APS 72051921 APS00001 Addendum 6 - Innovations Activity.pdf

El Salvador and Central America Regional Mission (ECAM) Annual Program Statement (APS) No.: 72051921APS00001 - Addendum 6

Issuance Date: June 14, 2022 Deadline for Questions: July 1, 2022 12:00 PM (El Salvador) Closing Date: June 14, 2023 Concept Paper Submission - Quarterly Closing Dates:

First Round: September 14, 2022 5:00 PM (El Salvador) Second Round: December 14, 2022 5:00 PM (El Salvador) Third Round: March 14, 2023 5:00 PM (El Salvador) Fourth Round: June 14, 2023 5:00 PM (El Salvador)

Subject: United States Agency for International Development (USAID) El Salvador and Central America Regional Mission (ECAM) Annual Program Statement (APS) No. 72051921APS00001

Program Title: Innovations Activity - Addendum 6

Catalog of Federal Domestic Assistance: 98.001, Foreign Assistance for Programs Overseas

Pursuant to the Foreign Assistance Act of 1961, as amended, the United States Government, as represented by the U.S. Agency for International Development (USAID), is announcing the Innovations Activity Addendum to the USAID/El Salvador and Central America Regional Mission (ECAM) Annual Program Statement (APS) No. 72051921APS00001, hereinafter known as the APS.

Through this Innovations Activity Addendum to the APS, the USAID/El Salvador and Central American and Mexico Mission (“the Mission”) seeks concepts for innovations that address development challenges in El Salvador and regionally within El Salvador, Guatemala, Honduras, Mexico, and Nicaragua. Innovations will contribute to USAID/El Salvador’s Country Development Cooperation Strategy (CDCS) 2020-2025 goal to “Reduce the Drivers of Irregular Migration by Fostering a More Self-Reliant El Salvador: Secure, Prosperous, and Well-Governed”. Furthermore, innovations will contribute to achieving the regional goals of the U.S. Government’s Root Causes of Migration Strategy (RCS).

https://www.usaid.gov/

Subject to the availability of funds, the Mission anticipates investing approximately $26,816,914.00 in this activity in support of one or more awards. The Mission reserves the right to award more or fewer awards than this estimate and is not obligated to make any awards.

The Mission is issuing this Addendum pursuant to the Foreign Assistance Act (FAA) of 1961, as amended. Any potential resulting award(s) will be subject to 2 CFR 700 and 2 CFR 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and USAID’s Standard Provisions for U.S and Non-U.S Based organizations per ADS 303.

It is the responsibility of the Applicant to ensure that the entire APS and Addendum opportunity has been downloaded from www.grants.gov, and the Mission bears no responsibility for data errors resulting from the transmission or conversion process. If you have difficulty accessing the APS, please contact the grants.gov Helpdesk at 1-800-518-4726 or via email at support@grants.gov for technical assistance.

Issuance of this Addendum does not constitute an award or commitment on the part of the U.S.

Government to make an award, nor does it commit the U.S. Government to pay for costs incurred in the preparation and submission of a Concept Paper or Application(s). Should you have any questions about this Addendum, please contact Marielos Arce at mquinonez@usaid.gov.

Thank you for your interest in USAID programs.

Sincerely, Albert Carrera Agreement Officer Regional Office of Acquisition and Assistance USAID/El Salvador http://www.grants.gov mailto:support@grants.gov mailto:mquinonez@usaid.gov

U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT

ANNOUNCEMENT

CALL FOR Concept Papers

Innovations Activity Addendum

UNDER EXISTING

USAID El Salvador and Central America Regional Mission (ECAM) Annual Program Statement (APS)

No.: 72051921APS00001

PLEASE NOTE:

This is an Addendum to an existing announcement. All interested organizations should carefully review both the Innovations Activity Addendum AND the full APS announcement (as amended by Amendment 4), which can be found here:

https://www.grants.gov/web/grants/view-opportunity.html?oppId=332969

IMPORTANT INFORMATION CONTAINED IN THE FULL APS ANNOUNCEMENT IS

NOT REPEATED IN THE INNOVATIONS ACTIVITY ADDENDUM.

This activity is authorized in accordance with Part 1 of the Foreign Assistance Act of 1961, as amended.

Through the Innovations Activity Addendum to the APS, the Mission seeks responses to critical development challenges that drive migration from El Salvador, Guatemala, Honduras, Mexico, and Nicaragua. The Mission may choose to support either relatively small activities that pilot early-stage innovations or larger awards that scale later-stage innovations.

Subject to the availability of funds, the Mission anticipates investing approximately $26,816,914.00 in this activity in support of one or more awards. The Mission reserves the right to award more or fewer awards than this estimate and is not obligated to make any awards.

