Press Release: World’s first sanitation development impact bond concludes successfully — 16 October 2023

FOR IMMEDIATE RELEASE Contact: Kara Prior, myWHY Agency, Inc. for iDE (email: kara@mywhyagency.com)

Denver, CO – (October 16, 2023) USAID, the Stone Family Foundation, and iDE marked the conclusion of an innovative “pay-for-results” financing mechanism, which was used to fund part of iDE’s successful sanitation program in Cambodia.

The Cambodia Rural Sanitation Development Impact Bond (DIB) provided impact investment to the program, which was designed to accelerate the country’s efforts to end open defecation and improve health outcomes and livelihoods in rural communities.

Under the terms of the DIB, US$10 million was repaid by USAID to the Stone Family Foundation, which provided the money to iDE, after the program successfully met its aims despite challenges created by the COVID-19 pandemic.

iDE CEO Lizz Welch said the DIB was groundbreaking because it was built on trust and eliminated risk for the impact investor, which wasn’t required to pay unless the program achieved what it set out to do.

“As the implementing partner, iDE demonstrated the promise of impact bonds, which we believe have the potential to unlock new funding streams for international development and help improve the wellbeing of low income communities across the globe.”

Welch said she was confident other impact investors and nonprofits would replicate Cambodia’s sanitation DIB and move forward under partnerships, using impact bonds to fund programs in other sectors and countries.

For almost four years (November 2019-June 2023), the DIB supported 1,780 villages, covering almost 500,000 households, to successfully claim “open defecation free” (ODF) status: a milestone that signifies universal access to improved sanitation within a community.

In six provinces (Svay Rieng, Kandal, Prey Veng, Kampong Thom, Siem Reap and Oddar Meanchey), iDE worked alongside local governments and local entrepreneurs to facilitate the purchase of approximately 81,000 pour flush latrines and 20,000 latrine pit upgrade products by rural households.

Kerry Pelzman, USAID Cambodia Mission Director, said “This new results-based financing approach to improving rural sanitation demonstrates our commitment to supporting the Royal Government of Cambodia’s goal of eliminating open defecation by 2025.

“This DIB, which is USAID’s first dedicated to village-level sanitation, is an under-utilized but innovative mechanism for collaborating and co-designing solutions with diverse stakeholders, including local private sector partners, to achieve the best possible development results."

John Stone, founder and chairman of Stone Family Foundation said: “With big risk comes big reward. The fact that our foundation was prepared to take the risk of failure persuaded USAID to pay for success. This DIB demonstrates how it is possible to transition from a grant funder to an impact investor.”

The DIB provided a significant funding boost to iDE’s already successful Sanitation Marketing Scale-up Program (SMSU). After beginning with a pilot in 2009, SMSU came to an end in June, 2023, having provided durable, and aspirational sanitation for more than two million people.

Under the program, more than 409,000 households across seven Cambodian provinces have invested in improved sanitation after being connected to iDE-promoted entrepreneurs, who produced, sold and installed pour flush latrines in rural households.

For a country that had particularly low rates of sanitation coverage, this represents a remarkable achievement. Now one in five rural Cambodian households own a latrine from iDE-supported entrepreneurs – at a time when global efforts to improve sanitation and access to safe drinking water are falling behind international goals.