Outcome-based financing: Impact bonds and outcomes funds

Since 2014, Brookings has tracked the development of the global impact bond and outcomes funds markets across all sectors, providing updates on the characteristics of contracted deals, as well as analyzing the potential and limitations of these outcome-based financing tools.

A particular focus of Brookings impact bonds and outcomes funds research is on education and early childhood development in low- and middle-income countries. We are particularly interested in the potential for innovative technology solutions to support data-informed decisionmaking and performance management. Thus far, the research has shown that impact bonds and outcomes funds have the potential to help address a wide range of social challenges in high-, middle-, and low-income countries. Some challenges remain in their design and implementation, and rigorous evidence is still lacking about the effectiveness of outcomes-based financing compared to traditional financing mechanisms.