Tools & Resources

IDP Rising Schools Program

This case example appeared originally in Essentials of Impact Investing: A Guide for Small-Staffed Foundations
Investor: IDP Foundation
Investee: Sinapi Aba Trust (IDP Rising Schools Program)
Asset Class: Private Debt
Investment Amount: $125,000, then $1 million
Impact Sector(s): Community & Economic Development; Education
Date of Investment: 2013 and 2014
Projected Exit: 2020 and 2017
Financial Return Goal: Below Market Rate
 
The keystone program of the IDPF is the IDP Rising Schools Program, which it launched in 2009 in Ghana to boost the development of existing low-cost private schools by efficiently delivering financial and capacity building services to help these schools move away from aid-based programs.
 
The program’s objective was to use philanthropic dollars as risk capital to develop an innovative, scalable, and replicable approach to support sustainable investment in educational initiatives that provide even the most deprived with a quality education. IDPF developed this program in response to the clear market demand of impoverished parents to address their children’s lack of access to quality public education. As a result, a multitude of very low-cost, individually owned schools are attempting to create such access, not just in Ghana, but all over the developing world.
 
The program targets only existing schools that reach those at the very bottom of the economic pyramid. School fees in these types of schools average $15 per term. The program began with a pilot study of 105 existing private schools that served 27,000 primary-aged children. After three years of demonstrated success, it has transformed into a fully developed program and is expanding throughout Ghana.
 
IDPF has built the capacity of Sinapi Aba Trust (SAT) to sustainably expand the IDP Rising Schools Program in Ghana through three stages of financing: (1) a three-year grant to pilot the program; (2) a PRI in the form of a zero-interest, seven-year loan in August of 2013 for $125,000; and (3) a $1 million loan for three years at an interest rate of 12 percent per annum in September 2014. A 12 percent interest rate for the large phase 3 loan is below market because SAT would pay a higher rate for a similarly-conditioned loanfrom a commercial investor and IDPF is accepting a significant risk of currency fluctuation doing business in Ghana.
 
Process
As mentioned above, the IDP Rising Schools Program is central to the IDPF’s mission and purpose. The partnership with SAT was essential to the program’s success, as was the heavy involvement of IDPF staff members who took many trips to Ghana to build a relationship with SAT and to work with it to create a successful and replicable model. As was the goal, the IDPF is no longer involved in the day-to-day operations, but instead relies on SAT to manage the program and to provide valuable reporting details to IDPF.
 
Partners Involved in Investment
None
 
Projected Impact
The IDP Rising Schools Program model is sustainable, but it does require initial capital to build toward complete sustainability. IDPF is expecting the zero-interest loan to be repaid in full in August 2020 and the operations loan to be repaid with interest in September 2017. Loans are repaid by the schools once they become financially self-sufficient.
 
The IDP Rising Schools Program has led to better school management, improved infrastructure, and increased enrollment with participating low-cost private schools. As of April 2015, 393 low-cost private school owners have completed the IDP Rising Schools Program training in financial literacy and school management, affecting more than 96,000 children. Over 240 loans have been disbursed in the amount of 2.3 million Ghanaian cedis ($545,000), which have provided these deprived schools with the capital they require to improve their infrastructure or add classrooms, purchase land, and purchase or repair school vehicles to transport children safely to and from school. Furthermore, 32 percent of schools continue reinvesting in school improvements by taking subsequent loans. The IDP Rising Schools Program is expanding to a total reach to 580 schools and 150,000 pupils by July 2016.
 
On-The-Ground Insights
Get your hands dirty and spend some time in the field to understand the conditions and local context in which a social enterprise in a developing country operates.
 
Include space for flexibility in your budgets and financing plans to make adjustments to a program as lessons are learned along the way.
 
Build the capacity of your partners through both mentoring and a willingness to finance line items others refuse to finance—staff costs, external research, business plan development.
 
Listen to your partners on the ground because they will be your greatest resource in making a project work.

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