Unless otherwise stated herein, all terms and conditions of the APS apply. Therefore, in addition to this Addendum, applicants are strongly encouraged to read in its entirety the APS as amended by Amendment 4 (issued on June 1, 2022), which can be found here:

https://www.grants.gov/web/grants/view-opportunity.html?oppId=332969.

https://www.grants.gov/web/grants/view-opportunity.html?oppId=332969 https://www.grants.gov/web/grants/view-opportunity.html?oppId=332969

TABLE OF CONTENTS

LIST OF ACRONYMS 5

SECTION A: PROGRAM DESCRIPTION 6

SECTION B: FEDERAL AWARD INFORMATION 24

SECTION C: ELIGIBILITY INFORMATION 27

SECTION D: APPLICATION AND SUBMISSION INFORMATION 31

SECTION E: APPLICATION REVIEW INFORMATION 33

SECTION F: FEDERAL AWARD AND ADMINISTRATION INFORMATION 39

SECTION G: FEDERAL AWARDING AGENCY CONTACT(S) 40

SECTION H: OTHER INFORMATION 41

ATTACHMENT 1 - CONCEPT PAPER TEMPLATE 42

ATTACHMENT 2 - ELIGIBILITY CERTIFICATION FORM 44

https://docs.google.com/document/d/12nNgoEZDJUB9n7MXZGa_tVveX69VeXXazWpbMEbKoPs/edit?ts=6008a53f#heading=h.x8lus6aofan4 https://docs.google.com/document/d/12nNgoEZDJUB9n7MXZGa_tVveX69VeXXazWpbMEbKoPs/edit?ts=6008a53f#heading=h.1pkjzfe4xibw

LIST OF ACRONYMS

ADS: Automated Directives Systems AO: Agreement Officer AOR: Agreement Officer Representative APS: Annual Program Statement CDCS: Country Development Cooperation Strategy CFR: Code of Federal Regulations CLA: Collaborating, Learning and Adapting CMMS: Collaborative Migration Management Strategies COR: Contracting Officer Representative DGS: Democratic Governance and Security Office DO: Development Objective DOC: Development Outreach and Communications ECAM: USAID El Salvador and Central America Regional Mission EGE: Economic Growth and Education Office GOES: Government of El Salvador NPI: New Partnerships Initiative RCS: U.S. Strategy for Addressing the Root Causes of Migration in Central

America (Root Causes Strategy) RDCS: Regional Development Cooperation Strategy RFA: Request for Application UDL: Universal Design for Learning USG: United States Government

SECTION A: PROGRAM DESCRIPTION

Overview

Through a year-round grant competition, the USAID/El Salvador and Central American and Mexico Mission (“the Mission”) seeks concepts for innovations that address development challenges in El Salvador and regionally within El Salvador, Guatemala, Honduras, Mexico, and Nicaragua. Innovations will contribute to USAID/El Salvador’s Country Development Cooperation Strategy (CDCS) 2020-2025 goal to “Reduce the Drivers of Irregular Migration by Fostering a More Self-Reliant El Salvador: Secure, Prosperous, and Well-Governed”. Further, innovations will contribute to achieving the regional goals of the U.S. Government’s Root Causes of Migration Strategy (RCS). The Mission will provide funding to pilot, test, and transition to scale (i.e., grow to reach the highest number of beneficiaries possible) those innovations that demonstrate evidence of impact, cost-effectiveness, and feasibility as to the financial sustainability and potential to scale.

The Mission aims to fund two types of grants - one, a piloting stage for innovations to assess efficacy and possible impact; and two, a scaling stage for proven innovations. Both approaches seek ideas that align the funding amount to the strength of the possible evidence generation or available evidence of impact, cost-effectiveness, and feasibility of the proposed innovation. More details on each of the Mission’s grant types can be found in the “Innovation Grant Types” section below.

Through these innovations, the Mission supports relatively small, high-risk bets on early-stage innovations to pilot, and advances later-stage innovations to be scaled that are better able to demonstrate impact. The Mission is deliberately open to all manners of innovative approaches and all forms of innovators, in all sectors. Ultimately, the Mission aims to help transition the best innovations with proven impact to scale to improve the lives of those in El Salvador, Guatemala, Honduras, Mexico, and Nicaragua and provide alternatives to the perilous journey of irregular migration.

Who is eligible to apply?

USAID accepts applications from anyone, including businesses, social entrepreneurs, women-led organizations, individuals, non-profit organizations, and researchers. This addendum also offers the Mission a means of attracting innovations from both traditional development partners, non-traditional partners, and new and/or local partners, including the private sector. As such, “private sector” refers to the following:

1. Private for-profit entities such as a businesses, corporation, or private firm;

2. Private equity or private financial institutions, including private investment firms, mutual funds, or insurance companies;

3. Private investors (individuals or groups);

4. Entrepreneurs;

5. Private business or industry associations, including but not limited to chambers of commerce and related types of entities; or

6. Private grant-making foundations or philanthropic entities.

While private entities are invited to participate, any resulting award will not consider profit or fee as part of the proposed costs.

For purposes of the Innovations Addendum, applicants may include, but are not limited to:

1. Non-Governmental Organizations (NGOs);

2. Universities;

3. Think tanks;

4. Foundations;

5. Private sector entities;

6. Philanthropic institutions;

7. Researchers; and

8. Other entities whose rich array of expertise, experience and other human and institutional assets position them to be valuable partners in the creation and implementation of high-impact alliances.

