Disclosure Statement: 

Operating Principles for Impact Management

 

U.S. International Development Finance Corporation 

August 4, 2023

U.S. International Development Finance Corporation (“DFC”) is a founding Signatory to

the Operating Principles for Impact Management (the “Impact Principles”).

This Disclosure Statement affirms that DFC’s impact management system, policies and procedures, and 

investment services (debt, political risk insurance, equity, and investment guaranties) are designed with 

the intent to align with the Impact Principles, as currently stated. Total Assets Under Management in 

alignment with the Impact Principles is $35.1 billion as of 3/31/2023.

1

___________________________________________

Elizabeth Boggs Davidsen

Vice President, Office of Development Policy

U.S. International Development Finance Corporation

August 4, 2023

 

 

1 Assets Under Management is the DFC’s total portfolio exposure, including direct and guaranteed debt

(outstanding and undisbursed) and political risk insurance policies (maximum contingent liability, net of 

risk.
Principle 1: Define strategic impact objective(s), consistent with the investment strategy.

The Manager shall define strategic impact objectives for the portfolio or fund to achieve positive and 

measurable social or environmental effects, which are aligned with the Sustainable Development Goals 

(SDGs) and the Net Zero Initiative. The impact intent does not need to be shared by the Investee. The 

Manager shall seek to ensure that the impact objectives and investment strategy are consistent; that 

there is a credible basis for achieving the impact objectives through the investment strategy; and that the 

scale and/or intensity of the intended portfolio impact is proportionate to the size of the investment 

portfolio. 

• DFC is a wholly U.S. government-owned corporation that was established under the “Better 

Utilization of Investments Leading to Development Act of 2018” (the “BUILD Act”) to mobilize and 

facilitate the participation of private sector capital and skills in the economic development of less 

developed countries and countries in transition from nonmarket to market economies.

• DFC advances the international development objectives of the United States of America (“U.S.”) 

and the global Sustainable Development Goals (“SDGs”). The Office of Development Policy 

(“ODP”) develops DFC’s development impact strategy. DFC’s Chief Development Office and Chief 

Executive Office have informed this strategy in an effort to strengthen linkages with the U.S. 

Government’s Agency for International Development (“USAID”), Millennium Challenge 

Corporation (“MCC”), and other U.S. Government agencies for a “whole-of-government” 

approach to U.S. international development activities. The strategy focuses on priorities including 

climate (SDG 13), inclusion and equality (SDGs 5 and 10), and specific priority sectors, including 

agriculture and food security, energy, infrastructure, health, and small business support.

• ODP oversees the implementation of DFC’s development impact strategy throughout its 

investment decision-making and portfolio monitoring processes, including: 

o Aligning projects to DFC’s impact theses, which describe DFC’s sector and sub-sector 

priorities, theories of change, high-level impact objectives, and alignment to the SDGs; 

o Supporting investment officers in performing preliminary project-specific development 

impact analysis during pre-decisional investment screening stages;

o Measuring impact through DFC’s impact management framework, the Impact Quotient 

(“IQ”), alongside the impact investment industry standard “Five Dimensions of Impact” to 

assess and monitor DFC’s progress to achieving project-specific and portfolio-wide 

development objectives in a standardized manner; and

o Collecting development impact monitoring data from each project, after investment, via 

an electronic, comprehensive data survey called the Development Outcomes Survey 

(“DOS”), project specific Results Table; and in-country site monitoring.

• The IQ incorporates a standard set of indicators and metrics organized across three broad pillars

aligned to DFC’s founding legislation: Economic Growth, Inclusion, and Innovation.

o The Economic Growth Pillar measures “how much” impact will be derived from 

investments that increase factors of production (e.g., infrastructure and other critical 

inputs to economic growth), human capital development (e.g., investments that provide 

basic human needs), access to finance, jobs, local income, and macroeconomic fiscal 

benefits. The development objectives of this pillar align with several SDGs, such as Zero 

Hunger (SDG 2), Good Health and Well-Being (SDG 3), Clean Water and Sanitation (SDG 

6), and Affordable and Clean Energy (SDG 7), among others. 

