In part one of this post, we shared two key principles for funders to keep in mind as they adapt results-based funding models to the volatile and rapidly shifting “new normal” of international development funding. These insights are based on the authors’ own experiences with results-based funding from various vantage points. If you haven’t yet read that post, we suggest you start there.

However, even as the need for adaptation is clear, we believe users of these models should be sure to retain three critical elements that not only work, but work well in a crisis: flexibility, accountability, and rigorous measurement.

What to Keep: Accountability, Flexibility, and Rigorous Measurement

In making adaptations and getting creative with results-based funding, it’s critical that projects not lose sight of crucial elements that make results-based funding instruments effective vehicles for social impact. For one, results-based funding commits funders and implementers to participant welfare and ensures it is at the heart of the problem-solving process as stakeholders navigate and adapt to the crisis. Second, implementers need the flexibility to chart their course when plans change. Last but not least, rigorous measurement is the only way to know whether a program is making an impact in a context where everyone may be negatively impacted, making it particularly critical in a volatile context.  We explain these points in more detail below.

Accountability to program participants

Accountability to the program participants is the most critical part of any results-based funding project, especially in times of crisis when those most impacted are the most vulnerable. This setup is unique to results-based funding models as desired outcomes for participants are enshrined in the contracts, formalizing a collective focus on and drive for success as the decisions of all parties are in pursuit of this end.

Flexibility

Flexibility means the ability to chart your own course when plans change, which isn’t how pay-for-service contracts work, but this feature is a key part of development impact bonds and is very suitable for volatile contexts when conditions and plans change quickly.

Rigorous impact measurement

As discussed in SSIR, development impact bonds should always be grounded in strong measurement. But never was this more true than during a crisis when everyone weathered the economic repercussions of the pandemic. The investors, Village Enterprise, and outcome payers felt it was worth continuing the project because they trusted the randomized control trial would detect impact even in a pandemic, even if the only impact of Village Enterprise was to mitigate the loss of income and assets compared to the control group. Had the researchers relied on a before and after comparison, in contrast to a randomized control trial, the research team likely wouldn’t have been able to detect that the program increased the resilience of participating households compared to those not in the program.

Read the full article about what to keep by Dianne Calvi, Avnish Gungadurdoss, and Jeff McManus at The Center for Effective Philanthropy.