Furthermore, the Mission supports innovations in El Salvador or regionally in the countries of El Salvador, Guatemala, Honduras, Mexico, and Nicaragua. At a minimum, regional innovations must include El Salvador and either Guatemala, Honduras, Mexico or Nicaragua. The Mission also accepts applications across all development sectors as the challenges that follow detail.1

What the Mission might fund. The Mission recognizes that innovation can take multiple forms.

Some examples of development innovations that the Mission may support include the following:

● New technologies;

● New ways of delivering or financing goods or services;

● New ways of producing goods or services;

● New business models;

● Cost-effective adaptations to existing solutions;

● New ways of increasing uptake of proven solutions, replication, and scaling to new places;

● Policy innovations;

● Social or behavioral innovations based on insights from behavioral science; and

● Data collection and rigorous evaluation to measure the social impacts of promising innovations.

1 Please note that the Mission’s funding to support certain activities may be limited or not available during a given fiscal year based on the nature of its appropriated funding from Congress. For example, USAID might be restricted from funding particular types of activities (e.g., certain funding to the military, police, or intelligence authorities) or activities in a particular country.

What the Mission will not fund. There are some types of projects that are not a good fit for the Mission’s objectives. These include but are not limited to the following:

● Innovations at the idea stage that have not yet been created (i.e., that are pre-prototype);

● Projects with limited potential to scale cost effectively (e.g., construction of immobile physical infrastructure, including schools, power plants or lines, and factories);

● Basic scientific research (e.g., laboratory research of a prototype with no field testing);

● Innovations that are unlikely to generate significant development impacts that benefit the base-of-the-pyramid (e.g., innovations that target high-income customers);

● Planning, diagnostic, and other tools that are difficult to link directly to measurable development impacts for people living in poverty and that reach millions of people only indirectly (e.g., a stand-alone monitoring or evaluation platform);

● Innovations that are applicable only in very limited contexts that limit their ability to scale—or reach—a large number of people in need (e.g., projects that target a very rare disease);

● Research that provides evidence of impact but does not assess cost-effectiveness or scalability;

● Intermediaries with an indirect impact on development outcomes (e.g., incubators, accelerators, start-up boot camps, and other conveners); and,

● Solely construction activities.

The Mission welcomes applications from a broad variety of applicants, including local partners and private-sector entities, to deliver greater scale, sustainability, and effectiveness of development outcomes. The Mission also welcomes applications from organizations that have limited or no experience working with USAID.

Development Challenges

The Mission seeks partnerships with innovators to overcome critical development challenges that drive migration from El Salvador, Guatemala, Honduras, Mexico, and Nicaragua, and advance2 the Mission and the USG’s objectives under the Mission’s CDCSs and the USG’s RCS. To offer greater focus for these efforts, the Mission has narrowed the range of possible innovations and seeks ideas on a select group of challenges. The list below describes each of the Mission’s targeted challenges, the specific objectives, and the context related to the challenge.

USAID/El Salvador anticipates that the Innovations Addendum will allow and encourage the piloting and scaling of innovations from both traditional and non-traditional partners to address challenges for which the Mission does not have an established technical approach as a response.

The outcomes sought in response to challenges will be developed in collaboration with affected Missions to respond to their strategic DOs, intermediate results (IRs), and sub-IRs. The addendum directs applicants to respond to Challenge Objectives, which identify the issue, define

2 Concepts proposing work in Nicaragua must be governance focused.

the goal of each challenge opportunity, and explain the context as noted below and in the Addendum.

● Challenge Objective: Increased access to and utilization of financial services among those currently underserved in communities of high out-migration.

○ Context: Use of innovative financial products in El Salvador remains nascent, and lower income households in particular often don’t have access to financial products such as housing and consumer loans, or a secure low cost means to store, transfer, and withdraw savings. According to the latest data available, only 3.5 percent have a mobile money account; less than 24 percent have made or received digital payments; and only 29 percent of Salvadorans have an account with a financial institution, leaving more than 4 million unbanked Salvadorans. This3 lack of financial inclusion also places constraints on fully leveraging the economic impact of remittances, which account for 24 percent of the GDP but4 sometimes incur substantial transfer costs and remain outside the formal financial sector. Financial innovation and technologies can lower transaction costs, expand access to financial services for lower income households, and increase resources available in the formal financial sector. With greater financial access and utilization, these efforts could have a measurable impact in reducing the likelihood of individuals to irregularly migrate to the United States.

● Challenge Objective: Increase perceptions of hope and decrease likelihood of irregular migration in communities of high out-migration by demonstrating positive, local-level changes through partnerships with diaspora, faith-based, community, and other groups that leverage funds to enable small grants or other types of support to local communities.

