There are at least four reasons donors should consider providing a guarantee and/or grant contribution to amplify their impact:
IFFEd is a new, innovative financing facility designed to help close the chronic education funding gap in lower-middle-income countries (LMICs) and support the achievement of Sustainable Development Goal 4 (SDG 4) – ensuring inclusive, quality education and lifelong learning opportunities for all. It brings together and expands the education ecosystem by engaging with government, non-government, and philanthropic players, enabling and leveraging distinct strengths of each stakeholder.
A robust response to the call for new financing initiatives under the Addis Ababa Action Plan, IFFEd helps to finance the SDGs and leverage “billions to trillions.”
IFFEd increases the capacity of the multilateral development banks (MDBs) to finance education and skills in LMICs by providing additional lending headroom for education projects and improving the concessionality of the education financing packages for eligible countries beyond what MDBs can currently offer.
COVID-19 resulted in huge learning losses and brought new urgency to IFFEd. Eligible countries continue to face budget constraints and find it difficult to protect their education budgets urgently needed to recover from the pandemic and deliver quality education for all. The financing gap for low- and lower-middle-income countries to achieve SDG 4 now stands at nearly $100 bn annually – with LMICs accounting for over 70% of the gap. Without additional measures by 2030, 300 million students will lack basic numeracy/literacy skills and only 1 in 6 countries will achieve universal secondary education.
IFFEd’s financing will be delivered to countries through its partner MDBs, starting in the Asia and Pacific Region with the Asian Development Bank. IFFEd will provide incentives to both the MDBs and LMICs to scale up investments in quality education and skills programs by:
IFFEd is not a policy or implementing agency. It is a financing facility with a lean structure and a small core team, largely made up of finance experts in Geneva. Projects funded by IFFEd will be ultimately led and implemented by country governments.
Watch IFFEd’s technical explainer video here.
There is an urgent, well-documented crisis in learning and education. Even before COVID-19, over half of the world’s children and youth were either out of school or in school but not learning the skills needed to thrive. This crisis was tragically intensified by the global pandemic. At the same time, the scale of the resources needed for countries to respond effectively is mind-boggling. This is particularly true in lower-middle-income countries (LMICs), where the annual financing gap of $71 billion per year needed to reach SDG 4 is almost three times the financing gap in low-income countries (LICs).
LMICs house most of the world’s poor and out-of-school children and have the largest financing gaps, but most are not eligible for grants and concessional financing programs. With limited domestic resources, these countries are caught in the “missing middle,” as non-concessional finance is unaffordable, and education budgets are often hit hardest. IFFEd will address a critical gap in the global development finance architecture by enabling LMICs to scale up investments in education and skills development.
IFFEd is unique because it is designed to help lower-middle-income countries (LMICs) – which house most of the world’s poor – address chronic, unmet needs in education and skills financing. Other signature education initiatives and funds largely target low-income countries and countries in crisis.
IFFEd is a solution to a specific gap in education and skills funding in LMICs. Its purpose is to generate more funds for LMICs that are no longer eligible for other concessional finance as they move through their development journey. Due to its unique financial guarantee structure, IFFEd is currently the only mechanism that multiplies scarce donor dollars by up to seven times.
To achieve SDG 4, a major uplift in education finance is required. While IFFEd is a key solution to bridge this gap, it cannot do this alone. IFFEd and its multilateral development bank (MDB) partners will work alongside countries and other international actors such as the Global Partnership for Education (GPE); the Education Cannot Wait Fund (ECW); United Nations agencies such as UNICEF, UNHCR, and UNRWA; national donors; foundations; and civil society.
IFFEd is not a delivery or implementing agency. Its implementing partners will be the MDBs, which are important providers of programmatic and technical expertise in education and have established track records in improving learning outcomes. IFFEd will also foster and support MDB collaboration and cooperation on education and skills development.
IFFEd is the only institution in the education and skills sector that creates additional financing by leveraging the balance sheets and expertise of MDBs. Furthermore, it blends loans with grants to make financing more affordable and attractive for lower-middle- income countries (LMICs) that face a structural gap in education funding. IFFEd enables $140 million in cash from donors across IFFEd’s guarantee and grant windows to be leveraged into $1 billion of additional concessional financing for countries, providing a 7x multiplier for LMICs which are home to 1.2bn children and youth.
IFFEd was recognised as a leading MDB financing innovation by the G20 in 2023 and has broken new ground by having its contingent capital recognised as useable equity. IFFEd has a credit rating of Aaa from Moody’s and AA+ from S&P.
IFFEd is committed to ensuring its additional funding delivers tangible impact on the ground for children and youth, not just additional dollars. IFFEd explicitly focuses on quality education and skills for marginalised children and youth, including girls, will build on evidence of what works, and proactively measure results to ensure impact in project execution.
IFFEd was established in Switzerland in 2023 as a non-profit foundation based in Geneva and appointed its Board of Directors and CEO in 2024. The Board is expected to approve IFFEd’s first investment cases in Q4 of 2024, and first projects are expected in 2025.
Only public education programs funded by IFFEd’s partner MDBs will be eligible for IFFEd financing. These will include any education-related initiative or reform effort that is consistent with a country’s strategy to increase access, learning, equity, and deliver SDG 4.
IFFEd funding can also be provided for activities related to other sectors (e.g. health, infrastructure) where such activities are directly related to or integrated with education services. For example, integrated early childhood development services (education, health, nutrition, protection) would be eligible but nutrition alone would not; school infrastructure would be eligible but rural roads would not.
