Impact-linked Finance - Scaling Up

Today, there is significant traction for Impact-Linked Finance, which is driven by an increasing number of innovators across the globe. As more evidence emerges with each application, the number of ILF transactions will rise rapidly in the future. Today, there are several new funds and facilities that explicitly embed impact incentives into their investment approaches.

While demand from funders for ILF implementation is high and ever increasing, high-quality implementation is the main bottleneck for scaling with just a few organizations capable to implement ILF in an effective way and a few funders with sufficient knowledge to get involved directly.

Switzerland has co-invented ILF and should maintain high visibility in the future while saveguarding high quality, and establishing ILF in particular as an innovative, additional instrument for achieving the SDGs, with a focus on poverty reduction and inclusion. SDC needs to initially support ROI in sharing risks in this innovative, but risky move forward towards a digital platform.

Contribute to poverty reduction, inclusion and the achievement of the SDGs

• Net additional income generated and decent job creation facilitated
• Equitable access to goods and basic services improved, in particular for low-income households
• Gender equality improved

Indirect target group are low-income households, in particular female headed in LIC and LMIC. As this project is creating the infrastructure for more ILF programmes, the potential indirect outreach is in the millions of low-income households.
Direct target groups are

a) ILF implementer staff and organizations (113 implementers per year 4 on platform registered)

b) Outcome payers staff and institutions (27 organizations)

1. More Impact-Linked Finance projects/programmes/transactions and of good quality implemented, with a particular focus on gender equality
2. Private and public sector resources (financial and more) for the attainment of SDGs mobilized, leveraged, catalyzed

Expected results:  

1. ILF implementer staff and organizations have interest, incentives, and the capabilities to structure and execute ILF transactions (push)
2. Outcome payers staff and institutions have interest, incentives, and the capabilities to plan, design, fund, and monitor ILF programmes (pull).
3. ILF Transaction and Community Hub platforms up and running, featuring gender equality inputs
4. ILF Collaborative up and running

Results from previous phases:   Several ILF projects running since 2016 have shown the effectiveness of ILF, documented by external evaluations and internal audits: supporting social and impact enterprises (SIE) is an effective way to reach out to hundreds of thousands or even millions of low-income households. Providing payments for outcomes is a particularly effective support to SIE, incentivizing them even further to produce impact.