○ Context: El Salvador has a significant diaspora community: 1.6 million Salvadorans live outside the country (1.4 million of which reside in the U.S.)

representing roughly one quarter of the population of El Salvador itself. The5 relatively large diaspora community represents an opportunity for them to be significant actors and contributors to El Salvador’s development. Resources of the diaspora, along with those of other non-traditional and underutilized development actors like faith-based and local organizations, could be better leveraged for localized, sustainable impact. For example USAID’s local organization landscape analysis, which identified 900 potential partner organizations in El Salvador, underscores the profound opportunity to improve the linkage and use of non-donor resources to advance development outcomes. With more effective engagement with non-traditional actors (e.g. local organizations and the diaspora) and leveraging resources for community development in El Salvador, local

5 Diaspora data from the UN Department of Economic and Social Affairs. Data on El Salvador population from the World Bank.

4 World Bank Data.

3 World Bank Global Findex Data. 2017. https://globalfindex.worldbank.org/#data_sec_focus https://globalfindex.worldbank.org/#data_sec_focus solutions to local challenges can be better developed and addressed by Salvadorans living in El Salvador and abroad.6

● Challenge Objective: Increased number of residents in communities of high irregular out-migration with improved sustainable access to safe water.

○ Context: El Salvador is experiencing both more erratic rainfall patterns and longer drought periods. Meanwhile, 624,000 people (approximately 12 percent of the total population) do not have access to water supply and sanitation (618,000 are located in rural areas). With development of improved and sustainable options7 for access to safe water, the health and safety of hundreds of thousands of Salvadorans will improve. Example: http://www.lankarainwater.org/.

● Challenge Objective: Reduced perceived corruption through greater civic engagement, advocacy, and citizen demand for transparency and accountability in public and private sectors.

○ Context: Corruption hinders the government’s ability to provide basic social services to Salvadorans. Corruption also undermines the effectiveness of efforts to confront El Salvador’s social and economic development challenges. According to the 2021 Americas Barometer, Salvadorans perceive high-level corruption as more prevalent, with 56 percent believing “most politicians are corrupt” in 2021 compared with 32 percent in 2018. As demonstrated during the 2019 presidential election campaign, Salvadorans have a strong desire to tackle the country’s ongoing corruption issues. With reductions in perception of corruption through greater engagement, advocacy, and demand for transparency and accountability, citizens’ growing hope for better economic and social prospects should improve the likelihood that individuals choose to stay in their home communities rather than irregularly migrate to the United States.

○ Note: USAID/El Salvador is currently designing a potential stand alone, bilateral anti-corruption activity that will seek to enhance government transparency and accountability and increase citizen pressure on and oversight of the government to combat corruption. A potential regional anti-corruption activity is also being contemplated. As USAID/El Salvador continues its internal planning discussions, please monitor the Businesses Forecast for updates on these potential activities.

● Challenge Objective: Improved safety of human rights defenders both in the short and long term.

○ Context: Democracy and human rights advocates can face risks against their life, personal integrity, and liberty due to the nature of their work. This challenge objective seeks to provide tools for the prevention of human right abuses, emergency assistance, and longer-term solutions to those at risk of harm to better protect their personal and organizational safety. Partnerships with other donors are

7 UN Special Rapporteur on the human rights to safe drinking water and sanitation 2016).

6 Retos y oportunidades para el fomento de las inversiones de la diáspora salvadoreña en su país de origen https://www.cepal.org/sites/default/files/static/files/estrategias_para_la_inversion_el_salvador_0.pdf / https://www.cepal.org/sites/default/files/events/files/resultados_preliminares_diaspora.pdf.

http://www.lankarainwater.org/ https://www.usaid.gov/business-forecast https://www.cepal.org/sites/default/files/static/files/estrategias_para_la_inversion_el_salvador_0.pdf https://www.cepal.org/sites/default/files/events/files/resultados_preliminares_diaspora.pdf encouraged. With greater safety for human rights advocates and defenders, independent voices necessary for fostering awareness and dialogue within an open, democratic society can be better maintained.

For more information about the Mission, please visit the following links:

● USAID/El Salvador website

● USAID/El Salvador Country Development Cooperation Strategy

● USAID/Guatemala website

● USAID/Guatemala Country Development Cooperation Strategy

● USAID/Honduras website

● USAID/Honduras Country Development Cooperation Strategy

● USAID/Mexico website

● USAID/Mexico Country Development Cooperation Strategy

● USAID/Nicaragua website

● U.S. Strategy for Addressing the Root Causes of Migration in Central America

● Collaborative Migration Management Strategy

● USAID’s Centroamérica Local initiative

Core Principles for Innovations The following are core principles for the Mission’s approach to innovations: (1) evidence of impact, (2) cost-effectiveness, and (3) viable potential for scale and financial sustainability. The Mission provides funding based on an innovation’s potential capability or demonstrated track record of achieving each of these principles. Below, the Mission provides background on each of these core principles before outlining the requirements for each stage in subsequent sections.

1. Evidence of Impact

Evidence of impact demonstrates what does and does not work to deliver positive development outcomes for beneficiaries or in response to development challenges. The Mission supports piloting of early-stage innovations, funds research to test new solutions to development challenges, and helps those innovations that have successfully demonstrated impact to transition to scale. The Mission looks for different indicators of impact and requires different degrees of rigor in evaluation methodologies depending on the stage of financing that the applicant is seeking and on the innovation’s proposed pathway to scale. All applicants must demonstrate a clear theory of change that draws upon available evidence.

