Glossary

Every term used in the course, defined in plain language.

Additionality: The test of whether the deal would have happened without this money. In practice: a funder asks it directly, and a weak answer ends the conversation.
Anchor partner: The first funder whose commitment convinces the others. In practice: usually a funder who already funds you, and the right first conversation, because it costs nothing and prices everyone else.
Ask: The amount requested, the instrument, the use of funds and the timeline.
Attribution: The evidence that the programme caused the change rather than something else.
Baseline: The measurement taken before the programme starts, against which the result is judged. In practice: the baseline, the evaluation design and the data system are built before signing, and they sit in the budget.
Benefit sharing: The contractual allocation of a defined share of revenue, usually carbon revenue, to the communities involved. In practice: in Carbon to Care, 50 percent of revenue goes to communities and 15 to 20 percent of that share to children.
Blended facility: A vehicle that owns and finances an asset, is paid per unit of service delivered, and repays its investors from those payments, with a donor or development finance institution absorbing the first loss.
Blended finance: The use of public or philanthropic money to de-risk private investment so that capital flows where it otherwise would not.
Capital raising: The stage of securing commitments from the payer, the risk cover and the investors, typically three to nine months.
Capital stack: The layers of capital in one structure, each with its own risk and return. In practice: risk rises as you move down the stack and return falls as you move up it.
Carbon prepayment: An advance payment for future carbon credits, repaid from an agreed share of the revenue when the credits are sold.
Catalytic capital: Money that accepts disproportionate risk or a below-market return in order to unlock other capital that would not move on its own.
Collaborative fund: A pooled philanthropic vehicle through which several funders back one theme together.
Concessional loan: A loan repaid on terms softer than the market would offer.
Concessionality: The discount given against market terms, whether through a lower interest rate, a longer tenor, a grace period or an acceptance of first loss.
Continuum of capital: The single line along which every instrument sits, running from pure grant at one end to commercial investment at the other. In practice: moving right along the line raises the expected financial return and lowers the provider's tolerance for losing money.
Counterfactual: What would have happened without the programme, usually established through a control or comparison group.
Credit risk: The risk that a party does not repay what it owes.
Default: The failure to repay on the agreed terms, which is what triggers a guarantee.
Delivery risk: The risk that the programme does not produce the agreed result.
Design grant: Money from an anchor partner that pays for feasibility and structuring before anyone commits capital. In practice: the first thing to ask for, and the easiest thing to be given.
Development finance institution: A publicly backed institution that lends, guarantees and invests in developing markets, typically from USD 5m upwards and over nine to eighteen months.
Development impact bond: An impact bond in which the outcome funder is a donor, foundation or development agency.
Donor-advised fund: An account held at a sponsoring organisation from which a donor recommends grants, used widely in North American philanthropy.
Due diligence: The checks a funder runs on the organisation, the evidence and the structure before committing.
Equity: Ownership in exchange for capital. Fits when a business can grow and be sold.
Family office: A private office managing the wealth of one family, able to decide in weeks and often willing to take an anchor or first-loss position.
Feasibility: The stage that tests whether the structure can work, typically two to four months, and usually paid by a design grant.
Finance first: A capital provider who requires a market return and treats impact as a condition rather than as the purpose.
First loss: The layer that absorbs losses before anyone else. In practice: USD 1m of first loss can protect USD 9m of other capital, and that leverage is what a donor is buying.
Fundable: A funder will pay for the activities. The instrument is a grant.
Funder map: The structured list of counterparties around one programme, organised in four columns, namely those who already fund you, those who fund this theme here, those who provide this instrument, and those with a commercial reason.
Grace period: An agreed period at the start of a loan during which no repayment is due.
Grant: Money that is not repaid. Fits pilots, public goods and programmes with no revenue. Provided by donors and foundations.
Guarantee: A promise to cover part of a loss. In practice: it moves no money upfront and is often never called, which is why it unlocks so much lending.
Guarantor: The party that agrees to cover part of a lender's loss if a borrower defaults.
Hosted facility: A pooled facility held by an existing institution on behalf of several participants, which avoids creating a new entity and the licence that usually comes with it.
Humanitarian impact bond: An impact bond operating in a conflict or crisis setting. In practice: the first was the ICRC bond of CHF 26m, financing three rehabilitation centres.
Impact bond: A structure in which investors pre-finance a programme, an independent party verifies the outcomes, and an outcome funder repays the investors with a return if the outcomes are met. It is not a bond in the capital markets sense.
Impact first: A capital provider who accepts a lower financial return, or none at all, in exchange for impact.
Impact fund: An investment vehicle that pools capital from several investors and places it as debt or equity in many enterprises, seeking impact alongside a return.
Impact investing: Investment made with the intention of generating measurable social or environmental impact alongside a financial return.
Impact-linked finance: A loan or investment in which a funder pays a bonus, or reduces the interest rate, when agreed impact targets are met. Fits enterprises that already have revenue.
Implementer: The organisation that delivers the programme.
Independent verifier: The party that confirms whether the outcome was achieved. In practice: contracted by a party that is paid regardless of the result, so that the verification is credible.
Innovative finance: Any financing approach that moves beyond a standard grant by changing who pays, when they pay, or what they pay for. In practice: every instrument exists to remove one specific barrier, usually evidence, payment, risk or scale.
Insurance: A payment made when a defined event occurs. Fits when shocks threaten repayment.
Internal rate of return: The annualised return an investor earns over the life of a transaction. In practice: investors in these cases targeted 2 to 8 percent.
