1. Lay the operational tracks before your Impact-Linked Finance train can run

Before a fund manager can deploy an Impact-Linked Finance (ILF) program, a complete operational backbone must be in place. This is much like laying the tracks before the train can run. Grant-type assets require a legally compliant foundation that can receive, safeguard, and disburse donor funds. Dedicated bank accounts must be established for each program. Governance rules need to be defined. A compliance system must be aligned with international AML/CFT standards. Without these steps, even a well-designed incentive scheme can stall.

If you are unsure how to do this or simply want to get it done in the most cost-efficient and professional way, the ILFF, initiated by Impact-Linked Finance pioneers Roots of Impact and iGravity, has all the expertise you’ll need. The ILFF gives you a ready-made foundation from day one and frees you from spending months on legal and administrative setup.

2. Enter the donor universe and ensure to plug into the impact-first logic

If you have only managed traditional investment funds so far, you may think that you know the rules from A to Z. But with Impact-Linked Funds, you’re entering a parallel world. Here, the donor logic rules – and it’s very different from the investment capital type of fund management you’re used to. “A traditional fund administrator can manage investments, but not outcome-verified reward payments. The moment you introduce grant-type assets tied to impact, you’re operating in a different universe”, highlights Patrick Elmer, CEO of iGravity. ILF mechanisms follow donor logic, verification triggers, and sometimes dynamic pricing based on impact. Most administrators are not set up for this “impact-first” logic.

A fast track through the wormhole to the donor world is using the ILFF’s backbone infrastructure. It fills the knowledge gap and is built specifically for everything ILF, from cash incentives (SIINC) to investments with embedded impact rewards, fully compliant with donor requirements.

 

3. Before you start, cover the invisible work behind the scenes

Many new fund managers underestimate the work that Impact-Linked Funds will trigger behind the scenes. Understandably, they focus on shining on the stage by designing the right incentives. But it’s easy for them to overlook what it takes to legally and operationally execute them. Managing donor agreements, navigating anti-money-laundering requirements, or reconciling payments across multiple currencies can quickly become overwhelming. What seems like a small administrative detail can delay disbursements by months. The result can be a risky and expensive play, so it is better to ensure that you cover the invisible work behind the scenes before you begin. One of the benefits of using ILFF is that it quietly handles unseen complexities while you perform at your best as a fund manager and focus on what matters most: structuring impactful deals and working with the entrepreneurs.

 

“The fund manager stays in the driver’s seat. They choose the entrepreneurs and design the incentives. The ILFF simply removes the operational friction that would slow them down.”

 

Bjoern Struewer, Founder & CEO Roots of Impact

 

4. Get an assurance layer and create trust from the onset

As pointed out before, managing an Impact-Linked Fund is like entering a parallel universe with a new set of rules. Better to have an experienced guide by your side who shows you around, rather than risking falling through the cracks. Don’t burden yourself with unpredictable dangers from donor-aligned grant hosting, impact-verification-linked disbursements, AML/CFT, governance compliance, asset protection, and transparent reporting. Instead, you can count on an established, audit-ready system.

Patrick Elmer shares his experiences in this respect: “For us, the ILFF serves as the assurance layer: funders trust the governance, managers trust the operations, and entrepreneurs feel the incentives flow when outcomes are reached. This reduces risk for all parties involved.” And finally, there’s the convincing aspect of efficiency and shared infrastructure.

 

“Instead of every fund manager setting up their own foundation, we act as a shared home for grant-type assets. It’s efficient, trusted, and ready to operate from day one.”

 

Aarti Mahajan, Chief Operating Officer ILFF

 

Sowhy not be smart and cautious and check out what the ILFF can offer? For more details, find our FAQs, revisit our services, and reach out to us to learn more about how we can make your fund manager’s life easier and safer!

A trusted back-end service provider for Impact-Linked Fund Managers

With 4+ years of unique operational experience in its belt, the ILFF acts as a trusted partner and provider of a well-oiled back-end machinery that makes the lives of Impact-Linked Fund managers smooth and allows an easy “plug-and-play”. Imagine you’d have to search for the right legal structure to manage grant money, negotiate contracts, and convince funders that your governance is trustworthy enough to manage their capital. Such operational headaches can be painful and eat up plenty of precious time and margins. And they can also distract you from your core task as a manager. “The ILFF allows us to focus on what actually matters: supporting entrepreneurs with Impact-Linked Finance”, confirms Patrick Elmer.

If you have never managed an Impact-Linked Finance program, fund or facility before, the benefits are specifically strong. The ILFF provides a solid foundation from day one, with clear governance, transparent processes, and credibility with funders. From asset protection to compliance systems to risk management to knowledge sharing, the ILFF has a lot of value to offer to fund managers, whether beginners or experts in Impact-Linked Funds.

