Outcome-based financing is an innovative way to leverage markets to fund socially impactful projects that can be difficult to finance using conventional models. Amie Fleming of Quantified Ventures, a D.C.-based capital firm specializing in the application of outcome-based financing to environmental, public health, and community-development initiatives, joins us to explain how it works.
One of the challenges of sustainability-focused projects is that their positive impacts often aren’t felt until years after the projects begin. This can sometimes make it difficult to get investors to put money behind what they might see as uncertain future results. In recent years a potential solution has emerged in the financial world: outcome-based financing leverages markets to fund impactful projects that might otherwise be difficult to finance. It has been successful in helping cities invest in things like green stormwater infrastructure and climate resiliency, making agriculture more sustainable and economically stable for farm communities, and putting carbon-sequestering trees in the ground on reclaimed mine lands.
“We want to put finance where it’s impactful and where it achieves outcomes we want to see in the world,” said Amie Fleming, Associate Director at Quantified Ventures.
A lot of what we end up doing is playing this translator role between the world that understands economics and finance and the world that lives and breathes this work.
Quantified Ventures (QV) is a D.C.-based capital firm specializing in the application of outcome-based financing to environmental, public health, and community-development initiatives. They’re also a key partner in PEC’s growing reforestation program. PEC started working on abandoned mine land reforestation over five years ago, beginning with small-scale projects on public lands and expanding to larger projects. We have been working with QV for nearly two years as we pursue larger and more expensive reforestation projects. According to Fleming, reforestation projects are a natural fit for the outcome-based financing model.
“The clear choice on all of this was carbon. Planting trees is going to generate significant carbon benefit. So our model the we’ve been working on together is to leverage the carbon credits to help finance upfront the ability to do reforestation,” said Fleming.
Carbon credits are generating a lot of interest in both the private and nonprofit sectors. For reforestation projects, they’re a way to measure the future impact of the seedlings being planted.
“Our end goal is certainly not to monetize the environment and monetize public goods,” said Fleming. “We think those are valuable for everyone in an intrinsic way, but I think a lot of what we end up doing is playing this translator role between the world that understands economics and finance and the world that lives and breathes this work and understands how valuable this is.”