Perfunderes

Perfunderes is a term used to describe a class of funding arrangements in which funders provide capital to projects or organizations with payments contingent on the achievement of predefined performance outcomes. The term is a portmanteau of performance and funder, and it is used in discussions of outcome-based financing, impact investing, and public-private partnerships.

Definition and scope

Perfunderes encompass agreements where disbursement of funds depends on verified results. They can involve public agencies, philanthropic foundations, private investors, or blends of these actors. The underlying idea is to align funding with demonstrated impact, rather than simply supporting activities or inputs.

Structure and operations

Typical perfunderes arrangements specify the outcome metrics, baselines, targets, and verification methods. A third-party evaluator or independent arbiter often confirms whether targets have been met. Payments may take the form of grants, repayable grants, milestone-based disbursements, or convertible instruments. Risk-sharing arrangements, performance timelines, and data collection requirements are common features.

Applications

Perfunderes are used across sectors such as education, health care, social services, urban development, and climate or environmental projects. They are also discussed in the context of pay-for-success contracts and social impact bonds, where private investments are linked to social outcomes achieved by public programs.

Benefits and challenges

Supporters argue that perfunderes improve accountability, incentivize efficiency, and attract investment for outcomes-driven projects. Critics note challenges in outcome measurement, data quality, high transaction costs, administrative complexity, and potential misalignment of incentives.

See also

Pay-for-success, outcomes-based financing, social impact bond.