An Overview of Evidence Regarding the Impact of Impact Bonds as Innovative Financing Mechanisms for Education in Development Contexts

Abstract

This report provides a summary overview of the evidence regarding the impact of impact bonds (including Social Impact Bonds and Development Impact Bonds) in their application as innovative financing mechanisms for supporting education in development contexts. Within the education sector, impact bonds have emerged over the last 4-5 years as one innovative financing mechanism that uses private investment to support social development. From a developmental perspective, this emerging model encompasses two recent and clearly-defined global trends: firstly, an increased focus on programmes that deliver results and, secondly, an increased drive to support collaboration between the public and private sector (Innovative Financing Initiative 2014: v). Evidence suggests that there has been a significant growth in the application of impact bonds in a range of global settings, including for education in low- and middle-income countries (LMICs). These mechanisms are seen to be particularly valuable when operating in complex, fluid contexts (REACH 2017), and, with appropriate design, can also contribute towards the development of wider systemic capacity.