Impact bond model turns project funding on its head | Paige McClanahan

From Aid | The Guardian Thu Dec 27 2012, 09:00:11

As foreign aid has begun to put more emphasis on outcomes, experts have been shaping a new model to finance development

Imagine that foreign aid agencies handed out money after development goals were achieved, and not before - that they paid only for the results of a project, not its implementation.

It's an idea that's not too far-fetched, thanks to the work of a group of development experts in the UK and overseas. Two years after the British government launched the world's first social impact bond, development experts are trying to adapt the model to foreign aid.

"It's a high-powered performance contract, to put it very simply," says Michael Belinksy, co-founder of Instiglio, a non-profit social enterprise based in Boston. "Government ... is used to funding social services up front and being very specific about the activities it funds. The social impact bond model turns that on its head."

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