For a piloting stage activity, the more clearly the applicant presents a robust plan for generating early-stage innovation evidence, the stronger the application. Similarly, for a scaling stage activity, the more evidence an applicant presents in support of their innovation’s theory of change and impact on development outcomes, including the scale and significance of impact to be targeted and how it will be measured, the stronger the application.

https://www.usaid.gov/el-salvador https://www.usaid.gov/el-salvador/cdcs https://www.usaid.gov/guatemala https://www.usaid.gov/sites/default/files/documents/CDCS-Guatemala-2025-Amended-30Aug2021-Public.pdf https://www.usaid.gov/honduras https://www.usaid.gov/honduras/documents/country-development-cooperation-strategy-cdcs-honduras-2020-2025 https://www.usaid.gov/mexico https://www.usaid.gov/mexico/cdcs https://www.usaid.gov/nicaragua https://www.whitehouse.gov/wp-content/uploads/2021/07/Root-Causes-Strategy.pdf https://www.whitehouse.gov/wp-content/uploads/2021/07/Collaborative-Migration-Management-Strategy.pdf https://www.usaid.gov/news-information/press-releases/nov-4-2021-usaid-announces-centroamerica-local-initiative-empower-local

Public Pathway to Scale: To support later-stage innovations to transition to scale with public financing, including by government or philanthropic funding, the Mission requires applicants to show rigorous evidence of causal impact. The Mission does not require applicants for earlier-stage awards for piloting and testing of innovations to show rigorous evidence of causal impact and will issue awards for earlier-stage innovations to help innovations get to the point at which they have this rigorous evidence of impact.

Measurement of impact can encompass either final outcomes or impacts that can be taken as worthwhile objectives per se (e.g., reducing infant mortality). Measurement of impact can also encompass improvements to intermediate outcomes on the causal chain for solutions that have been previously demonstrated to have a causal impact on final outcomes (e.g., increasing vaccination rates, which have an existing evidence base of causal impact on improved health).

Commercial Pathway to Scale: To support later-stage innovations to transition to scale commercially, the Mission requires applicants to show evidence of long-run market viability. The Mission accepts customer willingness to pay the full costs of the innovation as such evidence. The Mission does not require applicants for earlier-stage awards for piloting and testing to show such evidence and will issue awards for earlier-stage innovations to get to the point where they have this evidence. For example, an applicant may use a piloting award to gather evidence on consumer reaction to and willingness to pay for the product. As an applicant progresses to a possible scaling award, the Mission expects the applicant to demonstrate a compelling case for long-run market viability. In addition, the Mission requires applicants through both approaches to show stage-appropriate data on usage, or in some situations on proxies for social outcomes that track how the innovation will respond to the noted challenge.

2. Cost-Effectiveness

The Mission seeks innovations that deliver more development impact per dollar than other solutions or the status quo. Cost-effectiveness is a function of both cost and impact and does not mean that an innovation is the cheapest solution. Instead, an innovation can increase its cost-effectiveness either by reducing its cost or by increasing its impact. The Mission recognizes that costs of an innovation at scale may be different than costs generated through earlier testing phases, so applicants should provide data around current and projected costs.

3. Feasibility

The Mission’s goal is to support impactful development solutions that will scale to reach and address intractable development challenges. Accordingly, innovations must be feasible in the short- and long-term. Proposed solutions must have a potential pathway to scale in the long-run and identified sources of financial sustainability such as commercial funding, public-sector or philanthropic funding, or a hybrid of the two. The Mission defines a hybrid pathway to scale as a pathway that is reliant on a combination of public and commercial revenue channels or that is supported by a combination of commercial along with public or philanthropically motivated funding (e.g., an education technology innovation that is partially funded through direct-to-consumer sales and partially funded by donors). The Mission recognizes that innovations can take a variety of pathways to scale but expects that they will be financially sustainable over a period of time that is necessary to achieve development impact and ultimately grow without continued Mission support. In the following “Innovation Grant Types” section, the criteria outline separate, additional requirements for innovations based on their proposed pathways to scale. To the extent that applicants propose a “hybrid” pathway to scale, they must demonstrate how they meet each relevant criterion.8

Innovation Grant Types The Mission funds two types of grants, and applicants must meet the criteria for the relevant grant type, as detailed below. The innovation grant types align the funding amount to the strength of the evidence of impact or evidence generation potential, cost-effectiveness, and potential for scale and financial sustainability of the proposed innovation. The Mission supports only those innovations that are at the post-prototype stage (i.e., the critical aspects of how the innovation works have already been tested). Applicants should apply for the stage that best reflects the current level of maturity of their innovation. The Mission reserves the right to consider innovations for funding at a different stage or amount than the applicant has requested, which may be addressed during a co-creation process after the application is submitted.

Given the Mission’s limited pool of resources, it assesses whether a grant for a particular activity provides social returns that are competitive with likely returns from grants to other applicants.

