Redefining Value From Outcome Based Funding to Tradeable Impact 2025

Verification and integrity KEY QUESTION How to validate impact and ensure it is not manipulated? Trust is the currency of any impact market. Verification systems must ensure that reported outcomes are real, additional, persistent and not double-counted. This demands independent, third- party verification with sector-appropriate protocols. Verification should align with the monitoring, reporting and verification (MRV) logic used in environmental markets but adapted for social complexity. For example, verifying improved literacy may involve mixed-method evaluation, stakeholder interviews, and pre-post assessments, not just quantitative metrics. To scale, verification must become more cost- effective. Development impact bonds feature verification costs between $50,000 and $500,000 (although the latter includes experimental and quasi- experimental approaches).25 Reducing these costs requires standardized methodologies, automation via digital tools, and tiered assurance systems (e.g. high rigour for primary markets, lower cost for secondary trades). Technological innovations – e.g. internet of things (IoT), geotagging and blockchain – can help lower verification costs and increase real-time data availability. As the ecosystem for verification matures, the risk of economic value being drained from the countries and communities that are ultimately creating the impact could increase. A key criticism of carbon credits is that most verifiers are based in high-income countries, while interventions are located and organized in low- and middle-income countries. Governance KEY QUESTION Who oversees and ensures market fairness? Effective governance ensures legitimacy, protects stakeholders and enables adaptive evolution. A multistakeholder structure may govern tradeable impact markets. This may involve: –Community-mandated representatives to ensure agency and contextuality –Standard-setting bodies to define measurement, verification and valuation norms –Regulators to enforce compliance and transparency –Advisory groups representing civil society, buyers and impact organizations Options range from centralized bodies (e.g. an international social impact council) to decentralized models featuring DAOs. Whatever the structure, principles of inclusiveness, transparency and accountability enable long-term acceptance and sustainability. Governance also needs to manage market risks – such as gaming (prioritizing measurable over meaningful outcomes), equity issues (exclusion of grassroots actors) and systemic imbalances. Ethical oversight rooted in societal legitimacy is particularly important given the human-centred nature of social impact. Image credit: Enuma Redefining Value: From Outcome-Based Funding to Tradeable Impact 22