Translating Results-Based Financing from Theory to Operational Reality: Lessons from the Practical Application of RBF at the European Commission

Results-based financing (RBF) is one of several broad approaches to finance official development assistance (ODA) “that attempt[s] to connect at least a portion of payment to the verified achievement of results.” Despite some relatively high-profile programs and pilots—and broad interest and curiosity—RBF approaches have yet to penetrate the routine operations of large institutional grant- and contract-based funders, many of which are governed by complex bureaucracies, restrictive financial regulations, and deeply entrenched, risk-averse corporate cultures. The European Commission (EC) is one large and influential donor that has shown a long-standing interest in RBF approaches but is still in initial phases of implementation. Informed by a research partnership between the Center for Global Development (CGD) and EC Commission Directorate-General for International Partnerships (INTPA), this Policy Paper reflects on the experience and lessons learned in attempting to operationalize RBF at scale within a large funder of ODA, with important implications for the broader international development community. Starting at the macro level, it considers the institutional prerequisites for adoption of RBF within a donor agency—in this case, the European Commission/INTPA. It then zooms into the project-level design and negotiation process, including the choice of implementing partner (in this case a United Nations agency) and political and technical stumbling blocks. It concludes with a discussion of remaining challenges for broader use.