In the developing world, more than 200 million children under the age of five years are at risk of not reaching their full development potential because they suffer from the negative consequences of poverty, nutritional deficiencies and inadequate learning opportunities. Overall, 165 million children (one in four) are stunted, and 90 percent of these children live in Africa and Asia. And though some progress has been made globally, child malnutrition remains a serious public health problem with enormous human and economic costs. Worldwide, only about 50 percent of children are enrolled in preprimary education, and in low-income countries a mere 17 percent. And though more and more children are going to school, millions have little to show for it. By some accounts, 250 million children of primary school age cannot read even part of a sentence. Some of these children have never been to school (58 million); but more often, they perform poorly despite having spent several years in school, which reflects not only the poor quality of many schools but also the multiple disadvantages that characterize their early life.

Ensuring that all children—regardless of their place of birth and parental income or education level—have access to opportunities that will allow them to reach their full potential requires investing early in their development. To develop their cognitive, linguistic, socioemotional and physical skills and abilities, children need good nutrition and health, opportunities for play, nurture and learning with caregivers, early stimulation and protection from violence and neglect.

The Case for Early Interventions 

The arguments for investing in children early are simple and convincing. Early investment makes sense scientifically. The brain is almost fully developed by age three, providing a prime opportunity to achieve high gains. We know that the rapid rate of development of the brain’s neural pathways is responsible for an individual’s cognitive, social and emotional development, and there is solid evidence that nutrition and stimulation during the first 1,000 days of life are linked to brain development. 

Early investment makes sense in terms of equity. The playing field has the highest chances of being leveled early on, and we know that programs have a higher impact for young children from poorer families. In the United States, for example, increasing preschool enrollment to 100 percent for low-income children would reduce disparities in school readiness by 24 percent between black and white children and by 35 percent between Hispanic and white children. We also know that equalizing initial endowments through early childhood development (ECD) programs is far more cost-effective than compensating for differences in outcomes later in life. 

Early investment makes sense economically. Investing early prevents higher costs down the road, and interventions yield a high return on investment. There is evidence of the benefits for the individual and for society more broadly. For instance, at the level of the individual, in Jamaica children participating in an early childhood stimulation program were found to have 25 percent higher earnings 20 years later compared with children who did not participate. At the economy-wide level, eliminating malnutrition is estimated to increase gross domestic product by 1 to 2 percentage points annually, while countries with school systems that have a 10-percentage-point advantage in the proportion of students

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One in five tax filers in the United States claims the Earned Income Tax Credit—a refundable federal tax credit targeted to low-income working Americans that has proven to be one of the nation’s most effective anti-poverty policies. Last year, at tax time the average EITC filer claimed just over $2,400 through the credit.

However, the share of filers claiming the EITC and the level of benefits they receive vary widely within and across communities, as shown by the local-level IRS data we post each year on our EITC Interactive data tool. For instance, almost one in three filers in the Memphis metro area claimed the credit (32 percent) in tax year 2013 compared to just 12 percent of filers in metro Boston. Local labor market conditions can affect these numbers, like the incidence and concentration of low-wage jobs or regional differences in cost of living and average wage levels. But the credit itself is also designed to vary across different kinds of filers and families. Maximum credit levels for workers without children are quite small, but they increase considerably for workers with one, two, or three children—boosting the credit’s work incentive and anti-poverty impacts.

For the first time, our EITC Interactive tool now includes data on how EITC receipt varies by the number of children claimed.

According to that data, last tax year workers without qualifying children received an average credit of $281 (Figure 1). Although they made up almost one in four EITC filers, childless workers accounted for just 3 percent of EITC dollars claimed, due to the small size of their credit (Figure 2). In contrast, workers with one child—the largest share of EITC filers (37 percent)—claimed an average credit of $2,316. Workers with two kids accounted for 27 percent of EITC filers, but with an average credit of $3,682 they took home 40 percent of all EITC dollars. Working families with three or more children made up the smallest share of EITC filers last tax year, but claimed the largest credit on average at $4,036.

