The quest for quality education for all remains a daunting challenge.

A staggering 300 million students risk missing out on basic literacy and numeracy skills by 2030 with early childhood care and education (ECCE) significantly neglected, especially in low- and middle-income countries.

Despite clear evidence of the benefits of preschool programs, access to early childhood education remains limited and uneven across the globe.

Only about 4 in 10 children aged 3 and 4 are enrolled in early childhood education worldwide.

Regional disparities are stark: around two-thirds of children in Latin America and the Caribbean attend early childhood education compared to just under half in South Asia and only 1 in 4 in sub-Saharan Africa.

To address this, GPE joined nearly 50 organizations and countries to endorse the Commitment to Action on Foundational Learning and work to ensure that all children have access to at least 1 year of quality pre-primary education.

Outcomes-based financing (OBF) has been proposed as a potential mechanism to support high-quality service provision and attract financing to early childhood care and education programs.

It sits within the broader field of innovative finance that explores new ways to mobilize, allocate and deliver funding for social outcomes.

While some forms of results-based financing link payment to outputs, such as the completion of specific activities, outcomes-based financing ties payment directly to the achievement of outcomes.

In the context of ECCE, these outcomes include improvements in literacy and numeracy as well as broader child development indicators like motor skills and social and emotional development.

Importantly, outcomes can be defined not only at the individual child level, but also at the provider, school or system level. For example, projects may include measures related to center quality, caregiver engagement or teaching practices.

This funding approach has the potential to transform ECCE by ensuring funds are invested in effective strategies that yield measurable, verified benefits, both in access and quality of provision.

Although there’s a paucity of research and evidence on the effectiveness of outcomes-based financing in early childhood care and education, experience on the ground is growing.

ECCE programs using outcomes-based financing have been developed in Jordan, Kenya, Rwanda, Sierra Leone, South Africa and Uzbekistan.

Each of these programs had a shared ambition: refining how educational and/or development outcomes can be financed and achieved, especially where traditional funding mechanisms fall short.

The early childhood care and education subsector, particularly in low- and middle-income countries, faces numerous systemic obstacles such as limited domestic financing, fragmented governance, inadequate workforce capacity as well as the absence of clear national standards and quality assurance frameworks.

These structural gaps create significant hurdles not only for securing funding and aligning stakeholders, but also for effectively measuring and improving ECCE outcomes.

Outcomes-based financing initiatives—that rely on robust data and clear standards—can initially expose these underlying weaknesses.

Yet interestingly, outcomes-based financing also has the potential to address them directly, encouraging the establishment of better measurement systems, increasing transparency and creating incentives for sustainable improvements within ECCE systems.

The state of Utah and the city of Chicago in the United States were among the first to experiment with the impact bond financing model in ECCE a decade ago. Ten years on, what do we know about the value of outcomes-based financing in early childhood care and education?

A recent evidence review by the GO (Government Outcomes) Lab (University of Oxford), NORRAG (Geneva Graduate Institute) and Ecorys UK offers valuable insights into its global application.