Trading impact credits based on social outcomes is proving a success in some places and should be scaled up to offset constraints on social funding, a new report concludes.
Tradeable impact credits based on social and environmental outcomes could provide a valuable source of revenues for impact-driven enterprises, as development aid and social spending come under pressure, according to a new report from the Schwab Foundation for Social Entrepreneurship.
The report – Redefining Value: From Outcome-Based Funding to Tradeable Impact – was developed by the Schwab Foundation, South Korean conglomerate SK Group’s Center for Social Value Enhancement Studies(CSES) and Rockefeller Philanthropy Advisors, and it was launched in mid-June at a meeting in Seoul.
In the report, the authors offer a roadmap to scaling up the development of impact credits, as a way to generate funds for social impact. They compare these to carbon credits, but instead of putting a price on emissions, they reward actions creating public good, such as improving education, support for vulnerable groups or green initiatives.
Schwab Foundation believes such initiatives are urgently needed to help offset constraints on social funding and falls in global development aid, as governments around the world alter their spending priorities. According to donor tracker, overseas development aid from the 17 largest donor countries is forecast to fall by 15% in 2025, compared to 2024, and then drop further in 2026.
The report also said traditional funding models are “failing to address the scale of today’s social challenges, leaving critical gaps in impact financing”. Despite progress over recent decades, they remain constrained by inefficiencies in resource allocation and the disconnect between social value and economic value, according to the authors.
Daniel Nowack, head of social innovation at the Schwab Foundation, said the mounting challenges required bold new thinking, and that impact credits should be part of the solution.
“Impact credits may sound like social fiction – but the infrastructure is already being built. We must ensure that communities and social innovators are at the centre of these developments, so that financial innovation helps shape a more inclusive, resilient, and regenerative global economy,” he said.
Pioneering projects
The report’s authors point to existing schemes around the world that already demonstrate the concept and provide examples to build on.
In South Korea, the Social Progress Credit (SPC) programme, run by SK Group and CSES, has mobilised over $360m in verified social value and has disbursed $52m in “rewards” to over 400 social enterprises.
Schwab Foundation said South Korea’s experience showed the power of linking financial incentives to measurable outcomes, allowing participating enterprises to improve their credibility, refine their business models, and access new capital. It also said that such outcome-based incentives had not only helped improve performance but also helped build public trust in impact-driven investment.
Meanwhile, in South Africa, another form of incentive scheme can be seen in the Zlto community currency, driven by blockchain technology. This has allowed 500,000 young people to earn credits for learning and community service, which can be redeemed at over 3,000 stores.
The report also notes that new digital marketplaces, where verified outcomes can be traded, have also sprung up. These include organisations such as Common Good Marketplace and OutcomesX, allowing companies, donors, and governments to support community impact.
“This white paper offers a solution to fundamentally rethink how we pay for progress: tradable impact. By placing an economic value on verified social outcomes, this approach empowers funders – from philanthropic foundations to corporate sustainability teams and international development agencies – to invest directly in measurable progress,” commented Greg Spencer, CEO of Common Good Marketplace.
Key enablers
Given the inherent complexities of measuring and comparing social outcomes, the report says schemes will need to include robust verification systems, price discovery mechanisms and legal infrastructure for transferability.
Without these “impact assets risk being symbolic rather than functional. Poorly designed markets could amplify inequities, exclude grassroots actors and reduce impact to tokenised data points”, the report said.
To avoid such pitfalls, the authors have provided a roadmap for scaling the model responsibly, outlining six key “enablers”. These are: shared frameworks for defining and assessing impact; methods for assigning value and enabling trading; digital infrastructure such as registries and exchanges; trusted verification and assurance systems; financial and regulatory incentives to stimulate demand; and governance frameworks prioritising transparency, legitimacy, and equity.
The report concluded that tradeable impact could become a powerful lever for change “where innovation uplifts and where doing good is not just an act of charity but also a strategic advantage”.
The authors said that, while it is “not a silver bullet, tradeable impact could be a cornerstone of efforts by governments, companies, financial institutions, social entrepreneurs and NGOs to ensure that systems serve society.
“Achieving this goal requires investments in infrastructure that supports both scale and inclusion, from interoperable data systems to shared verification standards,” it said.