These data, which are available down to the ZIP code level, offer insights into the ways in which the makeup of the EITC population (and the low-wage workforce more generally) varies across places. Returning to the Memphis and Boston regions, each metro area received more than half a billion dollars through the EITC last year ($517 and $512 million, respectively). However, the number of filers claiming the EITC was much larger in metro Boston (256,456) than in the Memphis metro area (178,241). In part, these numbers reflect the fact that 30 percent of metro Boston’s EITC filers were childless workers. In the Memphis metro area, just 15 percent of EITC filers did not have qualifying children, while 41 percent had one child, 31 percent had two children, and 12 percent had three or more children—higher than Boston’s share of EITC filers with children across the board (37 percent had one child, 24 percent had two children, and 9 percent had three or more children).

For EITC outreach campaigns working to ensure eligible filers claim the EITC at tax time, and for practitioners looking to use tax time to connect low-income workers to financial services and benefits, these numbers give a sense of who lives in their community and how to target their services. For advocates and policymakers, these numbers help shed light on how potential changes to the credit might affect different places.

For instance, the Obama administration, several legislators, and at least one presidential candidate have proposed expanding the EITC for workers without qualifying children to make it a more effective poverty alleviation and work support tool. Every congressional district in the country has childless workers or noncustodial parents who would stand to benefit from that expansion. But that expansion would be particularly important for the more than 240 districts—largely clustered on the coasts and roughly split between Republican and Democratic representatives—with above average shares of childless EITC filers (Map 1).

In contrast, if Congress does not act to make recent expansions to the credit permanent, every district will see a cut in EITC benefits in 2017, when the credit for workers with three or more children is set to disappear. In particular, more than 200 districts with above average shares of EITC filers with three or more kids—this time predominantly Republican districts clustered in the Intermountain West, parts of the Great Plains, and along the Texas border—would be most affected (Map 2). 

In the coming weeks, we will be delving deeper into the impact of proposed and potential changes to the EITC and releasing new resources on the EITC-eligible population and the credit’s anti-poverty impact. In the meantime, these new EITC Interactive data offer an important resource that can help practitioners, policymakers, advocates, and researchers better understand how the EITC affects low-income workers and families and their communities across the country.

       

       

       

       

       

       

       

       

       

       

       

       

       

The confluence of the agreement on 17 Sustainable Development Goals (SDGs, or Global Goals) in 2015, and the increased attention being paid to the role of non-traditional actors in contributing to shared prosperity, provide a unique opportunity to focus attention on attempts to identify promising new solutions to the barriers that impede the full development of the world’s youngest citizens. Current estimates indicate that 200 million children globally under the age of 5 are at risk of not reaching their development potential. With these goals, the global community has a tremendous opportunity to change the course of history. There is evidence that certain early childhood development (ECD) interventions—spanning the nutrition, health, water and sanitation, education, social protection, and governance sectors from conception to age 5—have high potential to help to achieve the SDGs related to child development. Furthermore, early childhood interventions have been found to improve adult health and education levels, reduce crime, and raise employment rates, which will be paramount to achieving global economic, climate, and physical security.

Impact bonds have the potential to address some of the main financing and delivery constraints faced in ECD. By providing upfront private capital, impact bonds could help to address service provider liquidity constraints and leverage public capital by allowing the government to connect preventive programs with future benefits to individuals, society, and the economy. Impact bonds also have the potential to drive performance management, support monitoring and evaluation, and create accountability, which all help to address quality and capacity constraints. By fostering innovation, experimentation and adaptive learning in service delivery, cost-effective solutions could be identified through impact bonds. By producing evidence of outcome achievement, impact bonds could shift the focus toward effective ECD programs. Finally, collaboration across stakeholders—a necessary component of impact bonds—has the potential to allow for alignment of interests and a win-win situation for investors, outcome funders, and program beneficiaries alike.

