Unlocking education potential in El Salvador: An outcomes-based approach

The project: A collaborative effort to improve educational outcomes

Social Finance International partnered with FUSALMO and BID Lab to design El Salvador’s first outcomes-based contract (OBC) to tackle secondary school dropout rates and enhance students’ 21st-century skills. By tying funding to measurable results, this initiative ensures accountability, drives innovation, and promotes long-term impact in the country’s education system. The project leverages EdTech tools and the STEAM (Science, Technology, Engineering, Arts, and Mathematics) approach to equip students with critical thinking, problem-solving, and digital skills essential for their future success.

This outcomes-based contract aims to reach approximately 1,300 students in Soyapango and Ciudad Delgado. To incentivize the achievement of education outcomes for students, the payments are tied to the achievement of two key student outcomes:

1. Percentage of students in 7th, 8th and 9th grade promoted to the next school year.

2. Improvement in students’ 21st-century skills measured by an increase in a STEAM skills test score.

To achieve these outcomes, service providers implement a comprehensive intervention that includes direct academic and socio-emotional support for students, teacher training, and engagement with families to ensure support for their child’s education process. The project also delivers extracurricular STEAM classes involving EdTech

Key elements of the approach

To develop this groundbreaking initiative, Social Finance International worked closely with partners to advance the following work to launch the outcomes-based contract.

• Defined target population and schools, established minimum service elements, and determined learning objectives for students in 7th, 8th and 9th grade.

• Conducted extensive research and market outreach to inform program design, cost estimations and the selection of service providers,

• Estimated the total budget required for the programme and prices per outcome, and designed various financial incentives to encourage the achievement of outcomes.

• Led an initial due diligence of service providers to identify their operational model and rapidly assess their capabilities to work under an outcome-based approach.

• Delivered training sessions and co-design workshops to strengthen local capacity to implement an outcome-based approach, including outcome funders and service providers.

This outcome-based contract marks a significant step toward embedding results-based financing into El Salvador’s education system and fostering a culture of evidence-based decision-making.

Lessons learned: Insights for future education-focused programs.

• Alternative methods to design outcomes-based approaches in the absence of key data. Data availability is a key factor for designing outcomes-based approaches, as it is the basis for defining ambitious targets and the price to pay for outcomes. Data availability was a key constrain in El Salvador during the design phase. To address this challenge, we designed an outcomes-based contract in which targets were not based on pre-existing baseline data but set dynamically each year based on the previous year’s progress. We learned that, even in data-limited environments, it is feasible to design outcomes-based approaches by leveraging alternative methods and working closely with stakeholders.
  

• In-country stakeholder leadership as a driver of a rapid and collaborative design. Strong leadership from in-country stakeholders was essential for accelerating the design of this outcomes-based contract. By aligning with FUSALMO’s agenda and adapting to the priorities of in-country actors, we fostered a highly collaborative process that enabled the contract design to be completed in less than 12 weeks. Key factors for this rapid progress included early stakeholder engagement, clear decision-making processes, and a shared commitment to flexibility and problem-solving.

Looking ahead: Expanding the impact of outcomes-based education

• Generating insights into effective models to improve education outcomes. This project provides valuable insights into two key areas: the differences between traditional NGOs and social enterprises in driving educational outcomes, and the added value of STEAM and EdTech tools in enhancing student motivation and improving learning outcomes. By exploring these two elements, the project contributes to a deeper understanding of how various models and approaches can be leveraged to achieve meaningful educational impact.
  

• Laying the foundations for a demonstration effect for outcomes-based approaches to improve education outcomes in Central America. As the first pilot of its kind in El Salvador, this project aims to serve as a proof of concept, showcasing how outcome-based approaches can drive better educational outcomes. By demonstrating a new way of structuring and financing interventions, it seeks to inspire and encourage other actors to explore similar models, ultimately fostering a broader shift toward innovation and impact-driven approaches in education.

Interested in partnering to advance results-based education models? Connect with us:

📩 María Alejandra Urrea, Associate Director, Social Finance International – maria-alejandra.urrea@socialfinance.org.uk

📩 Louise Savell, Director, Social Finance International – louise.savell@socialfinance.org.uk

Partners: FUSALMO | BID Lab

Location: El Salvador