Israel social impact bond to help Bedouins in maths studies

by Reuters
Monday, 15 July 2019 06:00 GMT

Pupils attend a class at Desert Stars School near the Bedouin city of Rahat in Israel's southern Negev Desert September 12, 2017. REUTERS/Amir Cohen

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Though still small, Israel's impact investment market more than doubled in two years to over $260 million in 2018.

By Tova Cohen

TEL AVIV, July 15 (Reuters) - Social Finance Israel (SFI) has launched a social impact bond to improve maths performance for high school students in the country's Bedouin community.

The goal of the programme, to be presented to the United Nations on Wednesday, is to raise the number of students matriculating in higher levels of maths in the town of Rahat from the current level of only 15%.

SFI is a non-profit firm established by Ronald Cohen and Yaron Neudorfer and cooperates with the government and business sector to create mechanisms for positive social impact. It has raised 45 million shekels ($12.7 million) in social impact bonds, also known as pay-for-success projects.

SFI raised 14.8 million shekels from seven investors, including Mizrahi-Tefahot Bank. The Education Ministry will pay back investors depending on the level of success.

Though still small, Israel's impact investment market more than doubled in two years to over $260 million in 2018.

In 2016, together with UBS, SFI sold a $5.5 million bond to prevent Type 2 diabetes. The trial, focused on prediabetics, is in its second year. Initial results are due in late 2019.

Its first bond, for 8 million shekels, aims to reduce the drop-out rate among higher education computer science students.

"Based on the performance so far, it is estimated that investors will get their money back plus around 4% annual interest," CEO Neudorfer told Reuters.

Projects in the pipeline include a programme aimed at alleviating loneliness among the elderly and extracting families from poverty.

SFI is also working with crowdfunding investor OurCrowd to launch a $30 million fund to invest in impact-related startups.

Last year such startups raised $1.6 billion, or 23% of all capital raised.

In January Bridges Israel raised $60 million for an impact investment fund from investors including Israel Discount Bank and Psagot Investment House.

($1 = 3.5500 shekels) (Reporting by Tova Cohen Editing by Steven Scheer and David Evans)

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