Giving Compass' Take:

• A results-based financing tool was introduced at the Skoll World Forum. The tool will help implement clean water systems in Uganda through a loans system that is based on achievement and impact. 

• If this is effective and can be replicated by others, will more people start to invest in the same clean water solutions or will they take the model and utilize it in other sectors? 

• Read about how philanthropists can fund clean water solutions. 

The Rockefeller Foundation and UBS Optimus Foundation are backing a new financing tool to bring clean water to 1.4 million Ugandan school children, saying the model can potentially be replicated across other countries and sectors.

Globally, nearly 850 million people have no access to a reliable, quality source of drinking water, the subject of Sustainable Development Goal 6. The World Bank estimates that securing sustainable and quality access to water and sanitation for all by 2030 will require an additional $114 billion annually. Official development assistance for the issue is now about $8 billion a year.

However, questions were raised about the sustainability of the “Social Success Note” model after the new tool was launched Thursday at the Skoll World Forum conference in Oxford.

In this first pilot of the SSN model, the UBS Optimus Foundation will provide a $500,000 loan to Impact Water, a social enterprise, to expand its work installing low-cost UV-based water purification systems in schools across Uganda. Schools pay approximately $1,000 to Impact Water to install the system.

Impact Water will pay back the loan after five years and the rate of interest will go down if certain outcomes are achieved.

The SSN is one of a string of results-based financing mechanisms that have emerged in recent years, including the development impact bond, a variation of the social impact bond pioneered in the United Kingdom in 2010. Despite strong interest in the DIB model within the development community, only a handful of DIBs are currently up and running.

However, some at the session said using installation-based key performance indicators as the outcome measure would not ensure sustainability in the long run — a problem that has dogged water projects in developing countries in the past. Studies have shown that around one-third of rural water projects are nonfunctional at any given time.

In a statement, Evan Haigler, CEO of Impact Water, said the SSN “has great potential as a financing model that social businesses can use to grow and deliver impact at scale.

Read the full article about results-based financing tool  by Sophie Edwards  at Devex International Development