Features | April 24, 2018

Early data signals success of Social Impact Incentives

Dennis Price
ImpactAlpha Editor

Dennis Price

ImpactAlpha, April 23 – Clínicas del Azúcar, a string of low-cost diabetes clinics in Mexico, increased the penetration of its services to low-income populations over a six-month period. Blood sugar levels improved. For hitting those six-month impact targets, Clínicas earned a $64,000 payment on top of its top-line revenues from the Swiss development agency. Bjoern Struewer of Roots of Impact, which is monitoring the clinics’ impact, touted the payment as an early proofpoint for Social Impact Incentives, or SIINC, the pay-for-success model Roots of Impact designed. By boosting the revenues of verifiably high-impact companies, SIINC aims to nudge ventures towards greater impact and help them attract the financing they need to scale.

  • Test cases… The SIINC model is also being piloted with Village Infrastructure Angels, a solar-agtech company in Honduras. A third firm, Peruvian enterprise Inka Moss, which helps local moss harvesters access international markets, is joining the pilot.
  • SIINC’ing portfolios… Roots of Impact and Root Capital, the agriculture lender, have also secured funding from the Swiss Agency for Development and Cooperation, to apply impact-based financial incentives for lending to early-stage agricultural enterprises in Latin America.

Impact investors are testing a variety of impact-incentive models. As part of a new “Social Success Note” (see below) UBS Optimus Foundation will lower interest payments on a loan to Impact Water if impact targets are met. Separately, Beneficial Returns has agreed to waive the final payments on loans to Sistema Biobolsa and Iluméxico in Mexico if the firms achieve their stated impact goals.