At a time when development funding is under pressure to prove real-world outcomes, the Challenge Fund for Youth Employment (CFYE) is showing how a results-focused model can drive both impact and accountability.

A 7-year flagship initiative financed by the Ministry of Foreign Affairs of the Netherlands and implemented by a consortium including Palladium, VSO and Randstad, CFYE is active across 11 countries in Africa and the Middle East. With the goal of creating 230,000 decent jobs for youth, half of them for women, the Fund supports a diverse range of enterprises and small businesses.

At the recent Aspen Network of Development Entrepreneurs (ANDE) Metrics Conference in Nairobi, CFYE shared how its approach to grantmaking, which ties funding to verified results, is reshaping how success is measured in youth employment initiatives.

Redefining Measurement: The Results Based Approach

The ANDE conference, a key gathering for development funders, practitioners, and researchers, provided a platform for CFYE's Monitoring, Evaluation and Learning (MEL) team to outline how results-based payments (RBP) can sharpen performance and encourage adaptability. The team joined a broader conversation on how MEL can evolve to support learning, adaptation, and systemic change in complex development environments.

A MEL System Built on Tailored Results, Not Just Reporting

During CFYE’s session, MEL Associates Juliana Beltran and Anna Kiss-Pal, along with the Country Lead for Kenya, Beatrice Gichohi, outlined the Fund’s RBP model and its integration into every project stage, from design to evaluation.

CFYE works with Implementing Partners (IP) during the inception phase to co-develop a tailored Results Framework, which defines key deliverables and indicators. These include both output metrics (such as number of people trained) and outcome measures (the number of young people placed in decent jobs). These indicators are then linked to milestone-based payments. This means that IPs receive funds only after outputs and outcomes are validated through in-house verification processes led by CFYE’s central and local MEL teams.

“This model demands a high level of collaboration from the start,” says Juliana Beltran Grisales. “We need to make sure that indicators are achievable, measurable and directly linked to our mandate in terms of impact.”

The RBP approach also allows CFYE to shape partner incentives—especially in areas like gender inclusion and job quality. By weighting payments toward specific milestones (e.g., creating jobs for young women or marginalised groups), CFYE can steer efforts toward more inclusive impact.

Verification is handled internally, providing both efficiency and continuous feedback to partners. This enables quicker adaptation in case of underperformance, leaving space for the Fund and Implementing Partners to adapt the intervention to their needs and get back on track, helping to strengthen MEL capacity within organisations.

“Having in-house verification means we’re not just checking boxes,” explained Anna Kiss-Pal. “We’re building relationships with partners and providing real-time feedback, which helps them adjust faster and ultimately perform better.”

CFYE’s Lessons Learned: What Really Works for SMEs?

Enabling small and medium enterprises (SME) to measure and report their own outcomes can strongly drive sustainable and concrete impact. Although many SMEs entered the program without robust MEL systems, CFYE introduced more hands-on technical assistance (TA) and worked to co-create tailored results frameworks with each partner.

This support was not only about compliance. TA and MEL advisors worked closely with SMEs to ensure the frameworks reflected realistic pathways to job creation and business growth. Over time, simplified templates and iterative learning enabled SMEs to embed impact tracking into their operations. "Rather than imposing rigid frameworks, we learned to design MEL tools that speak the language of the business itself," Beatrice Gichohi mentioned.

Over the course of the programme, CFYE evolved its payment structuring, increasing the weight of outcome payments to 40% based on outcomes, 60% on outputs. This adjustment was necessary to reflect the cash flow needs of SMEs, while continuing to incentivise impact.

These lessons are not theoretical. After nearly six years of implementation and engagement with hundreds of SMEs, CFYE’s approach to RBP and MEL successfully embeds impact measurement in diverse, capacity-constrained contexts. The Fund’s approach continues to evolve, balancing rigour with practicality and ensuring that results-based models serve the long-term sustainability of the businesses they support.

From Theory to Practice: Cherubet’s Story

A highlight of the CFYE session was a case study from Cherubet, a Kenyan agri-processing company. While the business faced hurdles, including having to divert operational funds to meet targets, it also reported long-term gains.

"The experience forced us to improve our internal systems and sharpen our financial strategy," said a company representative. "It was uncomfortable at times, but it made us stronger and more appealing to other investors."

Understanding RBP as a Strategic Tool

The discussion at the ANDE Metrics Conference reinforced the value of MEL not just as a compliance tool, but as an effective strategy to ensure adaptive management, learning, and sustainable impact.

“Our experience shows that with the right structure, MEL can do more than track performance—it can shape it,” said Beatrice Gichohi, Country Lead for Kenya. As interest in outcome-based funding continues to grow, CFYE’s practical approach offers insight into how to link inputs to impact, at scale and with diverse businesses and business models.