Beyond impact bonds: varieties of outcomes-based contracts around the world

The purpose of this report is to explore a variety of outcomes-based contracts to inform a discussion with ecosystem actors on how to develop a useful, expanded data collaborative that can gather information and share insights on these approaches.

We build on the Government Outcomes Lab-Ecorys systematic review on outcomes-based contracting and borrow the definition of outcomes-based contract from the systematic review protocol (Picker et al., 2021). Outcomes-based contracts involve the provision of any public service or social or environmental programme on behalf of a commissioner by non-governmental service providers where payment is contingent on the achievement of pre-defined outcomes (Picker et al., 2021, p. 5). This report describes the following types of outcomes-based contracts: a performance-based contract, a payment-by-results project, a public-private partnership, a public-private mix, a targeted grant, a sustainability-linked loan and an output-based aid agreement. None of these outcomes-based projects are covered in the INDIGO Impact Bond Dataset as they do not meet the definition of a social impact bond.

Furthermore, in consultation with several OBC stakeholders, we included additional approaches in which monetary incentives are not given to the delivery organisation, but are provided to different entities such as a country government (debt swaps) or an individual landowner (payment for ecosystem services), or payment is not contingent on outcomes in that particular project, but may be included as part of the model in other cases (alliance contracts). The way in which incentives work in these cases are probably very different from how they operate in a “typical” outcomes-based contract, and so we consider them outside the scope of the main report.