In this interview with IDR, Abha Thorat Shah, a founding member of BAT and the head of its Social Finance portfolio for South Asia, and Saleem Khan, India Director of BAT, elaborate on the importance of social finance, their experience of launching a development impact bond in India, and what it takes to work with different stakeholders in the social impact space.

What has BAT’s journey been like in the past three years and why did you choose to go down the path of outcome-based financing?

Abha: Having been in the sector for a while now, we realised that while some development problems can be solved through philanthropy, there are many others that might benefit from a different approach. As social sector practitioners, we usually assess how we can do better work, be it through our programmes, monitoring and evaluation systems, or technology.

However, when it comes to financing, the approach has been limited to grants, or at best, impact investing. From our substantial experience of working in South Asia, we knew that while philanthropy by itself could be incredibly positive, it was not enough.

What was the appetite for this new approach from other stakeholders?

Abha: Doing something new always takes time. So, while there was an appetite, we still had to convince a wide range of stakeholders within an organisation about the potential of impact bonds as an effective and efficient mode of financing. This was particularly difficult because at that point in time, there was no evidence to back our claims—while impact bond had been used in the UK and US, evidence to support our work in India or South Asia did not exist. We also had to prove to stakeholders and donors that we had skin in the game, and work on co-creating the solution with them.

Read the full interview about development impact bonds by Sharanya Menon and Smarinita Shetty at India Development Review.