The high participation of non-state actors and potentially significant returns in ECD make it a promising sector for impact bonds. Unlike other services that may have entrenched interests, the multitude of agencies and non-state entities financing and providing ECD services potentially allows for more experimentation. The preventive nature of ECD programs also fits well with the core feature of SIBs, which is that preventive investments will result in valuable short- and potentially long-term outcomes. There is evidence that ECD interventions can have immense effects on later-life outcomes. For example, a longitudinal study of a program in Jamaica, in which participants received weekly visits from community health workers over a 2-year period, was found to increase the earnings of participants by 25 percent, 20 years later.

There may, however, be some particular challenges associated with applying impact bonds in the ECD sector. Impact bonds (and other Payment by Results mechanisms tied to outcomes) require meaningful outcomes that are measureable within a timeframe that is reasonable to the outcome funder (and investors in the case of an impact bond). Meaningful outcomes are outcomes that are intrinsically or extrinsically valuable. Intrinsically valuable outcomes that are measureable within a reasonable timeframe could be extrinsically valuable if they are proxies for long-term benefits to individuals, society, or the economy. The delay between ECD interventions and later-life results may prove an impediment in some cases. By identifying appropriate interim measures such as language development, socioemotional development, and schooling outcomes that may proxy for desirable longer-term outcomes, the issue of delay could be mitigated. For example, there is evidence that early stimulation and health programs can have statistically significant effects on schooling outcomes in the short-run. An increase in focus on the intrinsic value of short-term outcomes that result from ECD interventions, such as child survival, is also important.

As the global community moves beyond the Millennium Development Goals to a set of Global Goals and associated targets linked to measurable outcomes, there is an opportunity to demonstrate a commitment to invest in future generations. Leveraging upfront funding, focusing on outcomes through adaptive learning and testing new ways to deliver early childhood interventions more effectively are all means of achieving the ECD-related goals. Despite the hype around all of the new financing mechanisms, the keys to creating high-quality, locally appropriate programs remains simple—real-time collection of outcome data, the freedom to fail, and the flexibility to course-adjust. In some circumstances social service provision based on outcomes and adaptive learning may require mechanisms like impact bonds or other Payment by Results mechanisms. In other circumstances it may not. As this very nascent field continues to grow, more research will be needed to capture lessons learned, contextualize them within the larger landscape of ECD financing and service provision, and apply them to real-world social challenges with the world’s youngest and most disadvantaged populations at the forefront of the conversation. 

Read the previous report on the landscape of impact bonds across sectors and geography »

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March 18 was an historic day for early childhood development (ECD) financing—the Departments of Social Development and Health of the Western Cape province of South Africa committed 25 million rand ($1.62 million) in outcome funding for three social impact bonds (SIBs) for maternal and early childhood outcomes. This is the first ever funding committed by a middle-income government for a SIB—to date no low-income country governments have participated in a SIB either—making South Africa’s choice to pioneer this new path especially exciting.

A SIB is a financing mechanism for social outcomes where investors provide upfront capital for services and a government agency repays investors contingent on outcome achievement. There are currently two active development impact bonds or DIBs (where a donor provides outcome funding rather than a government agency) in middle-income countries, one for coffee production in Peru and one for girls’ education in India. The South African SIBs, whose implementation was facilitated by the Bertha Centre for Social Innovation and Entrepreneurship at the University of Cape Town and Social Finance U.K. as well as other organizations, will be the first impact bonds in Africa.

We have been following closely the development of these SIBs over the last two years through our research on the potential applications of impact bonds for ECD outcomes, and recently hosted a discussion on the topic at Brookings. There are currently nine other impact bonds worldwide that include outcomes for children ages 0 to 5, including two recently announced impact bonds in the U.S. for nurse home-visiting in South Carolina and support for families struggling with substance abuse in Connecticut.

Impact bonds are well suited to fund interventions that have high potential returns to society; that require learning, adaptability, and combinations of services to achieve those returns; and that are not core government-funded services (often resulting in a relative proliferation of non-state providers). In our recent report, we find that a majority of evaluations show ECD can have unparalleled returns, but there are also a number of evaluations that show no significant impact or where impact fades out. Overall however, there are few evaluations relative to the number of service providers and interventions, an indication of how little we know about the effectiveness of the majority of service providers. For example, there are only 15 studies examining the effects of ECD interventions in low- and middle-income countries on later-life socioemotional development, which has been shown to be a critical determinant of success in school and life.

