Paying for outcomes in

service delivery: Impact

bonds

Dr. Emily Gustafsson-Wright

Fellow, Brookings Institution

IMPACT BONDS PRIMER

RESULTS-BASED FINANCING

Funding is tied to pre-agreed and verified results

Results Based Aid

Development Impact Bond

Social Impact Bond

Performance Based Loan

Performance Based Grant

Prize Based Challenge

Performance Based Contract

Source: Instiglio

IMPACT BONDS: CONFLUENCE OF 3 THINGS

BASIC STRUCTURE OF AN IMPACT BOND

1. The investor provides upfront capital to the service provider to deliver services to a population in need.

2. An independent evaluator verifies whether the service provider has achieved pre-agreed impact metrics

3. The outcome funder (Govt if SIB and 3rd party if DIB) repays the investor if the metrics are achieved.

GLOBAL LANDSCAPE (AS OF OCTOBER, 2019)

168 IMPACT BONDS CONTRACTED GLOBALLY

ACROSS 30 COUNTRIES

Source: Brookings Global Impact Bond Database, October 2019

1-2

3-15

16+

SECTORS: IMPACT BONDS CONTRACTED GLOBALLY

HEALTH

SOCIAL WELFARE

EMPLOYMENT

EDUCATION

CRIMINAL JUSTICE

ENVIRONMENT &

AGRICULTURE

Source: Brookings Global Impact Bond Database, October 2019

EXAMPLES

COLOMBIA WORKFORCE SIB

Source: SECO, 2017

EDUCATE GIRLS DIB

Source: Instiglio

SOUTH AFRICA ECD SIB

Source: Volta

The 10 Common Claims

Credit: Educate Girls

Our impact bonds research: brookings.edu/product/impact-bonds/

Contact: egustafssonwright@brookings.edu

@EGWBrookings

WORKSHOP SESSION

Workshop Session: Impact bonds

What is the social challenge you are trying to resolve?

___________________________________________________________________________

What are some of the key barriers you face?

1._________________________________________________2._________________________________________________3. _______________________________________________

Q1: What is the problem you are trying to solve?

Do you think funding outcomes (not inputs) might remove

some of these barriers? Why?____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Note: Funding on outcomes could

encourage adaptability, improve data, add

accountability

Workshop Session: Impact bonds

What would success look like? What outcomes could you use

to measure it?1._________________________________________________2.________________________________________________

3. _______________________________________________

4. _______________________________________________

5. _______________________________________________

Q2: What does success look like?

Is there good (existing) data on these outcomes? Can you

access this data?____________________________________________________________________________________________________

Note: Funding on outcomes may be most

appropriate where inputs are complex and

outcomes are simple

Workshop Session: Impact bonds

Service provider landscape: Are service providers already tracking/delivering on outcomes? Do they have proven interventions?__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Q3: Does an impact bond make sense?

Do service providers need:i) Capacity-building?ii) Upfront capital to deliver

interventions?____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Note: Impact bonds typically make sense

when service providers need capital and/or

capacity building