OUTCOME INVESTING OI Resultsbased approach to designing and

OUTCOME INVESTING (OI) Results-based approach to designing and managing investments Strategy, Measurement & Evaluation © Bill & Melinda Gates Foundation |

INTRODUCTION § The foundation has streamlined the process and approach we use for making and managing investments, both grants and contracts. § The goal is to reduce non-value added time in processing investments and provide more time to think, innovate and build strong relationships with our partners, ultimately helping us to achieve better results for the people we serve.

INVESTMENT WORKFLOW AND OUTCOME INVESTING Investment Workflow is the process we use at the foundation to make and manage investments, aiming to strengthen partnerships, set clear expectations, reduce opportunity costs and focus on outcomes. Outcome Investing is the approach we use within the Investment Workflow to enable a focus on measurable results. Outcome Investing has three defining characteristics that build over the four phases of the Investment Workflow PHASE 1 PHASE 2 PHASE 3 PHASE 4 CONCEPT DEVELOPMENT PRE-PROPOSAL INVESTMENT DEVELOPMENT MANAGEMENT & CLOSE • Generate Ideas Outcome Investing • Develop Concept • Develop Proposal Package • Identify Partners • Determine Funding Decision • Develop Agreement Outcomes at the Outset Logical Design Upfront collaboration between the Program Officer and prospective grantee to articulate and align on the few, most important and measurable results. Co-development of a larger set of logically-connected results (and associated measures) that are on the pathway toward achieving the investment outcomes. • Manage Investment • Measure Progress Managing toward Results Track progress towards achieving the investment results (not activities), and manage toward those results. © 2014 Bill & Melinda Gates Foundation | 3

IMPLEMENTATION OF OUTCOME INVESTING v The Investment Workflow process includes key Outcome Investing tools that help to enable a focus on results and measurement. • Results Framework – captures the logical relationship between the expected investment results (outcomes and outputs), and the strategic goals to which those results contribute • Results Tracker – supports planning for how results will be measured and tracked over the course of the investment timeframe • Measurement and Evaluation Planning Module – enables planning for measurement of the expected results and for anticipated evaluations, including any needed resources or support © Bill & Melinda Gates Foundation | 4

OI practice – it’s about more than just the tools

Outcome Investing can help us drive towards clear, explicit and agreed upon outcomes, freeing up staff and grantees to do what they do best – collaborate to produce catalytic change. Specifically, OI enables: ü Clear expectations around what success looks like for the investment ü Greater flexibility for partners to innovate on how they will achieve outcomes ü Investments designed toward measureable outcomes ü More effective measurement for the foundation and our partners Clear Expectations Greater Flexibility Measurable Outcomes and Effective Measurement

OI ENABLES…CLEAR EXPECTATIONS • • The Outcome Investing approach is a partnership between the funder and grantee that starts by taking the time upfront to identify what success looks like. Although it can take time to do well, translating success into specific, measurable outcomes enables both sides to understand the expectations associated with an agreement (whether it’s a grant, contract or program-related investment). Clear Expectations Greater Flexibility Measurable Outcomes and Effective Measurement

OI ENABLES…GREATER FLEXIBILITY • We’re optimistic that moving away from a focus on activities can give partners the flexibility to innovate and problem solve, and enable a foundation approach that is more consistently about identifying catalytic solutions. Clear Expectations Greater Flexibility Measurable Outcomes and Effective Measurement

OI ENABLES…EFFECTIVE MEASUREMENT • • Taking the time to specify and align around investment outcomes and the few, essential outputs required to produce them has positive consequences for measurement because the more specific the result, the easier it is to measure and check its alignment to strategy. Managing and monitoring progress with essential results data rather than ticking off process or activity-based milestones also provides grantees with more time to focus on achieving impact. Clear Expectations Greater Flexibility Measurable Outcomes and Effective Measurement

