UBS Optimus Foundation – Our Value Proposition Cutting Edge Solutions for UBS Clients to Increase the Scale and Effectiveness of Their Philanthropy

Sietse UBS Optimus Foundation – Our value proposition Cutting edge solutions for UBS clients to increase the scale and effectiveness of their philanthropy

Expertise Client centric approach Team of 25 highly experienced professionals Strategic philanthropy and social finance

Measurable social impact Global footprint 177 active grants, CHF 158m grants under Presence in 5 UBS locations around the globe management, 2.1m children's lives improved

Health 100% of donations go toward helping children – UBS covers all administrative costs Education UBS is the only wealth management firm Management Management Philanthropic with a client-facing foundation and we co- Social Finance SocialFinance Protection invest with our clients in philanthropy

1 Aditi British Asian Trust – who we are

• Founded by South Asian diaspora and HRH Prince Charles in 2008

• We invest in India, Pakistan, Sri Lanka and Bangladesh

• Our programme areas are education, livelihoods, anti-trafficking and mental health

• We focus on results based grants and other funding models, most recently in the form of innovative financing products like the Education Development Impact Bond

2 Aditi Innovative Finance – there is a growing demand

§ Potential for impact: >800M people living on <$1.25 a day; >260M children out of school

§ No one solution: To attain SDGs, governments and multilaterals will need - funding, accountability systems, collecting and using credible data and leveraging partnerships

§ Big funding gap: In education alone, estimated funding gap of $1.8 trillion/year to ensure quality education for all children

§ Innovative financing, to bring more capital and rigour in development solutions: § Developed market in the UK and USA, but white space in developing / emerging markets, especially the South Asia region § Currently lacks data on trends and impact, need to be strengthened to validate, scale solutions globally

3 Innovative Finance – paying for outcomes, rather than Sietse input

Innovative Finance programs are an extension to existing (grant) programs

4 Sietse Innovative Finance provides a pathway to scale

Public funding Private funding 3 3

Sustainable/ impact Investing

Innovative Finance Scale of funding available available funding Scale of

Philanthropy 1 Start-up

2 Expansio 1 n

Scale 3

Financial return Social return Impact First Market-based financial Grantmaking Financial returns based on social outcomes returns

5 Sietse Development Impact Bonds (DIBs) DIBs are an important and growing mechanism within Innovative Finance

DIBs are not Bonds – but they are: • Results-based contracts in which working capital is provided upfront by investors • Outcome funders (donors or government) only pay for results

Important benefits of a DIB structure are: • Transparency & accountability • Risk transfer to investors • Flexibility and innovation in program execution

6 Sietse starts moves to Education Development Impact Bond (India) Aditi

$4m

Convener of $6m

Primary School Children 7 in Gujarat, Rajasthan, and Delhi Aditi Broader stakeholders A numbers of additional stakeholders support the Education DIB

Funding Partners Risk Investor

Technical Assistance Partner

Knowledge Partner

8 Aditi Impact bonds – white space in emerging markets

There are increasing number of players entering this space, but >90% are concentrated in developed countries (in numbers and fund flows)…

Funding • 109 Impact Bonds raising $392m+ have been launched – majority in developed countries • Upfront capital invested across the impact bonds (with available data) is >$300 million. Sectors • Typically in 7 sectors, Social Welfare and Employment >70% of the total • Health has emerged as a crucial sectoral focus in developing countries • Of 28 impact bonds, either contracted or in design, 11 in health • Majority of these impact bonds are in Africa (12) or Latin America (7) Players • 30% of this market are funders (philanthropists, foundations, bi/multi laterals, banks) and 70% are fund managers

9 Aditi Designing a DIB/P4S instrument – not a silver bullet

Pitfalls to watch out for § High transactions costs § Legal complexities § Regulatory challenges with multi-currency flows § Incentives

Some suggested ingredients of successful cross-sectoral partnerships – from our learnings! § Identify and define incentives and common goals from the very start – best to start with end beneficiaries in mind and keep that front and center through design/implementation process § Need to be authentic – partners have to be prepared to work in different ways; to share, learn, and be flexible! § Don’t be shy to seek real accountability – at every step of the partnership and at every level of the partnership

10 Jointly Our vision for DIBs Scaling DIBs into a ~USD 100 mln Outcomes Fund with the donor community § Benefits of a larger outcomes fund include:

• Moving away from a short-term "project-by-project" approach to a longer-term portfolio approach – and ‘pilot’ approach

• Lowering transaction costs

• Pooling funding

• Increasing overall program cash flow efficiency

§ Outcomes Fund works in tandem with an Investment Fund that provides working capital

• Considering 2 tranches: Philanthropic tranche (UBS Optimus Foundation) and a "for- profit" and first loss tranche (E.g. UBS Wealth Management)

11 Contact information

Sietse Wouters Aditi Banerjee

Program Manager, Innovative Finance Innovative Finance, Advisor UBS Optimus Foundation British Asian Trust +41 44 234 80 63 +44 (0) 789 927 3133 sietse.wouters@ubs.com [email protected]

British Asian Trust UBS Optimus Foundation Colour Court, St. James's Palace, Augustinerhof 1 London, SW1A 1BA 8001 Zürich Tel. +41-44-237 83 50 Tel. +44 (0) 789 927 3133