Ideas to Action:

Independent research for global prosperity

Background

A Social Impact Bond (SIB) is a payment for outcomes model that seeks to shift attention, incentives and accountability to results; transfer risk and responsibility for performance to private investors and implementers; and drive value for money and efficiency gains throughout the cycle. A Development Impact Bond is a potential variation of the SIB model that would provide new sources of financing to achieve improved social outcomes in developing country contexts. As with SIBs, investors would provide external financing and only receive a return if pre-agreed outcomes are achieved. Funds to remunerate investors would come from donors, the budget of the host country, or a combination of the two. Financial returns to investors are intended to be commensurate with the level of success. This approach is intended to strengthen incentives for the innovation and adaptation necessary to deliver successful outcomes. This briefing note describes the structure of Social Impact Bonds being piloted in developed countries, and factors to consider in adapting the idea to international development. 

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