Accordingly, the more funding that an applicant requests, the higher the Mission’s expectations for proven development impact, cost-effectiveness, and ability to scale.

To meet the Mission’s requirements, many successful applicants form coalitions of partners with diverse skills and may also use or seek additional funding from other sources. Applications are stronger if they leverage non-Mission support and, all else equal, the more support that is leveraged, the stronger the application is. Additional support can take different forms depending on the nature of the innovation (e.g., a commitment from a government to implement the innovation, a financial commitment from an external investor, in kind support, etc.).

The Mission aims to be catalytic with its funding, which means that grantees should be able to achieve results after receiving a Mission grant that they would not have been able to achieve without that grant. Applicants should state explicitly how a grant will catalyze their innovation.

8 For example, if an energy innovation that reduces pollution costs $10 per unit, and the applicant proposes to scale the innovation through customer payments of $7.50 and public support of $2.50, the applicant must show that customer payments would cover $7.50 and must also show rigorous evidence of causal impact of at least $2.50 of social impact of reduced pollution costs. Applications for earlier-stage awards would not need rigorous evidence of causal impact but should help build towards the point at which such evidence would be available.

A. Piloting Grants

Purpose: The Mission funds piloting stage awards to support the testing of innovations.

Innovations at this stage are early in their development and require testing to refine the basic model and establish real-world viability at a small scale. The Mission supports only those innovations that are post-prototype and ready to be field-tested at the time of application (i.e., innovations that are still undergoing development in a lab or that are still at the idea stage are premature for the Mission’s support).

Application Requirements: To be eligible to receive a piloting stage award, applicants must demonstrate the following criteria for each of Mission’s three core principles:

1. Evidence of Impact

All applicants must make a credible case of the potential development outcomes.

Rigorous evidence of causal impact is not required at this stage; however, applicants must present a strong theory of change and justify how and why the innovation is likely to generate a positive development impact. Applicants should articulate plans to collect data during the award period that would test key assumptions in the theory of change and the pilot’s causal impact. While not required, applications for innovations with some existing piloting or that have a theory of change that is backed by rigorous evidence of causal impact are stronger.

2. Cost-Effectiveness

Applicants should articulate why their innovation has the potential to be cost-effective at scale. This articulation should include a discussion of the likely costs and cost-effectiveness of the innovation relative to alternative solutions including the status quo and a projection of the major drivers of cost and cost-effectiveness of the innovation when it is at scale. The Mission recognizes that piloting stage innovations may not have robust financial forecasting data but wants to understand the applicant’s perspective on the potential for cost-effectiveness should the evidence demonstrate impact.

3. Feasibility

All applicants, regardless of their pathway to scale, must demonstrate that their innovation has the potential to address and overcome the development challenge.

Applicants must describe how they expect the innovation to be financially sustained at scale and should make the case that there is potential for someone to pay for the innovation at scale. Applicants should also identify the types of partners (e.g. government institutions, private companies, community leaders) and any actions the partners would need to take that would be critical for the innovation’s success and for future scaling of the innovation. If relevant, applicants should describe the extent to which relationships with partners have already been built.

B. Scaling Grants

Purpose: The Mission funds scaling stage awards to transition proven approaches from piloting and testing to widespread scaling in new contexts or new geographies. Applicants should have completed the piloting stage of the innovation, with or without prior Mission support.9 Specifically, applicants must demonstrate rigorous evidence of causal impact, cost-effectiveness, and market viability and scalability at the time of their scaling grant application. Successful scaling stage applicants must collect data on costs and social outcomes during the award and may use award funds to adapt the innovation to new contexts, to prepare the innovation for scaling, to conduct further testing of the extent to which the evidence of an innovation’s impact is applicable in new geographies or settings, and to kickstart the scaling process.

For innovations designed to scale commercially, the Mission is reluctant to crowd out commercial investors, and the Mission will target scaling stage funding for adapting, improving, or expanding successful approaches to new markets.

Application Requirements: Applicants should identify and address operational challenges for scaling and should plan for activities that allow for refinement and iteration along defined pathways to scale. In addition, applicants are required to demonstrate the following criteria:

1. Evidence of Impact

Public Pathway to Scale: Applicants for scaling stage awards for innovations designed to scale publicly (meaning they require government, NGO, philanthropically or similarly sourced funding for sustainability) must demonstrate rigorous evidence of causal impact on a development objective and a compelling case based on the impact measurement that the solution will be cost-effective at scale relative to alternative solutions. Evidence of impact and a compelling case for cost-effectiveness (e.g., through a randomized controlled trial, randomized surveys, regression discontinuity, among others.) of the innovation must already exist prior to application. Applications will be stronger if the applicant can produce evidence of commitment from partners that would be needed in scaling.