The case for government investment is strong, but continuous learning and adaptation is needed to ensure the high potential impacts are achieved. Tying payments to outcomes could help the ECD sector in three ways: it could encourage new government investment in ECD, it could encourage performance management and adaptability, and, crucially, it could help develop the knowledge base of what works in ECD. Unlike some other sectors where providers are able to finance their own operations to participate in a results-based (performance-based) contract through fees or other cash flows, ECD providers will almost always require upfront capital in order to reach the most vulnerable. Consequently, we find that, despite some significant challenges, ECD interventions are particularly well suited to impact bonds.

For this reason, there are three things we find particularly exciting about these new SIBs for early childhood development in South Africa:

1. Collaboration of two departments to ensure a continuity of outcome measurement and, hopefully, achievement. Given their different mandates, the Department of Health will fund outcomes for pregnant mothers and children in their first 1,000 days and the Department of Social Development will fund outcomes for children ages 2 to 5. The Bertha Centre writes that “the funding will be made available to three community based organizations working with pregnant women and children up to five years of age with outcomes including improved antenatal care, prevention of mother to child transmission of HIV, exclusive breastfeeding, a reduction in growth stunting, and improved cognitive, language and motor development.” 

The continuity of quality services is essential to sustaining the impacts of early childhood services, and this is the first set of impact bonds to address outcomes across the development spectrum from age 0 to 5. Selecting outcomes however, particularly for more complex learning outcomes for children ages 3 to 5, can be one of the greatest challenges for impact bonds in the ECD sector.

A full list of recommended outcome metrics for ECD impact bonds is available in our report.

2. Outcome fund structure. The SIBs in South Africa have been designed as impact bond funds, where the outcome funder issues a rate card of prices it is willing to pay for certain outcomes and multiple service providers are awarded contracts to provide those outcomes. This structure, which has been implemented in four instances in the U.K., could help facilitate impact bonds at greater scale than what we have seen thus far.

At the Brookings event on impact bonds, Louise Savell of Social Finance U.K., explained that scale was critical in the South African case because there are few providers that work across the entire province. While the discussion around pricing outcomes in the U.K. was more focused on future value to the economy, the discussion in South Africa had to be more attuned to the price of providing services. These delivery prices differ greatly by township, which may result in different outcome payment prices by township. The impact bond designers also had to ensure the outcome price allowed for providers to serve the hardest to reach.

3. Matching of private-sector outcome funds. This is the first impact bond to date where private-sector actors will augment outcome funds, in addition to serving as investors. Impact bonds take a great deal of work for a government agency to establish—though it will likely drop over time—and additional or matching of outcome funds will be critical to making this effort worthwhile for low- and middle-income country governments.

Looking forward, it will be interesting to compare and contrast the structure and design of these SIBs with the impact bonds for ECD outcomes in Cameroon, India, and potentially other countries as they launch in the coming years. Each impact bond must be designed taking into consideration the particular issues and challenges in a given context. However, sharing learnings from one impact bond to the next will likely improve both efficiency and quality of the impact bond implementation. 

       

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Unprecedented armed conflicts and natural disasters are now driving a global displacement crisis. According to the United Nations High Commission for Refugees, more than 60 million people are displaced worldwide, and half of them are children. These displaced children are hindered from developing cognitive and social-emotional skills—such as perseverance, emotional regulation, and conflict resolution—which are essential for school readiness and serve as the foundation for a more peaceful and stable future. However, through the development and testing of innovative educational strategies, we can build effective practices for improving young children’s learning and developmental outcomes in crisis contexts.

On June 8, the Center for Universal Education at Brookings and Sesame Workshop co-hosted a panel discussion to explore innovative strategies to meet the needs of young children in humanitarian crises. 

