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“Social impact incentives” introduced in Mexico and Honduras

Social impact incentives are a form of pay-for-success financing that offer incentive payments to businesses for proven impact.

They effectively act as “bonus” payments on top of a company’s normal revenue stream.

As part of a $1.6 million pilot, Clínicas del Azúcar, a group of low-cost diabetes treatment facilities in Mexico will be be eligible for up to $275,000 for extending diabetes treatment and prevention — and success rates — for low-income patients.

Village Infrastructure Angels, a solar agtech company that supports women entrepreneurs and farmers, can earn up to $195,000 for helping to build women-run community businesses.

Unlike social impact bonds, social impact incentives focus on scaling the “supply” of impact, rather than specific outcomes. The goal is for the additional revenues to make the ventures more attractive to other investors.

The pilot, designed by German impact consultants Roots of Impact, was approved in 2015 by the Swiss development agency and is being implemented in Latin America by the Inter-American Development Bank.

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