Development Impact Bonds
Social Impact Bonds are a family of outcomes-based financing products, developed by Social Finance, in which social investors fully or partly pay for services to be delivered that improve social outcomes and the effectiveness of public sector spending.
Development Impact Bonds (DIBs) can provide new sources of financing from private investors to improve development outcomes. Public sector entities, including the governments of developing countries and donors engaged in those countries, face many of the same problems that the SIB model was responding to in developed countries. DIBs have the potential to improve the effectiveness of traditional donor-funded projects by shifting the focus onto implementation quality and the delivery of successful results, and introducing private sector actors who may be better-positioned than the public sector to take on the risks associated with innovation.
Challenges with how aid has worked to date, combined with the financial crisis and budgetary pressures, have heightened the pressure on aid agencies to demonstrate clear evidence of results. DIBs could represent an additional mechanism for outcomes-based approaches which donor agencies are exploring as a way to respond to these challenges.
Social Finance is working in partnership with the Center for Global Development to develop this new financing mechanism and has convened a Working Group of leading development and finance experts to steer this process.
More information can be found in the resources below: