What Is the Outcomes Finance Alliance OFA?
About the Outcomes Finance Alliance (OFA)
The Outcome Finance Alliance (OFA), formerly known as the Impact Bonds Working Group (IBWG), serves as a forum for organisations interested in paying based on results to be able to identify options for greater collaboration, and lead the design and testing of strategies that will help the international development community and countries use pay-for-success approaches more cost-effectively and at scale. Since 2018, OFA members have worked collaboratively to make recommendations and launch concrete initiatives to address the main barriers to mainstreaming of pay-for-success financing approaches and move the market toward maturity. The Outcomes Accelerator is a key initiative of the The Outcome Finance Alliance (OFA).
The Outcome Finance Alliance (OFA) Objectives
To design and test strategies to make pay-for-success financing instruments a cost-effective and scalable proposition to support development agencies and governments to deliver on the UN Sustainable Development Goals.
The The Outcome Finance Alliance (OFA) Community
The OFA is an outcome-funder-led initiative that is underpinned by industry-wide collaboration. The Outcome Finance Alliance (OFA) engages with a wide pool of participants from the impact bond ecosystem, including donors, governments, investors, service providers, technical advisors, evaluators and academics.
Objectives
The objective of the Impact Bonds Working Group (“the Working Group”) is to design a strategy that will help members use impact bonds and related pay-for-success instruments effectively at scale and contribute to launching quality development projects.
The Working Group will contribute to realization of the Paris Declaration on Aid Effectiveness, 2030 Agenda for Sustainable Development through the Sustainable Development Goals, and other relevant international agreements and declarations.
The Working Group will achieve these objectives through the following activities and workstreams:
1
2
3
4
Activities
Identifying barriers and solutions to scale
Community building through workshops and conferences
Developing and testing strategy options
Commissioning research and knowledge sharing
Identifying potential areas for collaboration
Communicating progress to the market
The Outcome Finance Alliance (OFA) Recommendations
The Outcome Finance Alliance (OFA) members identified five concrete areas and initiatives to accelerate the market’s capacity to deploy outcomes funding cost-effectively and at scale. These initiatives will serve as a catalyst to move the outcomes-based finance market toward maturity by targeting the most serious barriers to scale. The Outcome Finance Alliance (OFA) members have worked diligently to advance all five areas that were recommended into concrete actions and initiatives. The Outcomes Accelerator is actively driving the implementation of these initiatives, shaping its mission and purpose
Priority activities:
Accelerating pipeline, building capacity and coordinating and mobilising outcome funding
Priority activities:
Building up evidence and knowledge sharing infrastructure on pay-for-success in developing countries
Priority activities:
Engaging investors and mobilising private finance into hard-to-reach SDGs through outcomes-based instruments.
Priority activities:
Building markets for pay-for-success approaches through country-focused outcomes funds in Middle Income Countries.
Priority activities:
Accelerating Outcomes-Based Commissioning for high-priority development challenges through Demonstration Outcomes Funds
Sub Groups
The first meeting of the IBWG was hosted by the Ministry of Foreign Affairs of Belgium in Brussels on May 15-17, 2018. This meeting convened representatives from 23 development organizations. During the meeting, Members deepened their collective understanding of core barriers and challenges facing Impact Bonds, and prioritized preliminary strategy options. These strategy options will be further explored and defined in sub-groups with the task of developing detailed prototype strategies before the next IBWG meeting. The sub-groups and strategy areas established by the Working Group Members for further development following the first workshop were:
- Sub-Group 1
- Sub-Group 2
- Sub-Group 3
- Sub-Group 4
Capacity Building, Standardization, and Knowledge-Sharing, Members will focus on the actions to build capacity, and to better standardize practices in order to reduce transaction costs, increase efficiency, and improve transparency. This group will examine “Centers for Excellence” and an ‘Impact Bond Toolkit’ to mainstream terminology, standardize business processes, provide templates for contracts, design memos, investor reports, due diligence, and best practice principals for Impact Bond procurement and calculation of risk/return, among other potential activities. A possible electronic platform for the dissemination of best practices, templates, relevant research, cases, rosters and other resources will be examined as well as ways to leverage emerging technologies, such as blockchain, more effectively.