Examples from practice: weeks of legal and structural work saved

“One very tangible example of ILFF’s value is how it simplifies our work with financial instruments”, explains Patrick Elmer, who is also a Board member of the ILFF. “Whether we are structuring an Impact-Linked Loan, Social Impact Incentives (SIINC), or an Impact-Ready Matching Fund (IRMF), we don’t have to reinvent the wheel every time”. To fund managers like iGravity, the ILFF provides clear, proven templates and transaction frameworks that they can adapt quickly.

 

“This not only saves us weeks of legal and structural work but also gives funders the confidence that we’re operating within a robust and tested system. It’s like having a well-built toolbox ready whenever we need it. We can spend less time on paperwork and more time working with entrepreneurs.”   

Patrick Elmer, iGravity

 

In the meantime, the ILFF supports 4 Impact-Linked Funds, with 2 follow-on funds in the making. “I’m very proud to manage the ILFF’s service offering as the COO”, says Aarti Mahajan, who joined the ILFF in 2024 and brings strong experience as a program manager and operations lead to the table. “We have a highly experienced Board team, which also includes two independent members with Peter George from Spark+ Africa Fund, and Margot Quaegebeur with her 20+ years of impact investing expertise.” Aarti is the first point of contact for Impact-Linked Fund managers, who are curious to investigate how the ILFF can release them from a bulk of operational burdens. Interested fund managers can reach out to ILFF to learn more about its services and explore how collaboration could work in practice. “There are a few steps that need to be done in the beginning, but then our plug-and-play solution fully kicks in”, Aarti points out.

 

In the end, what Impact-Linked Fund managers and their funders want most is to optimize impact.

“To me, our mission is very clear: We want to empower entrepreneurs to deliver the best possible impact by providing financial rewards for the positive outcomes they create. Better terms for better impact. The fact that the ILFF allows Roots of Impact and other Impact-Linked Fund managers to do that in a smooth, reliable and simple way, is a huge value add for us and for others who truly care about impact.” 

Bjoern Struewer, Roots of Impact

 

So, are you planning to launch and manage an Impact-Linked Fund and are curious about more details? Then read our FAQs and reach out to us to learn more about how we can make your lives so much easier!

Resources: The FIWAM Growth Program – Championing Financial Solutions for Women Migrants /

Would you like to know how the ILF for GIF accelerates the growth of FinTech startups developing gender-inclusive financial solutions? The FIWAM program by Seedstars is a great example.

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The Financial Innovations for Women Affected by Migration (FIWAM) Growth Program is the second accelerator program implemented under the Impact-Linked Fund for Gender-Inclusive Fintech (ILF for GIF). In partnership with Seedstars, the program aimed to accelerate the growth of FinTech startups developing gender-inclusive financial solutions. By addressing the significant barriers women migrants face in accessing financial services, the FIWAM growth program supported innovative enterprises creating tailored solutions for this underserved population.

A powerful growth program for 29 FinTech startups from MENA, Sub-Saharan Africa and Asia

The program’s objective was pegged on building a strong pipeline of investable companies, nurturing them to develop and/or improve their already existing market-fit solutions addressing these crucial societal challenges. This was achieved by adopting global best practices tailored to their respective contexts across Asia, the Middle East and North Africa (MENA), and Sub-Saharan Africa. By providing technical assistance, hands-on support, and network building, the program strengthened their business and impact management capacities, increasing their attractiveness to investors.

To maximize the impact, the accelerator employed a highly individualized approach. Each FinTech underwent a comprehensive needs assessment at the beginning of the program, allowing them to receive customized support from service providers in areas critical to their business growth. This tailored assistance ensured that the unique challenges and opportunities faced by each startup were effectively addressed. The program successfully engaged 29 FinTech start-ups from MENA, Sub-Saharan Africa, and Asia, 31% of which were women-led, till its completion. The engagement covered areas such as impact measurement, product development, and growth strategies. The FIWAM program culminated in 3 regional events in Dubai, Nairobi, and Phnom Penh, and 1 global event in Malta. These events played a crucial role in providing fintech startups with the necessary exposure and connections to scale their impact and growth. Additionally, the program engaged 26 mentors, 62% of whom were women, and 12 technical service providers who supported 14 startups.

