July 10, 2018 | Blindness is among the most preventable afflictions on Earth. While an estimated 253 million people worldwide are visually impaired and 36 million are completely blind – 80% of blindness is either curable or preventable. [1] The vast majority of the blind live in the poorest parts of the developing world and lacks access to affordable treatment or preventative care, despite the fact that this extremely debilitating condition can be cured with simple and relatively cheap medical procedures.

One method that helps to do just that is the affordable eye care organization (“AECO”) model. Developed in the 1980’s by pioneering eye hospitals, like Aravind Eye Hospital in India, AECOs use a high-efficiency, tiered-pricing model whereby higher income patients subsidize the treatment costs of lower income patients. Although this cross-subsidy model offers enormous potential for reducing blindness across the developing world, many hospitals either do not adopt the model, or they remain relatively small, due to their dependence on limited philanthropic donations.

Those who doubt that investment capital can be deployed in a way that measurably contributes to solving social problems need look no further than the case of the Eye Fund I. Launched in January 2010 by a U.S.-based asset manager, the fund was created to tackle the issue of preventable blindness by financing AECOs with commercial debt capital. By investing in AECOs, the fund aimed to demonstrate how to scale the provision of affordable eye care services in the developing world.

As one of the first non-microfinance funds in impact investing in the modern era, this $14.5 million seven-year fund was both innovative and ambitious. Although the thesis remained steadfast during the fund’s development, it took almost four years for the founding group to rally investors, find appropriate AECOs, and finalize a fund structure. Ultimately, a unique partnership that blended pools of capital from philanthropic actors, development finance institutions, and private investors was necessary to bring the fund to fruition.

Seven years after its launch, the fund successfully paid back its investors and met its goal of significantly increasing the capacity of three AECO borrowers in China, Nigeria and Paraguay. Over the course of the fund, these three hospitals grew in aggregate from $18 million to $31 million in annual revenues. At the same time, they provided a total of 3.3 million eye procedures, including over 280,000 cataract surgeries – curing eye conditions and restoring sight for millions of underserved people around the world.

Tideline was engaged to assess the Eye Fund’s impact performance, and, as part of our work, prepared a summary report to share key findings from the fund’s experience. Our findings included five key elements that contributed to the successful outcomes of the Eye Fund:

  1. The clear and compelling investment thesis to scale the financing of AECOs and prevent blindness provided a strong foundation and rallying point throughout the long fund formation timeline.
  2. A blended capital structure was key to catalyzing the necessary private investment in an unestablished sector.
  3. Long term loans were important for ensuring the non-profit AECOs had time to construct new facilities and appropriately scale their treatment capacity to create sustainable impact.
  4. A preset portfolio, where the fund simultaneously closed investor capital and issued its loans, was complex to structure and execute but enabled investors to have much-needed transparency and comfort into the unprecedented financing case.
  5. A technical assistance facility created as part of the effort was necessary to help build the capacity of the AECOs to effectively manage and report on the investment capital.

The Eye Fund and its experience remind us that, while innovation is hard, it is a crucial practice for expanding the range, capacity, and impact of social enterprises across the world. In fact, the fund has helped pave the way for other promising affordable eye care initiatives, including Alina Vision and the Global Sight Initiative.

The future of impact investing and the use of finance to solve pressing global issues, such as preventing avoidable blindness, depends on the impact investing practitioners who experiment, collaborate, and create new product that aligns capital with the needs of social enterprises. Through its work, the Eye Fund was able to help restore sight to millions of people around the world – demonstrating, once again, just how useful financial innovation can be in helping to build a better vision of tomorrow.


By Jane Bieneman and Tristan Hackett

1. http://www.who.int/news-room/fact-sheets/detail/blindness-and-visual-impairment