Redefining Value From Outcome Based Funding to Tradeable Impact 2025

Challenges of traditional financing approaches1 Traditional approaches to solving social issues have led to significant progress over the past decades, yet they remain constrained, in part, by inefficiencies in resource allocation. A fundamental challenge stems from the disconnect between social value and economic value. Under the current system, achieving the United Nations’ Sustainable Development Goals (SDGs) appears increasingly unlikely. It is crucial to allocate resources more effectively to accelerate progress and address social issues that require greater support and investment. Meanwhile, it is equally vital to unlock private-sector investments to meet the SDGs’ financing requirements. Governments have historically played a central role in addressing social issues, but structural challenges hinder their ability to allocate resources in a timely, efficient manner. Social problems are increasingly interconnected and evolving at an unprecedented pace, making it difficult for government policies and budget frameworks to keep up and effect meaningful outcomes (instead of financing activities). Limited fiscal space further restricts governments from taking on the full responsibility of solving social issues alone, highlighting the need for cross-sector partnerships and market-driven innovation.For instance, global official development assistance (ODA) is expected to decrease by 30% ($74 billion) in 2025,4 reflecting a radical shift in budget priorities away from global development. Additionally, global government debt reached 97% of GDP in 2021,5 limiting fiscal flexibility and reducing the ability of governments to expand social programmes at the necessary scale. As defence and other urgent expenditures take priority, social funding often faces budget cuts, making long-term impact planning increasingly difficult.6 Corporations play a pivotal role in addressing social issues within and outside of their own value chains. Many companies continue to address these issues mainly through corporate social responsibility (CSR). However, CSR programmes are usually small in volume and not directly tied to business operations, making them even more vulnerable to budget cuts during economic downturns. The Financial Times Stock Exchange (FTSE) 100 Companies allocate an average of $23 million to corporate giving. At the same time, their average procurement spending is $5 billion – more than 400 times larger.7 While some companies have attempted to integrate impact more deeply, corporate giving among FTSE 100 companies declined by 8.3% in real terms in 2023,8 signalling that voluntary corporate efforts alone may not be sufficient to address systemic social challenges. Furthermore, a lot of global companies report difficulties in measuring the impact of their CSR initiatives,9 making it harder to justify long-term investments in social impact. Without clear financial incentives and concrete steps that align core business interests with societal benefits, social impact may be deprioritized in favour of short-term financial performance.1.1 Government approaches : structural limits and fiscal challenges 1.2 Corporate approach : the limits of traditional corporate social responsibilityTraditional funding models are failing to address the scale of today’s social challenges, leaving critical gaps in impact financing. Redefining Value: From Outcome-Based Funding to Tradeable Impact 7