What the FIWAM program achieved

The FIWAM Growth Program facilitated significant financial achievements for participating fintech startups, with nearly half securing investments. By the program’s end, these enterprises collectively raised US$ 2,738,500 in equity and grants, reflecting strong investor confidence in their growth potential and impact. This amount includes US$ 2,335,000 in equity and US$ 403,500 in grants. While no funding was raised through debt, the substantial equity and grant investments reflected strong investor confidence in the startups’ growth potential and impact.

The program also had a notable impact on job creation and employment stability, resulting in 26 new jobs, 16 of which were specifically for women. This emphasis on gender inclusion contributed to a more dynamic and robust workforce, with a significant number of enterprises reporting an overall increase in staff.

Additionally, the program enabled participating enterprises to extend financial access to over 275,000 women affected by migration. During the program, 65.5% of the enterprises successfully reached this target group through various fintech solutions:

• Loan and Savings Services: 267,212 women accessed these services.
• Transaction Solutions: 7,900 women utilized these solutions.
• Insurance Products: 408 women received insurance products.

What we take away from the program

The FIWAM Growth Program has demonstrated its capacity to drive meaningful change by empowering fintech startups to address the unique financial needs of women affected by migration. Through substantial investments, job creation, and expanded financial access, the program has not only strengthened the participating enterprises but also contributed to broader economic and social development. The success of the FIWAM program highlights the importance of continued support for fintech startups focusing on financial inclusion for women affected by migration. The results demonstrate the potential for driving growth and impact when these enterprises are provided with suitable resources, mentorship, and networking opportunities.

Looking forward, sustaining and expanding such initiatives will be crucial to advancing financial inclusion and economic empowerment for vulnerable communities worldwide. By building on these achievements and fostering a supportive ecosystem, future programs can continue to drive transformative change, ensuring that FinTech solutions reach those who need them most and contribute to broader economic development and social progress.

Resources: Fresh insights into Impact-Linked Finance in Bangladesh /

Would you like to know how two innovative Impact-Linked Finance instruments empower high-impact enterprises in Bangladesh? The website of B-Briddhi, a program powered by Roots of Impact, LightCastle Partners and the Swiss Embassy in Bangladesh, has a multitude of inspirations.

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The B-Briddhi (“Scaling Impact Enterprises of Bangladesh”) program is a multi-year public-private development partnership (PPDP) supported by the Embassy of Switzerland in Bangladesh and implemented by Roots of Impact and LightCastle Partners with many other stakeholders, including investors, private sector organizations, incubators, and support organizations for impact enterprises.

A comprehensive impact ecosystem-building program

B-Briddhi was launched in 2020 to enhance the financial, social, and environmental performance of impact enterprises by enabling them to master Investment Readiness (IR) as well as Impact Measurement and Management (IMM). In addition, it gives them much-needed access to innovative and catalytic funding, which puts them in a much better position to scale their impact. In the meantime, there are many case studies and learnings available from the program, which also cover the Impact-Linked Finance instruments used under the catalytic funding pillar: Impact-Ready Matching Funds (IRMF) and Social Impact Incentives (SIINC). Find some selected case studies below:

Three inspiring case studies of Impact-Linked Finance for high-impact enterprises

Apon Wellbeing provides factory workers, especially women, with low-cost everyday items, free health service and interest-free credit facilities in Bangladesh -> check out the case study!

SOLSshare is empowering rural communities in Bangladesh by deploying affordable and accessible renewable energy solutions. It also expanded its portfolio to include clean energy solutions for the transportation sector -> get more insights in this case study

Sheba has  established itself as a market leader for servicing MSMEs (micro, small, and medium-sized enterprises) in Bangladesh. One arm is sManager, a holistic suite of services intended to address MSME challenges and improve their livelihoods.  -> read more about this case!

 

Find all the resources here:

Interview: Making Impact-Linked Finance work for ATEC /

Another impact enterprise in the WASH space is using Impact-linked Finance to deepen its impact: Hear from Nikolai Schwarz, Country Director Cambodia at ATEC, what SIINC can do to help drive the company’s impact journey.

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The Social Impact Incentives for Water, Sanitation and Hygiene (SIINC for WASH) is an innovative, results-based financing program co-designed and implemented by Roots of Impact and Aqua for All. It rewards selected water and sanitation enterprises with time-limited payments for achieving additional social and environmental impact. Khmer Water Supply Holdings (KWSH) is one of the program’s first beneficiaries.

About ATEC

Developed by Engineers Without Borders Australia and Live & Learn Environmental Education, ATEC provides biodigesters to smallholder farmers in Cambodia and more recently also in Bangladesh. The standalone biodigester collects waste (mostly manure, but also human and bio waste) and transforms it into biogas for clean cooking and organic fertilizer. This, in turn, translates into many benefits for both the people and the planet. ATEC has pioneered the first PAYGO model for biodigesters that gives smallholder farmers the opportunity to pay off in installments using digital money.  -> check out more details in the ATEC case study!

