Development impact bond

'''Development impact bonds''' ('''DIBs''') are performance-based investment instruments intended to finance development programmes in low resource countries, which are built off the model of social impact bond (SIB) model. In general, the model works the same: an investor provides upfront funding to the implementer of a program. An evaluator measures the results of the implementer's program. If these results hit a target set during the implementation period, an outcome payer agrees to provide investors a return on their capital.<ref>{{Cite web |url=http://www.socialfinance.org.uk/investing-in-social-outcomes-development-impact-bonds/ |title=Social Finance | Investing in Social Outcomes: Development Impact Bonds |access-date=2015-02-07 |archive-url=https://web.archive.org/web/20150924103228/http://www.socialfinance.org.uk/investing-in-social-outcomes-development-impact-bonds/ |archive-date=2015-09-24}}</ref> This ensures that investors are not simply engaging in concessionary lending.{{Citation needed|date=April 2026}}

In 2012, as the first domestic SIBs were being arranged in Massachusetts, a group of students at the Harvard Kennedy School, formed Instiglio Inc. as a specialized intermediary to bring impact bonds to foreign aid projects in low and middle-income countries.<ref>{{Cite news |last=Kirsner |first=Scott |date=2012-05-20 |title=Winning the competition for ideas |url=https://www.bostonglobe.com/business/2012/05/19/winning-competition-for-ideas/I1eA4PfBoeaEzVJvkiBIdP/story.html |work=Boston Globe}}</ref><ref>{{Cite journal |last1=Belinsky |first1=Michael |last2=Eddy |first2=Michael |last3=Lohmann |first3=Johannes |last4=Georgea |first4=Michael |date=2014 |title=The application of social impact bonds to universal health-care initiatives in South-East Asia |url=http://www.who-seajph.org/text.asp?2014/3/3/219/206744 |journal=WHO South-East Asia Journal of Public Health |volume=3 |issue=3 |pages=219–225 |doi=10.4103/2224-3151.206744 |doi-access=free |pmid=28612806 |issn=2224-3151 |access-date=2026-04-17}}</ref>

In June 2014, Instiglio, Children's Investment Fund Foundation (CIFF), Educate Girls, IDinsight and UBS Optimus Foundation launched the first DIB.<ref>{{cite web|url=http://www.cgdev.org/blog/first-development-impact-bond-launched|title=First Development Impact Bond Is Launched|publisher=|date=2014-06-17|website=Center for Global Development|last=Perakis|first=Rita|archive-url=https://web.archive.org/web/20140624025152/http://www.cgdev.org/blog/first-development-impact-bond-launched|archive-date=2014-06-24}}</ref> The objective of the DIB was to reduce the gender gap in education in rural Rajasthan, India by getting girls into school and learning. UBS provided an investment to an Indian NGO, Educate Girls. After three years, CIFF (the outcome payer) paid based on enrollment and learning outcomes that IDinsight evaluated annually. UBS Optimus Foundation received its investment back plus a return on investment based on the performance of the program. A 2018 review showed that the program resulted in a 52 percent return on investment because of high achievement of the targets.<ref name=":0">{{Cite journal |last=Starr |first=Kevin |date=2018-12-13 |title=Development Impact Bonds: There's Still No Free Lunch |url=https://ssir.org/articles/entry/development_impact_bonds_theres_still_no_free_lunch |journal=Stanford Social Innovation Review |publisher=Stanford University |doi=10.48558/G1B2-EQ03 |access-date=2019-03-21}}</ref> The same study noted that a significant learning was that the high transaction costs can outstrip the cost of the program itself, but that these remain constant regardless of the program size.<ref name=":0" />

