before us, their journeys had not yet been mapped. To chart our course, we sought to connect with those who had traversed similar paths, hoping to learn from their experiences.  

This search led us to engage with exceptional organisations known for their expertise in fostering peer-to-peer learning. From these initial discussions, we forged two valuable partnerships. The first was a learning group co-chaired with the Education Finance Network, the Innovative Finance for Education Learning Group, which brought together over 30 professionals who are passionate about innovative finance in education (see footnote 2).  The second initiative, launched with GO Lab, NORRAG and Ecorys UK, the Collective Learning Initiative for OBF4ECCE, convenes specialists with direct experience in designing ECCE programmes using OBF.  

These partnerships have taught us a great deal about what I refer to as ‘the art of collective learning’. This concept draws inspiration from Priya Parker’s book: The Art of Gathering, where she illustrates beautifully how crafting meaningful and impactful gatherings requires intentionality and thoughtful design. The same principle applies to collective learning. Even when we have the opportunity to bring together experienced practitioners, turning a collection of disparate insights and experiences into cohesive and actionable knowledge requires skilful curation and facilitation.   

Main takeaways adapted from The Art of Gathering  

Define a clear purpose: ensure the learning group has a well-defined and specific purpose.  

Curate the invitation list: carefully consider who to invite and who not to invite to the learning group, as well as when to invite them. Consider the broad range of experiences of different stakeholders and how these may complement each other.  

Harness the power of invitation: build anticipation and clearly communicate the group’s purpose in your invitations.  

Establish ground rules: set clear expectations and guidelines to create a safe and open space for sharing.  

Be an active convener: set the tone and guide the process with intention and generosity.  

Customise learning methods: tailor both remote and in-person learning activities to align with the group's unique purpose, keeping in mind that different topics may benefit from various forms of learning.  

Create a distinct experience: use rituals and structured meeting flows to establish a unique and engaging environment for the group.  

Practice and reflect: continuously improve the art of collective learning through practice and reflection. Learn from each invitation and meeting to refine your approach. 

I would also argue that the real magic of collective learning happens when conveners are successful in supporting the emergence of ‘authentic connections’ between the participants. So, the ambition that we’ve set for ourselves with our partners in these two learning groups is to create an environment where practitioners feel comfortable sharing their experiences and insights, including their mistakes and misjudgements. In a world of online gatherings and rapidly shifting work priorities, we continue to search for better ways of strengthening person-to-person relations by nurturing trust and commitment.    

At EOF, the past year has solidified our belief in the power of reflective learning. Our learning experiences while designing three ECCE outcomes funds have demonstrated that reflective learning, be it individually, as a team or with other teams, is critical to successfully navigate uncharted waters. This past year has also confirmed our belief that reflective learning becomes even more profound and impactful when undertaken collectively with practitioners in other organisations. As we move forward, we remain committed to both ways of learning, as well as to improving how we learn as an organisation and as a member of a growing community of organisations using OBF in education. Only through continuous learning can we better equip ourselves with the knowledge needed for the effective use of OBF for higher quality ECCE for all.

Key takeaways from the Innovative Finance for Education Learning Group  

During one of the five sessions of the Innovative Finance for Education Learning Group, we focused on OBF of ECCE programmes. In smaller groups, we discussed experiences and insights relating to three key challenges: multi-stakeholder collaboration, measurement and evaluation, and system-level change.    

Key takeaways:  

• Context-specific approaches: OBF for ECCE programmes needs to be highly context-specific, more so than in basic education or skills training programmes, due to the diverse service provision models.  

• Data and measurement challenges: our discussions highlighted significant data limitations and measurement challenges. We came away from this exercise questioning how to effectively fund long-term outcomes in ECCE programmes amidst data scarcity in many countries.  

• Navigating political and administrative barriers: we observed notable differences in how OBF initiatives for ECCE respond to political and administrative challenges. Though some programmes appeared to stall, these often became success stories by adapting to political and regulatory challenges. These initiatives showcased alternative pathways to system strengthening, focusing on the principles of OBF rather than its specific mechanisms and working within existing systems to enhance outcomes-based approaches for ECCE. 

This blog was written by Dr. Özsel Beleli, Head of Learning and Engagement, ECCE at EOF. We invite you to stay tuned as this conversation unfolds, our shared insights grow, and we collectively strive to create more impactful ECCE programmes that deliver better outcomes for young children. For further information on EOF's work in early childhood care and education, please contact Dr. Özsel Beleli at ozsel@edufundmea.org.  Footnotes

1. The Rwanda ECCE Outcomes Fund is funded by the Government of Rwanda and the LEGO Foundation; The Sierra Leone ECCE Outcomes Fund is funded by the Government of Sierra Leone, the Danish Ministry of Foreign Affairs and the LEGO Foundation; The South Africa ECCE Outcomes Fund is funded by the Government of South Africa, First Rand, the LEGO Foundation, Oppenheimer Memorial Trust, Standard Bank and Yellowwoods.

2. The Innovative Finance for Education Learning Group convened experts from 34 organisations in five sessions over nine months to discuss opportunities and challenges around using innovative finance mechanisms in education. For more insights and lessons learned from the group, see 1) a blog on the measurement puzzle in OBF: https://www.educationoutcomesfund.org/post/piecing-together-the-measurement-puzzle-experiences-from-outcomes-based-finance-programs-in-educati and 2) a blog on systems strengthening with OBF: https://www.educationoutcomesfund.org/post/many-paths-up-the-mountain-of-strengthening-systems-through-outcomes-based-finance