Development-impact bonds are costly, cumbersome—and good

The Economist (07/12/2018)
  • Development-impact bonds are a novel way for charities to raise money.
  • These bonds are issued to financial institutions (investors) by charities who agree to meet certain outcomes.
  • If outcomes are achieved, a donors agree to repay the investors (+ bonus); if not, investor loses money.
  • Educate Girls (non-profit focused on Indian school girls, recipient of largest development-impact bond issuance) praised new issuance for increasing focus on generating positive results.
  • Given their complexity and high upfront costs, development bonds are unlikely to replace traditional donor funding.