o The Inclusion Pillar measures “who” will benefit from the impacts. This pillar consists of 

the following indicators: 1) inclusive customer base; 2) inclusive workforce; and 3) 

inclusive supply chains. These development objectives align with the following SDGs: No 

Poverty (SDG 1), Gender Equality (SDG 5); and Reduced Inequalities (SDG 10).
o The Innovation Pillar describes “how” the impacts will be achieved. This includes the 

investment’s contribution to strengthening market resilience, supporting competitive 

markets, mobilizing private capital, and benefitting the planet and communities. The 

development objectives in this pillar align with the following SDGs: Affordable and Clean 

Energy (SDG 7), Industry, Innovation, and Infrastructure (SDG 9), Responsible 

Consumption and Production (SDG 12), Climate Action (SDG 13), and Partnerships for the 

Goals (SDG 17).

• In addition to aligning DFC’s development strategy and IQ pillars with the global Sustainable 

Development Goals, DFC considers how projects collectively contribute to advancing progress 

relative to the SDGs and to achieving net zero by 2040, as part of an agency effort to 

demonstrate its contribution to achieving these global goals. 

 

Principle 2: Manage strategic impact on a portfolio basis. 

The Manager shall have a process to manage impact achievement on a portfolio basis. The objective of 

the process is to establish and monitor impact performance for the whole portfolio, while recognizing that 

impact may vary across individual investments in the portfolio. As part of the process, the Manager shall 

consider aligning staff incentive systems with the achievement of impact, as well as with financial 

performance.

• DFC’s goal is to advance U.S. development and/or foreign policy objectives, while operating at no 

cost to the U.S. taxpayers. As such, DFC adopts a portfolio approach to project selection that 

recognizes possible trade-offs among these objectives.

• The IQ provides a flexible, but standardized, approach to impact scoring that enables DFC 

Management to assess the development performance of DFC’s diversified portfolio. Each project 

is analyzed based on its contribution to Economic Growth, Inclusion, and/or Innovation.

• ODP additionally guides DFC in ensuring that its portfolio remains on track to meets its 

development mandate at the strategic level. In alignment with DFC’s impact theses and 

development impact targets, ODP analyzes data from its annual Development Outcomes Survey

(“DOS”) to understand project- and portfolio-level progress toward achieving DFC’s development 

goals. This annual assessment includes determining whether projects are underperforming or 

outperforming relative to their respective impact projections; understanding how the portfolio as 

an aggregate is performing relative to the global needs described in the SDGs; and identifying 

opportunities to further enhance development impact.

• DFC will consider aligning staff incentive systems with the achievement of impact as best 

practices emerge and to the extent that it is feasible within U.S. federal salary guidelines.

 

Principle 3: Establish the Manager’s contribution to the achievement of impact. 

The Manager shall seek to establish and document a credible narrative on its contribution to the 

achievement of impact for each investment. Contributions can be made through one or more financial 

and/or non-financial channels. The narrative should be stated in clear terms and supported, as much as 

possible, by evidence.

• DFC is statutorily required to ensure that its activities are financially “additional” to private sector 

resources by mobilizing private capital that would otherwise not be deployed without its support.

• DFC requires each of its potential clients to provide information on why DFC support is necessary 

and complements, but does not compete with, private sector support. Specifically, each potential 

client is required to detail efforts to secure private sector financing or political risk insurance for 
the transaction -- including a list of private sector sources that the client had approached – and

provide a reason why any available financing or political risk insurance is not a viable option.

• DFC’s financial additionality is discussed and communicated in written documentation 

throughout the project approval process including in screening memos, credit committee papers, 

investment committee memos, and in presentations to DFC’s Board of Directors. DFC is in the 

process of developing a framework to incorporate an assessment of DFC’s non-financial 

additionality, as well.

• Additionally, non-financial contribution is assessed for every project during the due diligence 

process. This takes into consideration whether technical assistance has been or will likely be 

deployed to support the project; whether projects have benefitted from support to strengthen 

environmental and social risk mitigation efforts; and whether DFC has supplied clients with 

tailored guidance on impact management best practices.

 

Principle 4: Assess the expected impact of each investment, based on a systemic approach. 