IFFEd’s founding sovereign donors are Canada, Sweden, and the UK.
Foundations including the Atlassian Foundation, Jacobs Foundation, Porticus, Soros Economic Development Fund (the impact investment arm of Open Society Foundations), and The Rockefeller Foundation have provided critical seed capital to support IFFEd’s establishment and early operations.
Sovereign and philanthropic donors interested in learning more about partnership opportunities with IFFEd are encouraged to get in touch: info@iff-education.org
The aim of IFFEd is the opposite. IFFEd has been designed to assess and mitigate debt risks.
The creation of IFFEd helps provide more affordable external financing options for lower-middle-income countries through multilateral development banks (MDBs) so they do not need to take on much more expensive and short-term commercial debt from private capital markets.
IFFEd requires the MDBs to include a country debt sustainability analysis (DSA) and confirmation that the eligible country is managing its debt sustainably in all investment cases submitted to IFFEd’s Board. Any proposals must be consistent with MDB and IMF limits on concessional borrowing. This requirement will reinforce the MDBs’ already prudent lending policies.
Yes, this is a key transformation needed and the pivotal pillar of sustainable education funding. It is vital that national governments commit to developing plans and budgets aimed at increasing their education spending to 4% to 6% of gross domestic product (GDP) or 15% to 20% of public spending – as set out in the Incheon Declaration. They can do this by taking on bold revenue reforms to mobilise additional tax income through fair taxation, eliminating and enforcing tax loopholes (including for corporations), and tackling corruption. Research shows that many countries – even those already meeting the education spending targets above – will require additional funding if they are to achieve SDG 4 by 2030.
To receive IFFEd financing, a country must show a commitment to mobilising more domestic financing for education.
During IFFEd’s design period, over 50 CSOs participated in a consultation process to contribute their ideas and feedback, which were used to amend the baseline principles and inform the technical design document.
National and global education CSOs can bring value to IFFEd in areas related to programming, monitoring, results, and evaluation. CSO engagement will be most impactful at the country level, and through interactions with the MDBs. IFFEd and the MDBs will continue to consult with CSOs as to how best to work together on program design, implementation, and review.
CSO representatives will also be invited to join IFFEd’s Board as observers.
There are several major education initiatives that provide grant financing for education needs in the poorest countries. But the largest, most pervasive, and chronic unmet education financing needs are in LMICs, which house 1.2 billion children and youth, nearly half of the global total.
Sixty percent of all children and young people who are projected to lack basic skills by 2030 reside in LMICs.These countries will fall far short of their social and economic potential without major new commitments to educate their children and youth and equip them with skills for the future.
Many LMICs have taken important steps to transform their education systems through domestic investment and reform. But they need additional sources of funding to deliver quality education and skills.
By 2030, 80% of the total global education financing needs will be in LMICs (pre-pandemic estimates). Most are not eligible for grant or concessional aid, and the costs of alternative external financing are prohibitive for long-term social investments, creating a significant funding shortfall. The shortfall is being exacerbated by stagnating or falling economic growth and reduced access to markets due to the impact of the COVID-19 pandemic.
IFFEd launched with $250 million in guarantees for MDBs and $100 million in grants that taken together can be leveraged to provide $1 billion in additional financing for education and skills development. IFFEd expects to have $1.5 billion by early 2025 and aims to unlock billions in funding by 2030.
IFFEd will be accessible to lower-middle-income countries (LMICs) that have access to the non-concessional financing windows of IFFEd’s partner MDBs.
IFFEd’s first projects will be in the Asia and Pacific region through the Asian Development Bank. The IFFEd Board has approved ten countries in the Asia and Pacific region as eligible for IFFEd financing: Bangladesh, India, Mongolia, Pakistan, Papua New Guinea, Philippines, Sri Lanka, Timor-Leste, Uzbekistan, and Vietnam. More countries will be added as other MDBs join.
For an eligible country to access IFFEd funding, it will need to show:
IFFEd is a flexible instrument which can support investment across the full education and skills lifecycle, from early childhood development to technical and vocational training, allowing countries to implement projects according to their national strategies.
IFFEd makes education projects more attractive to invest in by providing a 10% grant component that reduces the cost and risk of borrowing for LMICs.
IFFEd’s grants can be used for technical assistance and capacity building in LMICs to design and implement effective and sustainable education and skills development reforms.
IFFEd has prepared a robust results framework with donors and the MDBs. The framework will include major SDG 4 indicators, disaggregated by gender. IFFEd will also provide annual reporting on all education programs of the participating MDBs and their impact on learning. IFFEd will report publicly on operations and results annually. In addition, IFFEd will be assessed periodically by an independent, external evaluator(s). The first independent evaluation will be commissioned before the end of IFFEd’s first five years of operation.
Yes, the OECD has recognized IFFEd as an ODA-eligible facility and confirmed that donor paid-in capital contributions to IFFEd along with grant contributions will be ODA eligible.
IFFEd is the result of the landmark 2016 Learning Generation report endorsed by current and former heads of state, ministers of finance, and top global business and education leaders. One of the report’s key recommendations was the creation of a new international finance facility for education.
The Commission determined that MDBs are best placed to increase the volume and effectiveness of investments in education. MDBs have a wealth of experience with education at a systems level, which is where interventions are needed to make lasting change and already have strong relations with the potential beneficiary countries. By partnering with MDBs, IFFEd will work within the current education architecture, thus avoiding duplication and parallel structures, as well as the additional costs required to prepare, implement, and monitor a new facility at country level.
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