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Being able to read and write is the most basic foundation of knowledge accumulation and further skill development. Without literacy, there can be no quality education. Presently, 1 in 5 adults is illiterate, two-thirds of whom are women. At the current pace, over 700 million adults worldwide will still not be able to read in 2015. [1] In global education discussions, literacy rates are most often reported for adolescents and adults, an ex post facto measure of the failure of primary school systems to impart basic skills in the most formative schooling years. It is clear that much needs to be done to provide these adolescents and adults with access to successful literacy programs. But we must also ensure that children with access to schooling are not growing up to be illiterate.

Children enrolled and regularly attending school for the first three grades should be able to read basic text. Evidence shows that acquiring this ability to read sets students up for further learning, enabling them to read and comprehend progressively more advanced materials and acquire additional knowledge.

As explained in our earlier policy brief, data from numerous countries show that children in school are failing to acquire the most basic of skills, measured as the ability to read words of connected text. We called for a global paradigm shift that places learning at the center of the global education discourse. This shift requires the major bilateral and multilateral actors to refocus their own efforts on supporting learning in the classroom and measuring progress by increased learning outcomes. There has been some progress here, such as USAID’s goal to improve reading skills for primary school children in its new education strategy and the World Bank’s Education Strategy 2020, Learning for All: investing in people’s knowledge and skills to promote development.

This shift of focus also requires substantial changes on the ground, including encouraging and supporting a culture of literacy and learning at the community level. For example, Gove and Cvelich highlight some main factors contributing to low reading levels, including a lack of support for teachers, limited instructional time, poorly resourced schools, the absence of books in the home and policies regarding the language of instruction. [2] In Mali, a recent survey found that three-quarters of grade 2 students did not have a textbook and no student had supplementary reading books at school. [3] In The Gambia, the vast majority of students who demonstrated a level of reading fluency said that they had books at home. Globally, in both developed and developing economies, a relatively consistent proxy for “parental commitment to education” is the number of books in the home. A 20-year study of 27 countries found that children growing up in homes with many books get three years more schooling than their peers who come from homes without books. [4] There is no one-size-fits-all solution to improving the quality of education in developing countries. However, there is plenty of room for innovation to address some of the biggest barriers to improving reading levels, including availability of appropriate reading materials at school and at home. In disadvantaged communities, where there are relatively few books and even fewer books in local languages and that deal with culturally-relevant topics, innovation is needed to help develop a robust culture of literacy.

One such innovation is Worldreader.org’s iRead pilot in Ghana, which has put hundreds of e-readers into children’s hands. A lot has been written on similar classroom technology in developing countries, which cite examples of supplying hardware to schools without plans for its educational use, promoting technology from a single company, insufficient planning for sustainability, and inadequate investment in time to train teachers and administrators who will be the purveyors of the technology initiatives in the classrooms. [5]

However, the important difference between this e-reader program and similar projects focused on putting computers in classrooms is that e-readers usually operate on the mobile phone system, which has exploded in developing regions over the last few years. In Kenya, more than 80 percent of the population has mobile phone network coverage and more than half of the population has purchased a mobile phone subscription. The GSM compatibility of e-readers allows for downloading of new reading materials wherever there is mobile phone coverage and sufficient funds available to purchase new texts. E-readers also have relatively low levels of energy consumption (a one-hour charge can last more than a week). In addition to gaining the support of community leaders and teachers from the beginning, the pilot began with intense in-service training for teachers in how to use e-readers to complement their existing curricula. While Worldreader.org has not solved all of the challenges posed by technology initiatives in education, it has taken some important steps toward addressing the barriers to project success. [6]

The organization has also tackled specific challenges that are impeding reading success in the early primary grades:

• Additional support for emergent readers. E-readers provide additional support to teachers in teaching children how to read, an important supplement in primary school classrooms in low-income countries where there may be 40 or 50 students per teacher. In such cases, students are required to work independently or in small groups while the teacher is working with other students. The text-to-speech feature on e-readers can read books aloud to the student, exposing her to the written text as she hears it read aloud. Students can also use the downloaded dictionary while reading to look up unfamiliar words and continue to read without adult assistance.
  