For each investment the Manager shall assess, in advance and, where possible, quantify the concrete, 

positive impact potential deriving from the investment. The assessment should use a suitable results 

measurement framework that aims to answer these fundamental questions: (1) What is the intended 

impact? (2) Who experiences the intended impact? (3) How significant is the intended impact? The 

Manager shall also seek to assess the likelihood of achieving the investment’s expected impact. In 

assessing the likelihood, the Manager shall identify the significant risk factors that could result in the 

impact varying from ex-ante expectations.

In assessing the impact potential, the Manager shall seek evidence to assess the relative size of the 

challenge addressed within the targeted geographical context. The Manager shall also consider

opportunities to increase the impact of the investment. Where possible and relevant for the Manager’s 

strategic intent, the Manager may also consider indirect and systemic impacts. Indicators shall, to the 

extent possible, be aligned with industry standards and follow best practice.

• The IQ framework is DFC’s project impact assessment tool that enables DFC to estimate the 

expected development impact of its activities. This ex-ante assessment establishes each project’s 

development objectives, contributes to decision making for project selection, and provides a tool 

to assess the development profile of the DFC’s diversified portfolio.

• The IQ provides a systematic approach to impact assessment that is based on identifying a 

project’s potential “core” or most important impacts. The assessment considers:

o scale of impacts

o the profile of the project beneficiaries and other key stakeholders

o how the impact will occur through innovative products, services, operating practices, or 

financial structures

• The metrics used to measure development impact are aligned with the Harmonized Indicators for 

Private Sector Operations (“HIPSO”), including the Joint Impact Indicators (“JII”), and the Global

Impact Investing Network’s (“GIIN”) “IRIS+” catalogue of metrics.

• The IQ tool helps inform project selection and establish the development objectives of each 

investment under consideration. DFC impact management specialists and origination teams 

collaboratively determine the project’s possible core impacts and preliminary IQ score, with the 

goal of having this information at the time of credit and/or investment committee meetings. At 

the screening meetings, DFC analysts provide a general assessment of how the impacts help meet 
a development challenge in the host country, identify any environmental, social, and/or 

development risks, and convey any lessons learned from similar or existing projects. The IQ 

assessment and score are further refined as more information about the project is obtained 

through the due diligence phase and conveyed throughout the project approval process.

• Under the IQ scoring methodology, project impacts that directly address an identified 

development challenge in the host country are scored on a higher scale than those in which there 

is no evidence of a development challenge. In this way, the IQ score incorporates the 

geographical context.

• The IQ framework encourages thoughtful consideration of ways to maximize the development 

impact of DFC projects throughout the project term. The IQ framework includes an assessment of 

potential development risks, as well as recommendations to mitigate those risks. The IQ score is 

adjusted downward for risks that are not fully mitigated.

• The IQ framework utilizes proxy metrics to incorporate indirect impacts that are not easily

measurable, such as the impacts that access to finance has on downstream borrowers of DFCsupported financial intermediaries and the impacts on local suppliers of DFC-supported 

companies.

• The IQ framework is regularly revisited and updated to improve consistency across assessments 

and alignment with DFC impact priorities.

 

Principle 5: Assess, address, monitor, and manage the potential negative impacts of each investment. 

 

For each investment the Manager shall seek, as part of a systematic and documented process, to identify 

and avoid, and if avoidance is not possible, mitigate and manage Environmental, Social, and Governance 

(“ESG”) risks. Where appropriate, the Manager shall engage with the investee to seek its commitment to 

take action to address potential gaps in current investee systems, processes, and standards, using an 

approach aligned with good international industry practice. As part of portfolio management, the

Manager shall monitor investees’ ESG risk and performance, and where appropriate, engage with the 

investee to address gaps and unexpected events.

• DFC’s Environmental and Social Policies and Procedures (“ESPP”) articulate DFC’s approach to 

environmentally and socially sustainable development and sets the baseline for achieving positive 

development outcomes in DFC-supported investments. They are largely based on IFC’s 

Performance Standards and other international finance institutions, such as the European Bank 

for Reconstruction and Development and the Inter-American Development Bank. DFC’s ESPP is in

the process of being updated this year.

