The current global aid model is failing some of the world’s most vulnerable populations, but new and emerging funding mechanisms could offer a solution. Outcomes-based finance models can maximize impact, address inequalities, and benefit society, as EOF High-Level Steering Group Member Phyllis Costanza, Executive Committee Member Dolika Banda, and CEO Dr. Amel Karboul discussed during the recent EOF webinar ‘Finance for Good: How new forms of finance are transforming global development.’
These new forms of finance can help facilitate global recovery from the COVID-19 pandemic through addressing poverty, inequality, and unemployment. Though they largely operate on the margins of the current development model, the webinar panellists agreed we should scale the most effective new funding.
Outcomes-based financing involves translating intentions into meaningful action, tied to key outcomes. This starts at the top–it needs committed leadership, combined with bold execution and reassessed perceptions of risk. As Phyllis Costanza explained during the discussion:
“When financial institutions talk about driving impact we need to show what exactly we mean... We need a lot more money to go towards these [global] issues, and we need financial institutions to take more risk when it comes to addressing [them].”
Working collaboratively is also key, and public, private, and non-profit sectors must come together to facilitate these new ways of funding. The fundamental question when promoting partnerships for public purpose, Dr. Karboul asked, is:
“Are we actually funding them in the right way, and is our funding undermining the impact we want to achieve?”
Outcomes-based finance and impact bonds can actively benefit the communities that need them; in EOF’s case, the children most impacted by the global learning crisis. We must now continue to advocate for outcomes-based finance to fund effective international development to ensure better futures for the world’s most vulnerable.