 

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The enterprise’s experiences with SIINC, the drivers for its exciting impact journey and some surprises with culture and customers are vividly described in this inspiring interview with Nikolai Schwarz, ATEC’s Country Director in Cambodia -> read it now!

A quote from the entrepreneur

“SIINC is a fantastic tool to make harder to reach market segments commercially attractive and more accessible. Building the SIINC metrics into our financial modelling definitely reduces our risk profile and positively impacts our access to and interactions with current and future investors. For us, it’s a quality seal and a way to clearly steer us towards impact. It also demonstrates that we are able to make use of highly innovative impact finance mechanisms and get out of our comfort zone by trying something new. “

Nikolai Schwarz, Country Manager Cambodia, ATEC

Resources: The Impact-Linked Fund for WASH has launched /

Would you like to see how Impact-Linked Finance is empowering impact enterprises in the WASH sector? A new page by our program partner Aqua for All has all you need to know.

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Building on the promising results of the SIINC for WASH programme, Aqua for All and Roots of Impact are continuing their partnership by launching the Impact-Linked Fund for WASH (ILF for WASH). ILF for WASH aims at enabling pioneering impact enterprises in Africa, Asia, and the Middle East to gain access to suitable and innovative finance. By using Impact-Linked Finance and providing “better terms for better impact”, these WASH enterprises get equipped to grow their businesses, expand the reach of their solutions, and create impact at scale. This will ultimately contribute to achieving Sustainable Development Goal 6,  universal access to clean water and sanitation.  

An innovative Impact-Linked Finance program

What’s new about ILF for WASH is that on top of Impact-Linked Finance, the fund provides technical assistance that incorporates a two-throng approach to address impact-related challenges. Firstly, enterprises will be directly supported through an Impact-Linked Finance Readiness Bootcamp. This bootcamp aims at providing targeted support to improve enterprises’ impact measurement and management (IMM) systems. Secondly, specialised Train-the-Trainer programmes will strengthen the capacity of wider ecosystem players and empower service providers to deliver foundational support such as basic training on IMM to enterprises.

A quote from an entrepreneur

“SIINC is a fantastic tool to make harder to reach market segments commercially attractive and more accessible. Building the SIINC metrics into our financial modelling definitely reduces our risk profile and positively impacts our access to and interactions with current and future investors.”

 

Nikolai Schwarz, Country Director Cambodia, ATEC

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Resources: Explaining Impact-Linked Finance to Investors /

Are you an investor who wants to learn from practitioners how to identify the right social finance tool for your impact objective? AVPN Academy has launched two more modules for its free Social Finance courses – including Impact-Linked Finance.

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The Social Finance Centre is a practitioner-focused learning centre developed by AVPN in partnership with UBS Optimus Foundation. Two new modules were launched in June 2022 and our partner Roots of Impact contributed valuable insights in Impact-Linked Loans and SIINC.

About the modules

The modules  “How to Choose the Right Social Finance Tool” and “Partnering for Social Finance” are meant to inspire practitioners in Asia-Pacific and beyond, and include experts from Roots of Impact, UBS Optimus Foundation, Japan Social Innovation and Investment Foundation (SIIF), Convergence Blended Finance, Trisector Associates, and Piramal Foundation. Enrol for free to access the videos and enjoy your learning journey!

Interviews: How SIINC creates win-win-win situations in the WASH sector /

Impact-Linked Finance solutions such as SIINC effectively support impact enterprises in the WASH sector to deepen their impact. Listen to the voices of William Puyo from KWSH and Pratap Thapa from aQysta to learn what this innovative practice can do for them and their most important stakeholders.

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The Social Impact Incentives for Water, Sanitation and Hygiene (SIINC for WASH) is an innovative, results-based financing program co-designed and implemented by Roots of Impact and Aqua for All. It rewards selected water and sanitation enterprises with time-limited payments for achieving additional social and environmental impact. Khmer Water Supply Holdings (KWSH) is one of the program’s first beneficiaries.

KWSH Interview

Khmer Water Supply Holding (KWSH) offers clean and affordable water services to (semi–) rural households since 2013. The impact enterprise acquires private rural piped water stations and increases their production and distribution capacities to underserved areas. Customers pay a one–time fee to have a water tap installed on their premises. 

Check out more details in this interview with William Puyo from KWSH!

aQysta Interview

aQysta offers sustainable hydro-powered pumping solutions that have a positive economic, environmental and social impact. Their flagship product “Barsha Pump” is an award-winning innovative pump, which has been rolled out in various countries worldwide and provides farmers with sustainable irrigation that allows them to increase productivity.

