Catalytic Capital For Women’s Empowerment II: the Size/Impact Paradigm

By Kaylene Alvarez, Athena Global Founder and CEO

One of the hurdles to effective, large scale gender bonds is what I call the “size/impact paradigm.”  Historically, some of the “social” bonds that have been issued aimed at mid-size (US$1M) and retail (people like my mom: average to upper middle class investors who might have a few thousand to invest in something they care about) have traceable and direct, immediate impact on individual women, girls or gender equity. Let’s first look at the “impact” side of this paradigm. Think back to the example from the last blog on a city raising money for a girl’s school. Let’s assume we have shown that an all-girl’s school is a good thing, that people want to buy the bond, and that the price is right: so the city issues a US$1M bond to build the school. My mom can buy US$1,000 of that bond, and if it’s local to her, she may even know some of the girls or families it benefits. That’s a US$1M bond issued to support girls’ education, which is a pretty cool thing.

The other side of the “size/impact paradigm” is about size, or scale. Historically, “gender” or “social” bonds aimed at large institutional investors (think US$100M) move a lot of money. However, how do we measure the impact on individual women, girls or gender equity? That’s a lot of people and impact to track, and that’s not cheap. 

Issuing a $1M bond for a school for girls is still a tiny bond in the world of finance, and although not without its challenges, we can imagine ways to measure the impact of that school on the individual girls and the community.

Let’s go a bit bigger and think about how we would price and measure impact for 100 schools for girls all over the world, each costing US$1M to build. To keep it a wee bit easier, let’s assume that a single organization or company is raising the bond and will build all the schools. That means we’re only working with the credit rating of a single issuer. What would the coupon rate of a US$100M global bond for girls’ schools be? We have to take on the country and project risk for each school that is built, and aggregate that into a single price. We have to figure out how long it will take to build all these schools and begin to generate revenue since that determines how long it will take us to repay the bonds.

On the impact side, is it realistic for us to measure the impact on the lives of each and every girl, teacher and community for every single school? We’re talking about giving girls an education, so how do we even measure the impact of that in a way that is quantifiable? How do we know that attending our all girl’s school CAUSES positive impact? Do we only measure the impact while the girls are in school—what about over her lifetime?

We’ll come back to this topic again, but I wanted to start the conversation. We start with what is simple—a relatively small bond where we can measure the impact on a relatively few girls. But to move money in the gender lens investing (GLI) world, it will get a lot more complicated very quickly.

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