• Students and teachers get to choose. While paper books donated by schools, libraries, and individuals from around the world have helped to get written materials into low-resource schools in developing countries, e-books allow students and teachers in developing countries to choose which books they teach and read. Although choices now are restricted by the dominance of English in the e-book market, the potential for the expansion of the digital market represents a step toward greater agency for teachers and students.
  
• Working with local publishers to increase access to books for emergent readers. Children learning to read need access to the types of books that engage their imagination and spark their interest. For children learning to read, this means stories with simple sentences in their local language. Yet, traditionally children’s books are not a good economic bet for publishers, particularly in developing countries. The high cost of printing the books are not recouped since so many families cannot purchase copies for their own household use. However, distributing books in e-reader format will actually allow publishers to reach more customers at a lower cost. To bring more books to the developing world through e-readers and e-books, Worldreader.org seeks to support a self-sustaining reading and publishing culture by working with local publishers to digitize books and materials to support local language curricula.
  
• Portability can increase reading opportunities. Anecdotal reports from classroom teachers in the Ghanaian pilot frequently reference how students would not stop reading, pulling out their e-readers in between lessons, during recess and lunch, and after school with friends, parents and siblings. An International Association for the Evaluation of Educational Achievement study on reading literacy in 32 countries found that the amount of voluntary book reading that students did during out-of-school time was strongly positively related to students’ achievement levels. [7]

While the pilot is still in the early stages, the founders of the project are focused on the essential outcomes. Their USAID-funded impact study seeks to find out whether children are reading more than they were before the program and whether children read better than they were before the program. Measuring program success by understanding the impact on learning outcomes is a critical step for shifting the global education paradigm to one focused on learning.

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[1] UNESCO. (2010). EFA Global Monitoring Report 2010: Reaching the Marginalized. Paris: UNESCO.
[2] Gove, A., and P. Cvelich, (2010). Early Reading: Igniting Education for All. A report by the Early Grades Learning Community of Practice. Research Triangle Park, NC: Research Triangle Institute.
[3] Evans, 2010
[4] M.D.R. Evans, Jonathan Kelley, Joanna Sikora, Donald J. Treiman. “Family scholarly culture and educational success: Books and schooling in 27 nations.” Research in Social Stratification and Mobility, 2010; DOI: 10.1016/j.rssm.2010.01.002
The study controls for education levels, occupations, and socio-economic status of the parents.
[5] For example, Trucano, M. “Worst practice in ICT use in education,” 2010, accessed at http://blogs.worldbank.org/edutech/worst-practice
[6] Some of the core challenges identified by Worldreader.org and others include the upfront costs of e-readers, need for on-going training and support to teachers, students, and communities, buy-in of school systems and local governments to deploy technology and content, insufficient relevant materials in e-book format, and consistent access to electricity and mobile networks.
[7] Elley, W.B. (Ed.). (1994). The IEA Study of Reading Literacy: Achievement and Instruction in Thirty-two School Systems. Oxford: Pergamon Press.

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Editor's Note: This article was originally published in Pediatrics, a subscription-only journal. To obtain a subscription or log in to access the full article, click here.

ABSTRACT

Building a strong foundation for healthy development in the early years of life is a prerequisite for individual well-being, economic productivity, and harmonious societies around the world. Growing scientific evidence also demonstrates that social and physical environments that threaten human development (because of scarcity, stress, or instability) can lead to short-term physiologic and psychological adjustments that are necessary for immediate survival and adaptation, but which may come at a significant cost to long-term outcomes in learning, behavior, health, and longevity. Generally speaking, ministries of health prioritize child survival and physical well-being, ministries of education focus on schooling, ministries of finance promote economic development, and ministries of welfare address breakdowns across multiple domains of function. Advances in the biological and social sciences offer a unifying framework for generating significant societal benefits by catalyzing greater synergy across these policy sectors. This synergy could inform more effective and efficient investments both to increase the survival of children born under adverse circumstances and to improve life outcomes for those who live beyond the early childhood period yet face high risks for diminished life prospects.

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