Check out more details in this interview with Pratap Thapa from aQysta!

Quotes from the entrepreneurs

“SIINC is a clear win-win-win situation for all parties involved. For our existing grant providers, it makes sure that we stick to our mission statement and impact objective. For our lenders and shareholders, SIINC improves our commercial performance by allowing us to install connections to last-mile households and then serve these households in perpetuity. And for our end users, SIINC enables them to access services that they would otherwise be excluded from.“

William Puyo, General Manager of KWSH

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“One of the big differences of SIINC for WASH is that the other programmes typically had milestones based on implementation, not on impact. For example, they rewarded how many pumps we installed or how many acres we irrigated, but not how much we were able to increase the income of the farmers we serve. SIINC for WASH is much more targeted towards outcomes, not outputs. Also, the metrics are not predefined but customized to what you want to achieve as an entrepreneur in terms of depth and breadth of impact.”

Pratap Thapa, Co-Founder of aQysta

Resources: Making Impact-Linked Finance work for KWSH /

Curious how Impact-Linked Finance helps impact enterprises in the WASH sector to deepen their impact? Here is an inspiring video with William Puyo, General Manager of KWSH, who closed a SIINC transaction in June 2021 as part of the SIINC for WASH program.

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The Social Impact Incentives for Water, Sanitation and Hygiene (SIINC for WASH) is an innovative, results-based financing program co-designed and implemented by Roots of Impact and Aqua for All. It rewards selected water and sanitation enterprises with time-limited payments for achieving additional social and environmental impact. Khmer Water Supply Holdings (KWSH) is one of the program’s first beneficiaries.

About KWSH

Khmer Water Supply Holding (KWSH) offers clean and affordable water services to (semi–) rural households since 2013. The impact enterprise acquires private rural piped water stations and increases their production and distribution capacities to underserved areas. Customers pay a one–time fee to have a water tap installed on their premises. Over the next five years, KWSH aims to organically grow its existing portfolio stations and more than double the number of households within its license areas -> check out more details in the KWSH case study!

The video excerpt below is from the Investing for Good webinar held in June 2021 upon the launch of their report “A review of impact-linked finance: does incentivising impact work?”

A quote from the entrepreneur

“With the support from SIINC for WASH, we expect to bring our services to thousands of additional households, which would otherwise continue to be excluded. We are really looking forward to seeing these incentives push us to deepen our impact and stay true to our mission statement.“

William Puyo, General Manager of KWSH

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Resources: Fresh insights into SIINC for WASH /

Would you like to know how SIINC can empower high-impact enterprises in the WASH sector? A new page by our program partner Aqua for All has all the insights for you.

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The Social Impact Incentives for Water, Sanitation and Hygiene (SIINC for WASH) is an innovative, results-based financing programme co-designed and implemented by Roots of Impact and Aqua for All. It rewards selected water and sanitation enterprises with time-limited payments for achieving additional social and environmental impact.

A comprehensive Impact-Linked Finance program

SIINC for WASH showed the great potential for catalysing finance for water and sanitation enterprises. It also revealed the enterprises’ need for capacity building. Some shortlisted enterprises would strongly benefit from pre-SIINC support to be considered for the pipeline. Based on this experience, there are plans to enhance the SIINC for WASH programme to include pre-SIINC support, technical assistance and learnings exchange to increase its outreach and impact.

The three inspiring high-impact enterprises in this program

Khmer Water Supply Holding (KWSH) provides access to clean piped water in Cambodia -> check out the case study!

ATEC provides modern biodigesters to convert animal manure into organic fertiliser and biogas for clean cooking -> get more insights in this interview

aQysta developed an innovative, low-emission, hydro-powered pump for irrigation for smallholder farmers in Asia -> read more about this case!

 

Quotes from the entrepreneurs

“SIINC for WASH allows entrepreneurs to pursue both impact and revenue, without having to choose between them. I hope that SIINC for WASH and our results will prove to larger investors that our approach works and therefore help to raise more capital. I would also like that our SIINC for WASH transaction inspires other entrepreneurs.‘”

Pratap Thapa, CEO& Co–Founder aQysta

 

“For us, the SIINC transaction is a quality seal and a way to clearly steer us towards impact. It also demonstrates that we are able to make use of highly innovative impact finance mechanisms and get out of our comfort zone by trying something new.”

Nikolai Schwarz, Country Director Cambodia ATEC

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Photos: a glimpse into the first two inspiring enterprises in this program: KWSH and aQysta / copyrights: KWSH, aQysta