Results-Based Funding via Development Impact Bonds Stakeholder Perceptions on Benefits and Costs
Abstract
Chapter 7 in the book “Social and Sustainable Finance for Social Innovation and Sustainable Development Goals (SDGs),” this paper provides novel evidence on the benefits and costs of Development Impact Bonds (DIBs) as a form of results-based funding. Analyzing data from seven recent DIBs in low- and middle-income counties, the chapter finds that the DIB’s provision of outcomes-focused risk capital helped enable a collaborative and adaptive approach to service delivery. This approach then generated evidence of blended returns and increased organizational capacity, as well as spurred cultural shifts towards more sustainable outcomes-based working. The chapter also uncovers a range of costs and challenges in DIB implementation – especially around garnering institutional buy-in, negotiating contract terms, and managing changing relationships.