WASHINGTON — As several recent development impact bonds test the model, organizations are increasingly thinking about whether the financial tool might be right for them.
But those involved with previous DIBs, or those who have spent time researching them, have some cautionary advice to offer. Because while early results have shown that in some cases DIBs may work, they are complex instruments, costly both in time and startup financial investment.
DIBs work by getting an investor to pay upfront for the costs of an intervention that is then measured by clear, predetermined metrics. If the intervention succeeds in achieving the goals, the outcome payer — typically a donor agency, foundation, or perhaps a company — will pay the investor back based on the performance.