Development Impact Bonds (DIBs) apply the social impact bond model to international development contexts, with outcomes typically funded by development agencies or philanthropic organisations rather than government.
The DIB structure
Like a domestic social impact bond, a Development Impact Bond involves:
- Private investors providing upfront working capital
- Service delivery by an implementing organisation
- Outcome payments from a development funder (e.g., FCDO, ECHO, or foundations)
- Returns to investors based on independently verified outcomes
Challenges specific to international development
International development investments face additional complexities including currency risk, political risk, measurement challenges in difficult operating environments, and the need for culturally sensitive outcome frameworks.