But they enable governments or other funders to do what other models don’t allow: separate and transfer risk. One criticism is that impact bonds represent the ‘financialization’ of the public sector, in which policymaking is subordinate to the interests of the financial sector. The case for lotteries as a tiebreaker of quality in research funding If the project does not succeed, the investors lose their money, but the government does not. If the providers achieve their goals, the government pays 990,000 francs: 900,000 francs for the work and a 90,000-franc investment return. A broker finds one or more service providers that think they can achieve this at a cost of, say, 900,000 francs, as well as investors who agree to pay these costs up front - thus taking on the risk of the project - for a potential 10% gain if successful. For instance, say the Swiss government promises to pay up to one million Swiss francs (US$1.1 million) to service providers that achieve a measurable outcome, such as reducing illiteracy in a certain population by 5%, within a specified number of years. ![]() These would be issued to support public–private partnerships that promise strong accountability, no risk to the funding organization and a direct demonstration of impact.Īlthough as yet untested in academia, they would follow the same model as social impact bonds (SIBs), which some governments use to achieve social-policy goals. I propose another approach, which I call research impact bonds (RIBs). These approaches assume that the recipient will do great research, but have no guarantees and limited accountability. ![]() Funders award grants to the most-promising proposals or on the basis of researchers’ or organizations’ past achievements. ![]() As head of grant management at the Swiss National Science Foundation, I have spent a lot of time thinking about how grants are used to fund research, through processes that have changed little since the 1940s.
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