• DFC’s business lines work closely with DFC Environmental and Social (“E&S”) analysts to 

determine a project’s eligibility for DFC support. Each potential project is subject to full policy 

review and classified according to the potential magnitude of E&S risks. This classification (e.g., A, 

B, C, Special Consideration) assists in determining project eligibility, decision making during the 

project approval stage, and in the allocation of resources for monitoring during the construction 

and operational phase.

• Projects that are likely to have significant adverse E&S impacts that are sensitive, diverse, or 

unprecedented in the absence of mitigation measures are disclosed to the public for comment 

period of 60 days on DFC’s website, including the environmental and social impact assessments. 

The results of DFC’s E&S due diligence for every project are made publicly available in the form of 

the “Information Summary for the Public” link on the DFC website https://www.dfc.gov/ourimpact/all-active-projects.
• DFC’s E&S experts may require changes to the investee’s systems, processes, and standards, 

using an approach aligned with good international industry standards. These requirements are 

documented in the legal agreement between the DFC and the client. In addition, DFC staff may 

engage technical assistance funds to assist in closing any gaps.

• To provide a holistic assessment of each project’s development potential, the IQ framework 

incorporates E&S risks (as well as potential negative economic risks) into the IQ score. The IQ 

Score is adjusted downward based on the degree and probability of E&S risk where the 

demonstrated capacity or commitment to fully mitigate these risks is insufficient. This adjustment 

enhances management’s awareness of potential E&S risk in decision making, where management 

must balance the potential for positive development impacts, financial implications on the

portfolio, and other DFC priorities.

• The instance of E&S risks are additionally monitored post-investment, through the annual 

Development Outcomes Survey and through site monitoring. Projects are prioritized for 

monitoring based on their E&S risk profile.

 

Principle 6: Monitor the progress of each investment in achieving impact against expectations and 

respond appropriately. 

 

The Manager shall use the results framework to monitor progress toward the achievement of positive 

impacts in comparison to the expected impact for each investment. Progress shall be monitored using a 

predefined process for sharing performance data with the investee. To the best extent possible, this shall 

outline how often data will be collected; the method for data collection; data sources; responsibilities for 

data collection; and how, and to whom, data will be reported. When monitoring indicates that the 

investment is no longer expected to achieve its intended impacts, the Manager shall seek to pursue 

appropriate action. The Manager shall also seek to use the results framework to capture investment 

outcomes.

• DFC collects development impact data from each of its projects annually through an electronic, 

comprehensive data survey called the Development Outcomes Survey (“DOS”). This survey 

comprises metrics aligned to IRIS+ and HIPSO and is designed to enable DFC to assess each 

project’s impact results compared to the projected impacts and to track portfolio-wide progress.

• Through its routine data collection, DFC identifies projects that may need additional support or 

gleans lessons from the ones that are exceeding expectations. DFC may revise the IQ score if the 

original objectives are no longer realistic.

• The identified metrics that are used to assess the development performance of the project are 

included in the legal agreement with the client prior to project execution, so that DFC and the 

client are in alignment on the project’s developmental objectives. On site access and data 

collection requirements, including instructions for completing the DFC’s impact data surveys for

monitoring and evaluation activities are included as covenants in the legal documentation.

• Select projects may additionally be nominated to participate in the Customer Voice Technical 

Assistance Facility, through which 60 Decibels customer experience surveys are administered. 

Through this process, DFC gains additional insight into end-customers’ experiences with DFC 

clients’ products, services, and business operations. This insight complements DOS data, enables 

an increasingly nuanced understanding of impact achieved, and provides insights into specific 

areas for improvement.

• In addition to routine data collection, DFC’s impact specialists visit select projects each year to 

further understand qualitative impacts, gain deeper understanding of contextual barriers or 

catalysts a project encounters in achieving its development impact outcomes, fill in data gaps, or 
identify areas where a project may be able to enhance its development impact or strengthen its 

impact monitoring. DFC’s impact specialists identify projects for site monitoring based on a 

combination of thematic and performance considerations.

 

Principle 7: Conduct exits considering the effect on sustained impact. 

