UN FfD4 3rd PrepCom Side Event on Outcomes-Based Financing

On February 14, 2025, the OECD and the Outcomes Finance Alliance (OFA) Secretariat convened a side event during the 3rd Preparatory Committee of the Fourth International Conference on Financing for Development (FfD4). The session, Outcomes-Based Financing: Putting Evidence into Action to Accelerate SDG Progress, examined the current state of the evidence on outcomes-based financing (OBF) and its role to enhance the effectiveness and efficiency of development financing, strengthen accountability, and promote country ownership—all priorities for the FfD4 agenda.

A key takeaway from the discussion was that FfD4 presents a pivotal moment to advance the global financing agenda beyond funding volumes to focus equally on the quality and effectiveness of spending —ensuring that every dollar drives measurable progress towards the SDGs. OBF can serve as a powerful mechanism to both mobilize resources and maximize their impact. The discussion also underscored OBF’s potential to coordinate diverse funding streams, bridge public and private sector investments, and support systems strengthening at the national and local levels.

The event opened with remarks from the co-hosts, the OFA Secretariat and OECD, which highlighted the importance of ensuring that the lessons on OBF are shared, understood, and applied. By fostering a common understanding, the goal is to help mainstream the use of OBF where it adds the most value — and avoid its application where conditions are not conducive to success. The OECD also highlighted its efforts to develop internationally recognized guidance on OBF, which will support governments, multilateral development banks, donors, and the private sector in adopting best practices.

Key Takeaways from the Discussion

OBF as a Driver of Effectiveness and Accountability: Evidence suggests that OBF can improve outcomes by linking financing to results, fostering stronger accountability mechanisms, and enhancing performance management. However, systematically consolidating and analyzing fragmented evidence remains a challenge. Systematic research and real-time learning are crucial to ensuring OBF is continuously refined based on what works.
Ensuring Value for Money: OBF requires investment in performance management and monitoring, but it also has the potential to drive efficiencies by ensuring funds are directed toward measurable outcomes rather than activities. A key takeaway was the need for further comparative analyses to assess whether OBF delivers greater value relative to traditional financing approaches.
Empowering Governments and Strengthening Systems: OBF has demonstrated the potential to strengthen government systems by enhancing data collection, fostering accountability, and enabling performance-driven policy adjustments. By aligning financing with national priorities and creating structured incentives for results, OBF helps put governments in the driver’s seat—enhancing their ability to coordinate diverse funding streams and leverage the expertise of multiple partners. In some cases, OBF has influenced governance structures and supported localization efforts by promoting local ownership and capacity building.
Bridging Public and Private Financing: OBF has the potential to serve as a bridge to mobilize new pools of capital, particularly from private impact investors. Aligning OBF initiatives with impact investor priorities—such as impact measurement and risk mitigation—can attract additional funding for development efforts. This ability to blend financing streams makes it a key tool for leveraging the multiplicity of actors in development finance.
Balancing Rigor with Pragmatism: While rigorous evidence and data-driven approaches are essential, OBF must also remain practical and responsive to real-world challenges. The discussion highlighted the importance of real-time learning, adaptive program design, and cross-sector collaboration. Sharing insights and best practices between researchers and practitioners can contribute to deeper and broader learnings across the OBF ecosystem.

A panel discussion moderated by the UK Foreign, Commonwealth & Development Office (FCDO), featured leading OBF researchers and experts from the Brookings Institution, the Government Outcomes Lab at the University of Oxford (GO Lab), and the UNICEF-hosted Education Outcomes Fund (EOF). Based on the growing body of evidence over the last 15 years, the panel explored key lessons on what works, under what conditions, and what is needed for the future of the OBF learning agenda.

This session marked an important step toward the FfD4 conference in Seville, where final commitments and frameworks for financing sustainable development will be shaped. The insights from this event will contribute to ongoing FfD4 discussions on strengthening the efficiency and effectiveness of development financing. By focusing on outcomes rather than activities, OBF offers a framework to ensure that development financing is more effective, accountable, and evidence-driven in achieving SDG targets.

Click here to watch the recording.

The Governing Committee of the Outcomes Finance Alliance includes SECO (State Secretariat for Economic Affairs, Switzerland), the UBS Optimus Foundation, and the UK Foreign, Commonwealth & Development Office (FCDO), with Levoca LLC serving as the Secretariat.

UN FfD4 3rd PrepCom Side Event on Outcomes-Based Financing

Get the latest updates via email

Quick Links