HOW TO CRAFT A QUALITY OUTCOME • • An early critical step to practicing Outcome Investing is to align with our partners on the few, measurable outcomes that define what success looks like. When we talk about outcomes, we mean the key changes we expect to see within the timeframe and context of the investment. Outcomes are the ‘so-what’ of our work. Verb Indicating Change What Changes Examples: • Increased • Decreased • Improved • Reduced • Adopted • Established • Used • Integrated Examples: • Coverage • Behavior • Knowledge • Technologies • Models • Data • Systems • Policies Who Changes Additional Specificity (when relevant/feasible) Examples: • Individuals • Communities • Populations • Governments Examples: • Where you expect to see this change? (include geography) • By when you expect to see the change? (include date) • How much change you intend to see? (include target) © Bill & Melinda Gates Foundation | 10

EXAMPLE INVESTMENT OUTCOMES Verb Indicating Change What Changes Who Changes Additional Specificity o Improved early care-seeking practices for pneumonia and diarrhea among caretakers of children under 5 years old from two regions in Nigeria by year 3 of the project. o Adoption of national sanitation and hygiene policies and strategies (including non-sewer basic sanitation) in four countries classified as fragile by 2015. o Increased use of self-paced math programs among 25 school districts in California by 2018 © Bill & Melinda Gates Foundation | 11

TERMS & DEFINITIONS Investment Results BMGF Strategic Goals The 3 -5 year results of a BMGF initiative, sub-initiative or portfolio to which the investment contributes most directly Primary Outcomes The overall change(s) in technologies, systems, populations or behaviors the investment seeks to achieve within the investment timeframe Intermediate Outcomes Output Activities The changes in technologies, systems, populations or behaviors that need to be achieved to realize the primary outcome(s) The goods, services, events or deliverables produced during an investment The actions taken or work performed to produce goods, services, events or deliverables © Bill & Melinda Gates Foundation | 12

EXAMPLE RESULTS CHAIN Investment Results BMGF Strategic Goals Improved market enablers that allow smallholder farmers to interact more efficiently with markets Primary Outcomes Increased sales of produce by smallholder farmers in the major production zones of West Africa by year 5 Intermediate Outcomes Increased sales of hermetic produce storage bags by merchants in the major production zones of West Africa by year 4 Output At least 400 village -level demonstrations of hermetic produce storage bags held in the major production zones of West Africa by year 3 Activities Train bush technicians to effectively hold village-level demonstrations of hermetic produce storage bags © Bill & Melinda Gates Foundation | 13

CHARACTERISTICS OF QUALITY RESULTS Aligned with strategic goals Achievable within the investment context A set of investment results should be … Measureable Distinct from activities Logically connected to each other © Bill & Melinda Gates Foundation | 14

QUALITY RESULTS ARE…ALIGNED WITH STRATEGIC GOALS The results will help contribute to the achievement of the foundation’s strategic goals Aligned with strategic goals Achievable within the investment context A set of investment results should be … Measureable Distinct from activities Logically connected to each other © Bill & Melinda Gates Foundation | 15

QUALITY RESULTS ARE…DISTINCT FROM ACTIVITIES Aligned with strategic goals Achievable within the investment context A set of investment results should be … Measureable Distinct from activities The results tell us what is either produced or achieved by the investment, NOT what the investment will do Logically connected to each other © Bill & Melinda Gates Foundation | 16

QUALITY RESULTS ARE…LOGICALLY CONNECTED Aligned with strategic goals Achievable within the investment context A set of investment results should be … Measureable Distinct from activities Logically connected to each other The results have a causal, or if/then, relationship between one another © Bill & Melinda Gates Foundation | 17

QUALITY RESULTS ARE…MEASURABLE Aligned with strategic goals Achievable within the investment context The results are clear, specific, and measurable A set of investment results should be … Measureable Distinct from activities Logically connected to each other © Bill & Melinda Gates Foundation | 18

QUALITY RESULTS ARE…ACHIEVABLE Aligned with strategic goals The results can feasibly be achieved within the timeframe and the resources available Achievable within the investment context A set of investment results should be … Measureable Distinct from activities Logically connected to each other © Bill & Melinda Gates Foundation | 19

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