Date ArticleType
7/18/2017 Member News
Do you know about these new types of impact investing? Learn about DIBS and SIBs.

Development impact bonds gain momentum

A student learns Kinh language, the official Vietnamese language, at the Lac Hoa Primary School in Soc Trang province, Vietnam. Photo by: Chau Doan / World Bank / CC BY-NC-ND

The recently-released second year results of one of the first development impact bonds offer evidence of the potential gains and challenges for the innovative financing tool. The timing for those lessons is apt, as a growing number of organizations and funders are now planning or considering launching DIBs.

The Educate Girls DIB aims to raise school attendance for girls and overall educational attainment among students in Rajasthan, India. At the end of the second year, the NGO’s interventions have reached 87.7 percent of the enrollment targets and 50.3 percent of the learning targets that were set. The bond seeks to enroll 79 percent of all out of school girls in the area and improve the education of 15,000 children in grades three to five, with 9,000 of them girls, in 166 schools.

In this and other DIBs, an investor provides upfront capital for an intervention that is implemented by a service provider. If the program achieves specific, closely-measured, and preagreed results, then the outcome payor — in the case of development impact bonds, usually a foundation or donor agency, though it could be a private corporation as well — pays the investor based on how well the intervention succeeds.

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