How USAID’s Development Innovation Ventures plans to spend $45M

While many donor agencies are eager to support innovation, they don’t always make it easy for startups and other international development newcomers to access funding. That’s why the U.S. Agency for International Development launched Development Innovation Ventures, an open innovation program that provides grants to researchers, social enterprises, and other groups working on new approaches to global health and development challenges. The goal is to serve as an open door for a range of potentially transformative solutions, while also scaling interventions with strong evidence of impact and cost-effectiveness. Since its launch in 2010, DIV has made 277 research grants in 49 countries, focusing on the likes of early childhood care in Uganda, sanitation in Haiti, and mental health in Zimbabwe. Its impact speaks for itself. DIV has brought returns of $17 in social benefits for every $1 invested. But DIV’s budget, an estimated $40 million in the next fiscal year starting in October, is just a fraction of USAID’s nearly $30 billion budget. Plus, DIV is a catalytic funder — not a long-term, operational funder like USAID’s bureaus in Washington, D.C., and missions around the world. So the best way for DIV to take proven ideas to scale or reach a large number of users or beneficiaries is by getting other parts of the agency to support these solutions. “The organizations we work with, the donors we talk to, and the policymakers around us are all asking the same questions we are, which is, how do we help bring some of this work to scale?” said Sasha Gallant, DIV’s division chief. Now, DIV has additional money to make that happen. Last month, DIV was named one of four recipients of a $150 million regranting challenge by Open Philanthropy, the grant-making and research organization founded by billionaire couple Dustin Moskovitz and Cari Tuna. The $45 million grant will allow USAID’s DIV to expand its grantmaking in stages 1, 2, and 3, which test the feasibility of solutions, allow organizations to build evidence, and support partnerships to prepare for scale. DIV will also launch a new stage 4 grant, which will help some of the most promising innovations in DIV’s portfolio reach more people through partnerships with USAID, Gallant said. With its Open Philanthropy grant, DIV will also explore ways to inform and influence programming across the agency. How DIV works Since its launch, DIV’s approach has remained consistent. Individuals or organizations can apply for stage 1, 2, or 3 funding depending on how far along their innovation is. Stage 1 grants support work in the pilot stage with up to $200,000. Stage 2 grants help groups test and position for scale with grants up to $1,500,000. Stage 3 grants support the transition to scale with up to $15,000,000. DIV provides small grants to a large number of relatively unproven ideas but reserves big grants for ideas with evidence of impact, cost-effectiveness, and potential to scale. This allows USAID to invest in high-risk and high-return projects that don’t fit within the agency’s traditional structures. For example, social enterprises with new ideas and no guarantee of success might get support from DIV long before they would ever have a chance of working with other teams at USAID. “We have really maintained a focus on evidence, cost-effectiveness, and scale,” Gallant said. “We continue to offer tiered funding that allows for risk at earlier stages and mitigates it at later stages.” DIV also helps USAID in its effort to engage with local partners, with half its portfolio made up of organizations new to USAID, she added. When DIV launched, it was a unique initiative among bilateral donors. But the model drew interest from other major funders, inspiring related efforts such as France’s development innovation fund, a project where Gallant served as a consultant. DIV typically receives more than 1,000 applications a year, and only 1% to 2% receive funding. Stage 4 grants There are a few successes from the DIV portfolio that represent the kind of large-scale impact Gallant and her team hope to support with the new Stage 4 grants they’re introducing. Teaching at the Right Level, for example, is an approach to education that groups children based on learning levels instead of age or grade, and has reached more than 60 million students in India and Africa. Pratham, the Indian NGO that developed the approach, was able to scale this solution due in large part to support from DIV. In 2013, DIV supported Pratham to evaluate the cost-effectiveness of Teaching at the Right Level models in India. Then in 2017, it funded the Abdul Latif Jameel Poverty Action Lab to evaluate ways to scale the approach in Africa. DIV’s $7.24 million investment has catalyzed $25 million from external funders to expand Teaching at the Right Level to 12 African countries, beginning with the USAID Zambia Mission. It’s an example of how DIV has gotten USAID “to really buy into a highly effective solution,” Gallant said. “There have been a good number of innovations from our portfolio that have reached millions of people, but predominantly through external scale paths,” Gallant said. While DIV can provide innovators with risk capital, other teams at the agency can make bigger grants. USAID’s missions and bureaus have “much larger awards for much, much longer periods of time for things that really work,” Gallant said. Supporting the uptake of innovation at USAID The new $45 million grant will help to address several key challenges that stand in the way of USAID bringing the evidence-based innovation that DIV focuses on to scale in the agency’s work around the world, Gallant said. The first is the lack of flexible funding at USAID. By putting its own internal funds on the table, DIV hopes to leverage funds from other USAID bureaus and missions to incorporate highly promising, highly cost-effective interventions into its programming. “The second challenge is mechanisms,” she said. Even when other teams at USAID have money, they’re often constrained by where and how they can spend it, which prevents them from supporting interventions that have been proven to cost-effectively improve people’s lives. “We're hoping to find new and old ways to really kind of lay the blueprint that will facilitate the widespread uptake of these kinds of interventions from the portfolio into much larger implementation,” Gallant said. The third challenge has to do with limited time and personnel. The DIV team can help their colleagues at USAID design programs that “can meaningfully and measurably improve development programming,” she explained. Now, they’re staffing up, with an eye toward bringing evidence to USAID’s broader programming. The $45 million grant will help DIV identify “effective and, hopefully lasting, off ramps” for its work into the larger scale operational funding of USAID, Gallant said. But not every innovation in the DIV portfolio is going to scale. “Part of what we do is fail cheap and fast, and learn as fast as we can,” Gallant said. Now that DIV has developed an effective way to determine what works, it has an obligation to scale its model, Gallant said. The program seeks to ensure “the big dollars that we're moving toward development programs meaningfully and measurably improve people's lives,” she said, referring to USAID’s much larger budget. DIV is one of a growing number of organizations that seek to bring more evidence to program and policy design to generate maximum returns with a relatively small investment. “We only have so much money in international development,” Gallant said. “And I think we have an obligation on a fiduciary level as well as an ethical level to make sure we spend that as effectively as possible.”