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Impact Bonds and Outcome Funds
for Development
Dr. Emily Gustafsson-Wright
February 2019
October 2013CGD/Social
Finance DIB report
IMPACT BONDS TIMELINE
September 2014Brookings impact
bond event
March 2010Peterborough SIB
Spring 2015First DIBs in Peru
and India
July 2015Brookings First
Five Years report
March 2017 First SIB in developing
country (Colombia)
September 2017Brookings/Convergence Early Learnings report
May 2018First meeting of
IBWG
GLOBAL LANDSCAPE
137 IMPACT BONDS CONTRACTED GLOBALLY
Source: Brookings Global Impact Bond Database, Feb 2019
0-5
6-10
11+
SECTORS: IMPACT BONDS CONTRACTED GLOBALLYHEALTH
SOCIAL WELFARE
EMPLOYMENT
EDUCATION
CRIMINAL JUSTICE
ENVIRONMENT &
AGRICULTURE
Source: Brookings Global Impact Bond Database, Feb 2019
IMPACT BONDS IN DEVELOPING COUNTRIES
Impact Bond Name Country Sector BeneficiariesUpfront Capital (USD million)
Sustainable Cocoa and Coffee Production DIB Peru Agriculture 931 $0.11
Educate Girls DIB India Education 7300 $0.28
Workforce Development SIB Colombia Employment 766 $0.33 ICRC Programme for Humanitarian Impact Investment ('PHII') Mali, Nigeria, DRC Health 3600 $19.42
Graduation Model DIB Kenya and Uganda Social Welfare 18000 $3.50
Utkrisht DIB for Maternal and Newborn Health India Health 600000 $4.00
Cataract DIB Cameroon Health 18000 $2.00 Inclusive Youth Employment Pay-for-Performance platform South Africa Employment 600 $2.89
Education Bond (Dept of Social Development) South Africa Education 2000 $0.65
Quality Education India DIB India Education 300000 $3.00
Type II Diabetes Mellitus (T2DM) DIB Palestine Health 150 $0.15
Cali Employability SIB Colombia Employment 856 $0.86
• 10-20 % of pr
IMPACT BONDS IN DESIGN:
DEVELOPING COUNTRIES
1
2
MULTILATERALS
Multilateral SIB/DIB name Role
Inter-American Development Bank
Brazil Secondary Education SIBColombia Workforce SIBMexico The Future in My Hands SIBPeru Climate-Smart Agriculture DIBCali Employability SIB
InvestorConduit of fundsInvestor Outcome FunderConduit of funds
World Bank Group Cameroon Kangaroo Mother Care DIBWest Bank and Gaza Employment DIBUzbekistan ECD SIB
Outcome FunderOutcome FunderInvestor
Common Fund for Commodities
Peru Sustainable Cocoa and Coffee Production DIBUganda Empowering Women and Youth DIBPeru Climate-Smart Agriculture DIB
Outcome FunderInvestorInvestor
BILATERALS/FOREIGN GOVERNMENTS
Bilateral SIB/DIB name Role
DFID ICRC Programme for Humanitarian Investment (PHII)
Kenya and Uganda Graduation Model DIB
Quality Education India
Outcome Funder
Outcome Funder
Grant funding
USAID Kenya and Uganda Graduation Model DIB
Utkrisht Maternal and Newborn Health DIB
Outcome Funder
Outcome Funder
SECO (Swiss Secretariat of Economic Affairs)
Colombia Workforce SIBCali Employability
Outcome FunderOutcome Funder
SDC (Swiss Development Cooperation)
ICRC Programme for Humanitarian Investment (PHII) Outcome Funder
OPIC Cameroon Cataract DIB Investor
Government of Belgium ICRC Programme for Humanitarian Investment (PHII) Outcome Funder
Government of Italy ICRC Programme for Humanitarian Investment (PHII) Outcome Funder
POTENTIAL AND LIMITATIONS
CRITICAL CONSIDERATIONS
CHOOSING A FINANCING MECHANISM
Paying for outcomes more
likely to get you outcomes than paying for
inputs
YES
NOInput-based
Service providers need upfront (risk) capital and/or
capacity building
YES
NO
Impact bonds/
Outcomes funds
Traditional PBR
1. Is there a demand for impact bonds/outcome based contracting?
2. Are impact bonds reaching the populations in need?
3. Are the contracts achieving outcomes?
4. Are impact bonds achieving something besides outcomes?
5. Are the deals efficient (ie cost-benefit analysis)?
MEASURING SUCCESS:
FIVE KEY QUESTIONS
CHALLENGES AND
LOOKING FORWARD
Credit: Mark Wallace
Looking Forward
• How are impact bonds performing across the five dimensions of
success?
• How to resolve current challenges associated with impact bonds?
• How is data being used in impact bonds and outcome based financing
to improve service delivery and measure impact?
• How can technology be harnessed to collect and analyze data for
improved decision-making in this space?
Credit: RFUKCredit: Educate Girls
For more information on Brookings impact bonds research:
www.brookings.edu/product/impact-bonds/
Contact: egustafssonwright@brookings.edu
@EGWBrookings
IMPACT BOND EXAMPLES
EXAMPLE: INDIA EDUCATE GIRLS DIB
EXAMPLE: COLOMBIA WORKFORCE SIB
Investors
Outcome Funders
Service Providers
Provides upfront capital
Delivers services. Results verified by independent evaluator.
Pays for results
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