DIV's Model in Detail

The DIV model is designed to find breakthrough solutions, minimize risk and maximize impact through stage financing, rigorously test impacts and cost effectiveness, and scale proven solutions through the public or private sectors. Through this model DIV seeks to help understand and advance innovations that work while avoiding long term investments in those that don’t. 

Breakthrough Solutions

DIV runs a quarterly competition for bold development ideas and recognizes that breakthroughs can come from anywhere—a lab in a university, a local organization who has deep contextual knowledge, or a passionate entrepreneur. Nearly any organization in the world is eligible to apply, and their proposals can be for any sector and any country in which USAID operates. Selection of winning applications is based on:

Stool representing scale, cost-effectiveness, and rigorous testing
  • Cost Effectiveness - DIV seeks applications that have the potential to deliver greater development impacts per dollar than standard practice.
  • Rigorous Testing - The DIV model emphasizes testing potential solutions and rigorously evaluating impact to identify what works and what does not, and to help scale only those solutions proven to produce development outcomes.
  • Pathways to Scale - Innovations are expected to eventually scale up through the private sector, the public sector, or in some cases a combination of the two, in order to reach sustainability without DIV support. Public sector scaling plans demonstrate that grantees are likely to compel host country governments, multilateral donors or other public sector players to scale the innovation. Grantees who expect to scale through the private sector will plan to achieve commercial viability themselves, or convincingly demonstrate that other businesses will scale their innovation, or a combination of both

Staged Financing

Drawing inspiration from product development enterprises, DIV uses a three-tiered staged finance model to maximize cost-effectiveness and minimize the risk of testing new ideas. Applicants can apply at any stage (staging is based on the content of the project, not the level of funding needed).

Development Innovation Ventures (DIV) Staged Financing Model
  • Stage 1: Establishes proof of concept and viability of innovation 
    Stage 1 funding is intended to test the real-world viability of an innovative development solution. Projects demonstrate a departure from current practices and are more cost-effective than alternatives. Stage 1 funding requests will typically not exceed $100,000 per project. Stage 1 projects can propose activities for up to two years.
  • Stage 2: Evaluates solution at scale with rigorous impact testing (stage 1 criteria have previously been met with DIV or other support sources) 
    Stage 2 funding is provided to innovative solutions that have demonstrated success at a pilot or small-scale stage, and now require support to assess if the solution can achieve larger scale development impact and whether it can be successfully implemented at a larger scale. Stage 2 projects will typically not exceed $1 million but are often significantly less. Stage 2 projects can propose activities for up to four years.
  • Stage 3: Transitions program to widespread adoption (criteria of stages 1 and 2 have previously been met with DIV or other support sources)
    Stage 3 funding is reserved for innovative solutions that have credible and rigorous evidence of development impacts at significant scale. Stage 3 projects will transition an innovation from large scale implementation to widespread adoption in one country and/or replication in at least one other country. Applicants must provide rigorous evidence that the innovation has demonstrated cost-effective development impacts and that large scale implementation was successful. Stage 3 projects will typically not exceed $15 million but are often significantly less. Stage 3 projects can propose activities for up to five years.  

Rigorous Testing of Impact and Cost Effectiveness

The DIV model emphasizes testing potential solutions and rigorously evaluating impact to identify what works and what does not. 

To maximize development impact, DIV seeks solutions that yield greater results per dollar than competing alternatives. By Stage 3, grantees must have proven that they are more cost-effective than other ways of achieving the same development goals (e.g. prevented more cases of infant mortality per dollar).

  • Testing at Stage 1:
    Stage 1 grantees must assess the extent to which the innovation will yield real-world results through impact evaluation or performance monitoring. This involves testing whether beneficiaries demand and correctly use products or services, and assessing (or beginning to assess) what development outcomes result. Grantees also generate preliminary evidence on whether their innovation delivers greater development impacts per dollar than standard practice.
  • Testing at Stage 2:
    Stage 2 projects include a rigorous evaluation component that clearly demonstrates the solution’s impact on development outcomes when operations expand beyond a pilot level.The solution must be implemented at a scale that allows for statistical significance of impact analysis (e.g. a randomized controlled trial). Some solutions may require implementation and testing at various levels (local, regional, and across several regions). They should also evaluate whether the project yields significantly higher development impacts per dollar as compared to other ways of achieving the same development goals (e.g. through credible cost-effectiveness analysis).
  • Testing at Stage 3:
    Stage 3 grantees have already provided rigorous evidence of their innovation’s cost-effective development impacts, and that their large scale implementation was successful.As the innovation reaches millions more beneficiaries, grantees should demonstrate that the innovation is implemented properly and continues to deliver cost-effective results in these new contexts.

Pathways to Scale

Scaling proven successes

The DIV model expects innovations to eventually scale up through the private sector, the public sector, or in some cases a combination of the two, in order to reach sustainability without DIV support.

  • Scale through the Public Sector:
    Successful innovations that scale through the public sector will have gathered rigorous evidence of cost-effectiveness and impact with rigorous evaluation methodology, such as a randomized evaluation, to obtain legitimate measurements. Grantees follow the scaling plans proposed in their initial application to engage decision-makers (e.g. developing country governments and multilateral donors) into action for public sector scaling of their proven development solution.
  • Scale through the Private Sector:

    Successful market-based innovations will achieve widespread adoption through private sector commercialization and without long-run support from donors, governments, or philanthropy. They have provided evidence that they yield development outcomes, and that they are commercially viable (production costs and sales prices are such that producers make profits, beneficiaries demand and are willing to pay for the product or service, governments receive associated tax revenue). Most of DIV's private sector grantees plan to achieve commercial viability themselves. Some demonstrate convincingly that successful innovations will catalyze other business to achieve social outcomes. Often, the most competitive applicants do both.

Last updated: October 18, 2013

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