Impacts and Influence

Development Impact Bonds

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development impact bonds schematic

Development Impact Bonds (DIBs) finance development programs with money from private investors who earn a return if the program is successful (paid by a third-party donor). The outcomes to be measured are agreed upon at the outset and independently verified. With greater focus on outcomes instead of inputs, DIBs create space for more innovation, local problem-solving, and adaptation.

CGD and Social Finance UK jointly convened the Development Impact Bond Working Group and released a seminal report about the rationale for, and technical design of, Development Impact Bonds and how to create a market for this approach. Subsequently, the first DIB was launched in 2014 with the aim of improving educational access and quality for girls in Rajasthan, India, where 40 percent of girls drop out of school before reaching grade 5. In 2014, the UK Department for International Development became the first major bilateral donor to announce its support of DIBs and is funding work to develop a DIB that would tackle sleeping sickness in Uganda.