When conducting an exit, the Manager shall, in good faith and consistent with its fiduciary concerns, 

consider the effect which the timing, structure, and process of its exit will have on the sustainability of the 

impact.

• DFC currently supports projects through direct or indirect financing and financial guarantees. 

During such tenor, any change of project ownership or material involvement of initial participants 

generally requires DFC consent. DFC’s goal is for best practices to have been intrinsically 

implemented during the tenor of DFC’s involvement, which should, therefore, continue after exit. 

There may not be, however, a legal requirement for such.

• Under the IQ framework, investments that are close to maturity are prioritized for project 

performance evaluations to the extent feasible. DFC has additionally implemented project “closeout” evaluations to enable DFC to glean lessons learned from the investment, as well as assess 

the likelihood of the sustainability of positive impacts upon exit.

• Under the BUILD Act, DFC has been granted authority to make direct equity investments. DFC will 

consider incorporating policies and procedures to enhance the sustainability of positive impacts 

upon exit for this product, as well as other DFC products.

 

Principle 8: Review, document, and improve decisions and processes based on the achievement of impact 

and lessons learned. 

 

The Manager shall review and document the impact performance of each investment, compare the 

expected and actual impact, and other positive and negative impacts, and use these findings to improve 

operational and strategic investment decisions, as well as management processes.

• DFC has significantly expanded its internal impact management capacity by hiring a team of 

impact management specialists and strengthening its results management system. DFC now 

assesses each project’s core impacts to determine whether the project is on track to meet its

development objectives. The goal is to utilize the data to glean lessons learned for similar or 

repeat clients, assist in determining the development performance of the DFC portfolio, and 

contribute to DFC development strategy and goals.

• Further, data from the DOS feed into a series of impact performance dashboards which are 

available to all DFC staff. These dashboards enable both aggregated and project-level views of 

impact performance, comparisons between impact results and the scale of remaining global need 

in each sector, and comparisons between projects’ results and their initial baseline and projected 

impact performance. As such, these dashboards share learnings of achieved and potential 

development impact with staff across the agency.

• Additionally, key findings from the DOS are discussed in an annual portfolio review with DFC’s 

OCEO and OCOO to identify strategic learnings and inform future allocations strategies.

• DFC conducts impact performance evaluations on selected projects to facilitate learning that will 

aid in the design of future projects, improve the IQ framework, and identify opportunities for 

further impact management. The performance evaluation results are uploaded to DFC’s

information management system and, whenever feasible, shared publicly on DFC’s website.

 
Principle 9: Publicly disclose alignment with the Impact Principles and provide regular independent 

verification of the alignment. 

The Manager shall publicly disclose, on an annual basis, the alignment of its impact management systems 

with the Impact Principles and, at regular intervals, arrange for independent verification of this alignment. 

The conclusions of this verification report shall also be publicly disclosed. These disclosures are subject to 

fiduciary and regulatory concerns.

• DFC and the IQ were formally established in January 2020. Many relevant DFC processes, 

systems, strategies, metrics, policies, and hiring actions remain in development.

• This Disclosure Statement re-affirms the deepening alignment of IQ with the Impact Principles as 

the impact management framework is being implemented. The Disclosure Statement and will be 

updated in July 2024.

• The independent Verification Statement, conducted by BlueMark dated June 22, 2021, on the 

alignment of DFC’s IQ framework with the Impact Principles is posted on DFC’s website.

• DFC intends to undertake the next independent verification in 2024.

Disclaimer: The information contained in this Disclosure Statement has not been verified or endorsed by the Global Impact Investing Network 

(“the GIIN”) or the Secretariat or Advisory Board. All statements and/or opinions expressed in these materials are solely the responsibility of the 

person or entity providing such materials and do not reflect the opinion of the GIIN. The GIIN shall not be responsible for any loss, claim or 

liability that the person or entity publishing this Disclosure Statement or its investors, Affiliates (as defined below), advisers, employees or agents, 

or any other third party, may suffer or incur in relation to this Disclosure Statement or the impact investing principles to which it relates. For 

purposes hereof, “Affiliate” shall mean any individual, entity or other enterprise or organization controlling, controlled by, or under common 

control with the Signatory.