The article, written by Dianne Calvi, president and CEO at Village Enterprise, Avnish Gungadurdoss, the co-Founder and Managing Partner of Instiglio, and Jeff McManus, Senior Economist at IDinsight, emphasizes the importance of retaining three critical elements—flexibility, accountability, and rigorous measurement—in results-based funding models, even amidst the need for adaptation in the international development sector. These elements contribute to the effectiveness of results-based funding instruments in achieving social impact, particularly during times of crisis and volatility.
Accountability to program participants is crucial, especially when the most vulnerable are affected by crises. Results-based funding models formalize the commitment to participant welfare, ensuring that outcomes are prioritized and decisions are made in pursuit of those outcomes. This alignment among stakeholders allows for flexibility in navigating and adapting to changing circumstances, with the primary concern being what is best for the program participants.
Flexibility is a key feature of results-based funding models, particularly development impact bonds, that enables program implementers to chart their own course when plans change rapidly. The survey of impact bonds during the pandemic indicates that this flexibility allowed stakeholders to adapt service delivery and develop new components to address emerging needs. The ability to make data-driven and rapid adaptations is essential in volatile contexts.
Rigorous impact measurement is crucial for results-based funding models, especially during crises when economic repercussions are widespread. Strong measurement, such as randomized control trials, ensures that impact can be detected even in challenging circumstances. By maintaining rigorous measurement practices, funders can have confidence in the effectiveness of programs, even in times of crisis.
While adaptation is necessary in the face of uncertainty and volatility, funders must not overlook the importance of these key elements that drive program effectiveness. By scaling results-based funding models and incorporating these elements, the international development sector can continue to make an impact and improve the lives of those living in poverty cost-effectively.