Commercial Pathway to Scale: Scaling stage innovations intended to scale commercially should already have demonstrated market viability, described as follows:

● An applicant can make a compelling case of market viability by showing that the innovation has the potential to generate enough revenues to fully cover costs (including customer acquisition costs, distribution costs, headquarters costs, capital

9 In general, scaling grant applications are stronger if they leverage non-Mission support and, all else equal, the more support that is leveraged, the stronger the application is. Support can take different forms depending on the nature of the innovation. For example, it could consist of a commitment from a developing country government to implement the innovation in its original or adapted form, or it could consist of a financial commitment from an external investor.

costs, depreciation, etc.), together with a plan to test whether the innovation can indeed cover such costs.

● An applicant could also make a compelling case of market viability by showing that it can reasonably expect to attract commercial capital on market terms, since an investor would invest only if it believed that revenue would eventually be sufficient to cover fully loaded costs.10

● An applicant could also make a compelling case of market viability by showing that it can reasonably expect to attract capital on concessional terms awarded due to the social impact of the innovation. The Mission will consider such hybrid scaling strategies, but to the extent that the scaling path relies on philanthropically motivated funding such as impact investment or funding associated with corporate social responsibility, applicants will typically need during the award to demonstrate rigorous evidence of causal impact and show that the philanthropically motivated portion of funding is a cost-effective way to achieve the development objective; and11

● A compelling case that the applicant will be able to show that the innovation’s benefits exceed its costs, especially focusing on benefits and costs for beneficiaries.12

Applicants should therefore no longer need donor funding for regular operations; instead, they would use donor funds only to adapt and scale to new contexts. To enable maximum leverage of Mission funds, the Mission will endeavor to allow commercial investors the opportunity to fund these innovations. In addition, applicants must demonstrate a convincing case using evidence and data for how and why these additional investments in adapting and scaling the innovation in new contexts will yield a high return for beneficiaries. The additional Mission funding for adaptation should unlock significant additional capital or generate greater scale that allows the applicant to increase their social impact.

2. Cost-Effectiveness

Applicants must demonstrate plans to analyze cost-effectiveness or show that they have already done so. Applicants should discuss the costs and cost-effectiveness of alternative solutions and should also discuss the major cost drivers and cost-effectiveness of the

12 For most innovations, evidence of market viability can also serve as evidence that the innovation’s benefits exceed the costs since customers’ willingness to pay a price that fully covers costs is evidence that they place at least that much value on the product. One exception to this notion would be innovations that might generate net negative consequences for others, e.g., pollution. Another exception would be innovations that consumers might pay for despite the innovation not being beneficial for them, e.g., products sold based on misleading claims or addictive products. A third exception would be a product that is viable in the market due only to subsidies. For example, if an innovative energy source were more expensive than alternatives and viable only because of regulations that force firms to buy it, the innovation would be classified as a hybrid, and the Mission would require the applicant to show that the benefits of the public subsidy exceed the cost.

11 An exception to the heightened evidentiary requirements for the philanthropic portion would be if the philanthropic portion were minimal, if the innovation had clear benefits to people other than paying customers, and if a rigorous test of causal impact and cost-effectiveness were unfeasible.

10 Note that the applicant need not actually apply for and take commercial capital on market terms. Rather, the applicant needs to show only that it is able to attract such capital to make a compelling case of market viability.

innovation at scale. For innovations designed to scale publicly (i.e., it depends on government or philanthropically sourced funding in some part), applicants should provide data on likely current and future costs of the innovation; impact per dollar spent compared to alternatives; and information on how costs and cost-effectiveness will be measured. For innovations designed to scale commercially, applicants should be able to provide relevant commercial data, including a financial analysis of the innovation’s potential to commercialize, analysis of market demand, and all relevant costs.

3. Feasibility

Applicants must demonstrate that the innovation has the potential to impact a large population of beneficiaries. Applicants must discuss the financial resources they expect to be required to scale the innovation over time and their vision for how such resources will be obtained. Applicants should identify all partners and actions partners would need to take in order to scale the innovation and make it financially sustainable. Proposals will be stronger if applicants have established relationships with the partners envisioned for scaling (e.g., partnerships with distributors; orders from large customers; Memoranda of Understanding with the government indicating commitment to scale should evidence demonstrate a positive impact, etc.).

Cross-Cutting Principles

1. Coordination with Business Associations and NPI o USAID assistance for achieving the activity purpose relies on strong partnerships and coordination with local institutions, donors, and the private sector. This addendum recognizes the important role of business associations and philanthropic foundations as key partners for the advancement of the Mission’s Development Objectives. Business associations in El Salvador such as the American Chamber of Commerce (AMCHAM), the Industrialist Association (ASI) and the Chamber of Commerce (CAMARASAL) membership have traditionally partnered with USAID/El Salvador in activities ranging from crime and violence prevention, basic education, workforce development and SME strengthening. Regional business associations such as the Central American Integration for Corporate Social Responsibility (RED INTEGRARSE) have previously engaged with USAID to participate in regional forums that promote security, prosperity, and good governance.

o Private sector philanthropic foundations play a very important role in El Salvador and regionally (El Salvador, Guatemala, Honduras, and Mexico) and they have been the implementing or resource partners in multimillion dollar Global Development Alliances. Since private sector philanthropic foundations’ objectives frequently align with those of USAID’s, coordination with them will be essential.