Demonstration Outcomes Funds by Thematic Area, Members will focus on the current low volumes of outcome funding for SDGs through $100m-$500m multi- donor Demonstration Fund(s) that would commission multiple pay-for-outcomes contracts in specific thematic area(s) to improve key SDGs through greater aid effectiveness, innovation, learning and scale. Such a mechanism could attract a larger pool of funding around select thematic areas and by so doing, provide expertise for designing commissions and appraising proposals, develop streamlined procedures (e.g., contracts, metrics) to reduce transaction costs, and provide a clear signal to the provider and investor market, and serve as a platform for accelerating learning by donors.
Outcomes Market Funds for Middle Income Countries, Members will explore the viability of regional or country-specific “Outcomes Fund(s)” in promising markets such as India and Colombia. The funds would aim to blend donor and MDB financing with local public and private sector funding for outcomes, as means to leverage scarce ODA resources to help national governments transition public spending toward results-based models in select sectors. The final goal would be to support the adoption and mainstreaming of results-based financing into domestic budgetary allocations, and to put in place an ecosystem that would facilitate a replicable model for Middle Income Countries in South Asia, Africa and Latin America.
Investor Engagement, Members will explore mechanisms to attract and aggregate investors in a scalable Impact Bond market. The Group will also examine the transition from single transactions to a “fund” or “platform” model in order to increase scale and to attract more investors of different types at lower transaction costs. Toward this end, Sub-Group 4 will undertake Outcome Funder Mapping, engage in a fact-finding exercise with investors who have expressed interest in Impact Bond operations, and will develop early concepts and themes for Development Impact Bonds (DIBs), including opportunities for blending donor and commercial capital to maximize finance for development and aid effectiveness.
The Outcome Finance Alliance (OFA) Timeline
2018
Zurich, Switzerland
18
January
Launch of the Impact Bonds Working Group (IBWG)
Outcome Fund Roundtable
Brussels, Belgium
15 - 17
May
First Impact Bonds Working Group (IBWG) Meeting
2.5-day workshop to define priority barriers and strategy options to make impact bonds a more cost-effective and scalable proposition.
Four sub-groups formed.
Canada
8
June
Development Committee on Enterprise Development
Presentation made by Liliana de Sa from SECO on behalf of the Executive Committee of the Impact Bond Working Group
Barcelona, Spain
9 - 11
July
First Impact Bonds Working Group (IBWG) Annual Conference
Focus on refining strategy options, receiving input and feedback from larger expert community, and defining action steps for bringing forward concrete initiatives
2019
Washington DC,USA
26 - 27
February
Second Impact Bonds Working Group (IBWG) Annual Conference
Focus on refining prototypes of two concrete initiatives (the Outcomes Accelerator Platform Partnership and the Outcomes Finance Alliance (OFA) Knowledge-Sharing Platform) with input and feedback from larger expert community, and defining action steps to operationalize the initiatives.
2020
London,UK
3
March
Third Impact Bonds Working Group (IBWG) Annual Conference
Focus on sharing learnings on the diversity of initiatives in the market; deepening conversations on key topics and keeping the momentum towards market maturity; providing networking opportunities for different market actors through the growing IBWG community; and providing updates on initiatives of IBWG members.
2022
Virtual
28
July
Outcomes Accelerator Virtual Information Session
Virtual information session on the Expression of Interest process for the Outcomes Accelerator's Pipeline Acceleration program.
Virtual
4
August
Outcomes Accelerator Virtual Information Session
Virtual information session on the Expression of Interest process for the Outcomes Accelerator's Pipeline Acceleration program.
London,UK
12 - 13
July
Fourth Impact Bonds Working Group Annual Event (IBWG)
2023
USA
7
November
The Impact Bonds Working Group (IBWG) is renamed the Outcomes Finance Alliance (OFA)
2024
Zurich, Switzerland
18 - 19
March
The Outcome Finance Alliance (OFA) Summit
