Understanding the Implications of the COVID-19 Pandemic for the Global Impact Bond Market

Impact bonds, an innovative results-based financing tool, have been growing over the last twenty years providing increased access to capital for a variety of development initiatives. When the Covid-19 pandemic struck in 2020 and the world grappled with a major health crisis around the globe, development organizations faced new challenges in reaching their development outcomes. The Brookings Institution, a Washington-based think tank that conducts in-depth research on many policy issues including the impact bond marketplace, was interested in finding out what implications the Covid-19 pandemic had on impact bonds in low- and middle-income countries. A team of five SIPA students collaborated with Brookings to carry out a study on select fourteen impact bonds focusing on education, health, employment, social welfare, and environment. The team examined how impact bonds changed in areas of service delivery, monitoring and evaluation, outcome indicators, investments and repayments, and future developments. Based on their findings, the team laid out specific recommendations for the client's consideration to ensure the continued growth and future success of the impact bonds model.