The opinion piece written by Maya Ziswiler, based on her interview with Avnish Gungadurdoss, Managing Partner at Instiglio, highlights the growing importance of development impact bonds (DIBs) as effective tools for achieving measurable impact in social services and meeting the Sustainable Development Goals (SDGs). DIBs are results-based contracts that shift the focus from inputs to outcomes, allowing for flexibility, innovation, and improved social and environmental outcomes.
The article notes that DIBs have already seen increased funding in the past two years compared to the previous eight, and it expects the volume of DIBs to grow significantly, reaching over $2 billion cumulatively by 2023.
DIBs offer several advantages. They incentivize organizations to improve outcomes and adapt their models to deliver better results. Governments, as funders, only pay when outcomes are certified and achieved, allowing them to justify spending to taxpayers and allocate resources more efficiently. Additionally, DIBs provide funding predictability during uncertain times, such as the COVID-19 pandemic, and enable implementers to innovate and adapt to new situations.
However, the article also acknowledges barriers to widespread adoption of DIBs. These include a shortage of outcome funding, a lack of capacity for implementers to incorporate feedback loops, and the need for strategic shifts toward targeting outcomes rather than input-driven approaches. To address these barriers, efforts are being made to share best practices, provide capacity building support, and pool funds to create diversified investment opportunities.
In conclusion, the article argues that as the world seeks effective and scalable financing tools to achieve the SDGs, DIBs have demonstrated their potential and are poised to become a valuable option for driving social impact.