Investable: A cash flow will repay capital. The instrument is a loan, equity or a blended fund.
Investment committee: The body that decides where the money goes. In practice: an organisation may sit on it as an investor, with its interest declared.
Investor: The party that provides capital upfront and expects it back, with a return that reflects the risk taken.
Lender: A provider of debt, pricing against a repayment source rather than against a theme.
Leverage: The amount of private money mobilised per unit of public or philanthropic money. In practice: blended transactions closed in 2024 averaged 3.76 units of private capital per unit of concessional capital.
Loan: Money repaid with interest. Fits when a cash flow can service the debt. Provided by banks, development finance institutions and impact lenders.
Longlist and shortlist: Twenty names is a longlist, ten is a working map, and five is what you actually call, after filtering for geography, instrument and timeline.
Mandate: The internal authority to enter this type of transaction, usually given by a board. In practice: appetite without a mandate stops the first deal, which is why the internal pitch comes before the external one.
Minimum concessionality: The principle of using the smallest subsidy that makes the deal work, so that scarce public money stretches further.
Monetisation test: The four questions asked of every programme component, namely who benefits, who earns or saves, can it be priced, and can it repay. The answer places the component as fundable, payable or investable.
Off-taker: The buyer committed to paying for a service or output, such as an agency buying water per litre or a company buying carbon credits.
One page: The eight-field summary that opens a conversation with a counterparty, covering programme, payer, outcome, verification, volume, unit economic, the ask and the timeline. In practice: if a field is empty, the conversation is premature.
Origination: The work of finding, shaping and bringing a transaction to the point where capital can be raised.
Outcome: The change that follows the output, such as a job held for ninety days.
Outcome fund: A pool of several outcome funders that buys verified results from many providers working on the same theme.
Outcome funder: The party that pays once results are verified.
Outcomes marketplace: A platform on which a provider sells certified outcomes to buyers. Fits providers with strong data.
Output: What the activity directly produces, such as the number of young people trained.
Parametric insurance: Insurance that pays out automatically when an agreed index is crossed, such as rainfall below a threshold, with no loss assessment required. In practice: it releases money on a forecast rather than after the damage.
Payable: A payer will buy a verified result. The instrument is results-based finance.
Payer: The institution with a budget and a reason to buy the result, whether because it avoids a cost, buys a service or meets an obligation.
Payment metric: The single measured result that triggers payment. In practice: it must pass five tests, namely attributable, measurable at a cost the deal can carry, timely within the contract, robust under independent checking, and valued by the payer.
Performance-based contract: An agreement in which the same funder pays in tranches against milestones. In practice: the lightest first step away from a pure grant.
Pipeline: The set of programmes screened and ranked for their readiness to carry a financing structure.
Price risk: The risk that the value of what is sold, such as a carbon credit, falls below what the structure assumed.
Rate card: The agreed price list for each outcome in a results-based contract.
Recoverable grant: Money that returns to the funder only if the programme generates income. In practice: it lets a funder test a revenue model without asking the organisation to take a loan.
Reputational risk: The risk to the organisation's standing from the structure, the partners or the claims made about results.
Results chain: The sequence running from activities, to outputs, to outcomes, to impact. In practice: payment sits at the outcome level, where lives change.
Results-based finance: A family of instruments in which payment is tied, partly or wholly, to pre-defined outcomes. In practice: the budget stops being a list of costs and becomes a price per result.
Results-based grant: A grant paid on verified outcomes instead of on activities.
Revolving fund: A pool that lends short term against money already owed, so the same capital is used again each time a loan is repaid.
Senior capital: The layer repaid first and taking the lowest return. Usually provided by banks and impact lenders.
Social impact bond: An impact bond in which the outcome funder is a public authority paying from its own budget, usually against a cost it avoids.
Special purpose vehicle: A legal entity created for one transaction, holding its assets and contracts separately from the sponsor.
Sponsor: The organisation that originates a fund or facility and stands behind it, without necessarily managing it.
Structuring: The stage that defines the vehicle, the flows, the risks and the contracts, typically four to six months.
Subordinated capital: A layer repaid after the senior layer, taking more risk for a higher return. Also called junior or patient capital.
Technical assistance committee: The body that decides who delivers support and holds a veto. In practice: someone must be able to say no to the implementer.
Technical assistance facility: Grant money that sits alongside an investment and pays for the support an investee needs in order to use the capital well.
Tenor: The length of time until a loan or investment must be repaid.
Term sheet: The short document setting out the commercial terms of a transaction before the contracts are drafted.
Theory of change: The explanation of how activities are expected to lead to outcomes, and the assumptions on which that depends.
Ticket size: The amount a given funder typically provides in one transaction. In practice: a pilot below a development finance institution's minimum ticket will be refused however good it is.
Tranche: One layer of a structure, with its own risk, return and repayment order.
Trigger: The event that releases money or ends an obligation, such as verification, a milestone, a default or termination. In practice: the trigger is where the negotiation actually happens.
Unit economic: The cost per verified outcome, and what that outcome replaces today. In practice: EUR 11,000 per foster placement avoided, against EUR 43,000 of foster care, is a unit economic a payer can act on.
Vehicle: Whatever holds the money and the obligations, from a clause in an existing grant to a regulated fund. In practice: choose the lightest vehicle that carries the flows, because most first transactions stop at a bilateral contract.
Verification: The independent confirmation that the agreed result was achieved.
Water credits: Certified units of verified water benefit, bought by companies pursuing water stewardship targets.
Working capital facility: Short-term credit that lets a business pay its costs before it is paid by its customer.