Finally, it’s worth mentioning that El Salvador and the region (El Salvador, Guatemala, Honduras, and Mexico) have a vibrant ecosystem of local NGOs and foundations engaged in local development that will be targeted as potential implementing and resource partners.

2. Coordination with other USG Agencies o When applicable, activities under this Addendum are expected to implement their activities in close coordination with other USG Departments and Agencies that work with the private sector such as the Department of Commerce, the Economic Section of the US Embassy, and the US Development Finance Corporation. In this way, synergies that strengthen the proposed activities are expected to occur and duplication of activities will be avoided.

3. Coordination with Other Donors o A solid relationship and frequent coordination with other key donors such as the

Interamerican Development Bank and the European Union is critical to avoid duplication of efforts. Applicants will proactively seek to leverage funding and resources to better align priorities and achieve desired development impacts.

When applicable, USAID highly encourages proposals to demonstrate a solid understanding of key donors whose existing relationships and initiatives with private sector counterparts are aligned with the objectives of proposed activities.

4. Coordination with other USAID/El Salvador activities

○ Current awards managed by USAID/El Salvador’s technical offices (Economic

Growth and Education [EGE] and Democratic Governance and Security [DGS]).

Examples include, but are not limited to:

■ Oportunidades. This activity contributes to the prosperity of Salvadoran youth by increasing access to quality education directly related to local employment opportunities for those who have academic potential and desire, but lack financial resources. This alliance will provide a path to greater school engagement, enhanced life skills, employment, and non-violent conflict resolution. These skills promote a stronger sense of community, thus reducing violence and mitigating the drivers of irregular migration.

■ High Impact and Sustainable Communities Project in Soyapango:

This activity contributes to the improvement of the quality of life of families in Soyapango, through the articulation of the key sectors to increase the opportunities of economic and social development of the municipality.

■ Imagina - El País que queremos: This activity seeks to empower and catalyze citizens to actively participate in the creation, revitalization, and maintenance of public spaces, as well as to provide a dynamic platform to collect and analyze data regarding citizens’ perceived quality of life.

■ New Path for Social Reintegration Project: This activity focuses on social insertion of young people and adolescents by designing and implementing models for social insertion, strengthening public policy for rehabilitation and social integration, and engaging both public and private sector actors to promote social insertion.

○ Future awards managed by EGE and DGS offices at USAID/El Salvador.

○ Current awards managed regionally, USAID/Central America and Mexico (CAM). Examples include, but are not limited to:

■ Integrated Responses on Migration (IRM) from Central America.

This activity contributes to lowering both the number of irregular migrants to the United States and the number of apprehensions at the U.S. southern border, which are key U.S. Government priorities.

■ Trade Facilitation and Border Management Project. The goal of the Activity is to contribute to the Central American countries’ broad-based economic growth by enhancing regional integration and improving trade facilitation.

○ Future awards managed by USAID/CAM.

5. Gender Equality and Female Empowerment o Central American countries are societies with strong social norms that dictate gender roles and cultural practices that often result in gender inequality. Using a measure of gender equality developed by the UN for the 2016 Human Development Report, El Salvador, Guatemala, Honduras, Mexico, and Nicaragua currently rank toward the high end (indicating high gender inequality) at 117, 125, 130, 77, and 124, respectively, out of 188 countries.

Low levels of literacy and lack of information and knowledge about job opportunities and civil rights are more prevalent among women than men. This means that women are not able to fully benefit from the opportunities and efficiencies that workforce development or violence prevention programs offer.

Gender-based violence is also considered a constraint that women experience in the region (El Salvador, Guatemala, Honduras, and Mexico). Typically, working conditions are geared towards the needs of the male workers and thus women are afforded poor amenities and opportunities.

Applicants will systematically consider the gender aspects and implications of specific interventions. Applicants must build gender into the work plan in accordance with USAID requirements. This includes examining:

a. How the different roles and status of women and men in the region will affect the activities to be undertaken;

b. How the anticipated results of the activity might affect women and men differently; and,

c. A coordinated, place-based approach to improve the underlying causes that push Central Americans to migrate, taking into account, as appropriate, the views of bilateral, multilateral, and private sector partners, as well as civil society.

Applicants should ensure that stakeholder engagement is gender-sensitive and that both women and men are represented throughout the activity cycle including: (1) taking into account the particular constraints that women face, (2) engaging women and ensuring they are willing and able to participate in activities, and (3) ensuring that a wide range of women’s perspectives are represented within the activity.

Applicants will also ensure that any training activities address the gender dynamics that ensure an equal participation from male and female participants to ensure as much gender parity as possible.

Progress in all related activities will be measured and verified using indicators that are disaggregated by sex, and/or gender-sensitive indicators to measure gender-related changes over time, if feasible. Monitoring and evaluation tools should include questions to elicit information that allows differentiation of impacts based on gender.

6. Locally-Led Development o Locally-led development solutions are defined as using, strengthening, and partnering with local actors and local systems strategically, purposefully, and cost-effectively to achieve sustainable…