In 2014, Palladium International hosted a conference on rapidly expanding the use of DIBs in developing countries.<ref>{{Cite web |url=http://www.grminternational.com/detail/development_impact_bonds_conference#sthash.pxccWyiV.dpuf |title=Development Impact Bonds Conference |access-date=2015-02-07 |archive-url=https://web.archive.org/web/20150422035152/http://www.grminternational.com/detail/development_impact_bonds_conference#sthash.pxccWyiV.dpuf#sthash.pxccWyiV.dpuf |archive-date=2015-04-22 }}</ref> In 2017 Palladium contracted as the intermediary for the Utkrisht Impact Bond supporting maternal and newborn health in Rajasthan, with investment from UBS Optimus and outcome payments from USAID and Merck for Mothers.<ref>{{Citation |title=The Utkrisht impact bond. Improving maternal and newborn healthcare in Rajasthan, India. Retrieved from |date=2018-09-05 |url=https://www.usaid.gov/sites/default/files/documents/1864/Utkrish-Impact-Bond-Brochure-November-2017.pdf |access-date=2026-04-17 |publisher=USAID |archive-url=https://web.archive.org/web/20180905111727/https://www.usaid.gov/sites/default/files/documents/1864/Utkrish-Impact-Bond-Brochure-November-2017.pdf |archive-date=5 September 2018 }}</ref><ref>{{Cite report |last1=Emily Gustafsson-Wright |last2=Izzy Boggild-Jones |date=2019 |title=Paying for Education Outcomes at Scale in India |url=https://files.eric.ed.gov/fulltext/ED602924.pdf |publisher=Center for Universal Education}}</ref>

The Center for Global Development and Social Finance working group on DIBs convened in 2012 led by Elizabeth Littlefield. The working group published its report including numerous recommendations in 2013.<ref>{{cite web|url=http://www.cgdev.org/working-group/development-impact-bond-working-group|title=Development Impact Bond Working Group|publisher=}}</ref><ref>{{Cite report|last=Development Impact Bond Working Group |title=Investing in Social Outcomes: Development Impact Bonds |url=https://www.cgdev.org/sites/default/files/investing-in-social-outcomes-development-impact-bonds.pdf |publisher=Center for Global Development, Social Finance}}</ref>

The first work applying DIBs to neglected tropical diseases was led by H2O Venture Partners,<ref>{{Cite journal|last1=Coleman|first1=Paul Gerard|last2=Bardosh|first2=Kevin Louis|last3=Welburn|first3=Susan Christina|date=2016-11-17|title=Novel Financing Model for Neglected Tropical Diseases: Development Impact Bonds Applied to Sleeping Sickness and Rabies Control|journal=PLOS Neglected Tropical Diseases|language=en|volume=10|issue=11|article-number=e0005000|doi=10.1371/journal.pntd.0005000|issn=1935-2735|pmc=5113866|pmid=27855156 |doi-access=free }}</ref> supported by DFID and UBS Optimus, to develop case studies for the control of sleeping sickness and rabies.<ref>{{Cite web|url=https://www.cgdev.org/sites/default/files/investing-in-social-outcomes-development-impact-bonds.pdf|title=Center for Global Development - investing in social outcomes, development impact bonds|last=|first=|date=|website=}}</ref><ref>{{Cite journal|last1=Welburn|first1=Susan C.|last2=Coleman|first2=Paul G.|last3=Zinsstag|first3=Jakob|date=2017-03-09|title=Rabies Control: Could Innovative Financing Break the Deadlock?|journal=Frontiers in Veterinary Science|volume=4|page=32|doi=10.3389/fvets.2017.00032|issn=2297-1769|pmc=5343007|pmid=28337440|doi-access=free}}</ref>

A related development, pushed by the International Committee for the Red Cross and other partners, is the Humanitarian Impact Bond, designed for financing aid in conflict-affected areas.<ref>{{Cite web|url=https://www.icrc.org/en/document/worlds-first-humanitarian-impact-bond-launched-transform-financing-aid-conflict-hit|title=The world's first "Humanitarian Impact Bond" launched to transform financing of aid in conflict-hit countries|date=2017-09-06|website=International Committee of the Red Cross|language=en|access-date=2019-03-21}}</ref>

==References== {{Reflist}}

Category:Bonds (finance) Category:Social economy Category:Social finance