Proof of Impact White Paper LATEST PDF - 11 - 18 - 2019

Unlocking the Intrinsic
Value of Impact through

Global Impact Capital Markets
White Paper v1.0

November 2019
Proof of Impact
proofofimpact.com | hello@proofofimpact.com | @proofofimpact
Proof of Impact White Paper:
Unlocking the Intrinsic Value of Impact through Global Impact Capital Markets
Abstract
Impact is by and large invisible:
Those who want to fund it do not know if their money is put to work to achieve the impact
they seek.
Those implementing impact have very few means of showing the progress towards the
impact they achieved.
There is an opportunity to create a direct link between an impact event and its funding. We
propose to do this by building a global marketplace for impact capital. We argue that this is
the best way to connect impact outcomes to funding.
By combining emerging technology with transparency and financial engineering, we

anticipate that impact can eventually transition from an impact lens to a tradable asset class
thus improving both the amount and efficiency of investing in impact.
https://proofofimpact.com
page 2
Table of Contents
Abstract 2
Context: Changemakers and the Purpose Economy 4
Impact: the currency of the changemaker generation 4
Impact Financing today 6
The Size of the impact market 6
Current Challenges in Impact Financing 7
Challenge 1: The Impact Black Box 7
Challenge 2: Inputs vs. outputs 9
Challenge 3: The double attribution problem 9
Challenge 4: The cost of Evaluation 11
Challenge 5: Liquidity in Impact Markets 11
A Global Impact Marketplace 13
Prerequisites : 14
Individual Event Verification (Impact event proof points) 14
Financial Structuring/ Financial Engineering 16
Blockchain’s Value Add 21
Which is the best blockchain for Impact? 21
The value of public blockchains 22
Do we need a native token? 22
The Impact Marketplace 24
Impact Seller: The User Experience 25
Step 1: Onboarding 25
Step 2: Selecting Impact Events 26
Step 3: Delivering and Tracking Impact Events 26
Step 4: Payments and Dashboards 26
Impact Buyers: The User Experience 27
Step 1: Buyer Onboarding 27
Step 2: Research and Due Diligence 27
Step 3: Deploying Capital and Generating Returns 27
Step 4: Tracking and Managing Impact 29
Conclusion 30
ANNEXES 1
Annex 1: Proof of Impact Use case: Impact origination & Investment structure for Child Survival in Ethiopia 2
Annex 2: - Proof of Impact Use case: Impact origination & Investment structure for Solar Energy 3
Annex 3: Proof of Impact Use case: Impact origination & Investment structure for Ocean Cleaning 4
page 3
Context: Changemakers and the Purpose Economy
In our lifetimes alone, economic fundamentals have shifted several times under the pressure
of innovation. Starting in the 80s, industry-centered models powered by capital and fixed
assets made way to information-centered models powered by technology and software.
Then, new models emerged, centered around social networks, powered by connections and
engagement.
Each era produced winners and losers. Every time, incumbents slow to embrace the new
rules were forced to submit to first-principle, new generation businesses that “got it right”.
Most recently, social engagement models gave people a taste of their potential power over
companies and governments. Yet there are strong signals that the “social economy” is
1
slowing down .
Feeling exploited by false engagement and a forced social narratives, a whole new
generation of users are left wanting a more active, authentic role for themselves, in a new
type of economy, powered by new rules. These new consumers – we call them
Changemakers - are ready to define an identity for themselves through acts of positive
change. They care for their impact on the world. They need Purpose. And they want to be in
control.
Impact: the currency of the changemaker generation

Changemakers want to change the status quo. They don’t believe in output industries and
traditional economic theories that glorify growth without taking into account externalities and
the social and environmental long term costs. They don’t buy property, even when they can
2 3
afford it . They don’t set up pension funds and do not invest in the stock market . They
embrace alternative economic models that prioritize community and sustainability over fast
1
A new 2019 Children and parents: media use and attitudes report highlights the continuing decline of Facebook
use by younger demographics with 12-15 year olds with a Facebook profile decreasing from 40% in in 2017 to 31%
in 2018.
2
“Why young people don’t buy cars and apartments anymore” On brightside.me.
3
Joseph D. N. Kendrick: “Why Are So Many Young People Investing in Cryptocurrency?”
page 4
growth: Circular economies. Farm to table. Local, organic farming. Artisanal economies. Social
capital. Natural capital.
Conflicts and struggles on the other side of the world feel a lot more real than they did for
any previous generation. For the first time, perhaps this generation doesn’t only feel that they
may be able to cure disease, end poverty, save the planet, but they feel that it is their
4
responsibility to do so .
Spearheaded by the Changemakers, a new economic paradigm is here:
The Purpose Economy. Powered by impact.
As consumers, businesses and policymakers adjust to The Purpose Economy, a need is

emerging for a dedicated, first-principles infrastructure that allows global economic
interactions at scale, around purpose and impact.
4
Excellent example of a quintessential Changemaker, Greta Thunberg, a Swedish climate activist, has told world
leaders: 'I don't want you to be hopeful, I want you to panic. I want you to feel the fear I feel every day and then I
want you to act.' In an impassioned warning to act now on climate change, Thunberg told her audience at Davos:
'Either we choose to go on as a civilization or we don’t' (Recording of her speech).
page 5
Impact Financing today

Current practices in impact financing and delivery are antiquated and marred by
inefficiencies that act as a significant barrier for innovation, and implicitly inhibit impact at
scale.
Figure 2 - Full Cycle of Traditional Project Funding. It takes in average 6-7 years for the impact of an investment to be evaluated
or understood..
The main barrier in current delivery models is the fact that it is not possible for investors or
funders (or any other stakeholder) to know the outcome of an investment, before the project
has been completed. This reality affects every aspect of impact financing.
The Size of the impact market

We estimate that the minimum size of the impact market is between USD 900B - USD 1T
annually. This includes:
5
- USD 450 billion in private donations in the US alone ;
6
- USD 250 Billion in impact investing ; and
7
- USD 160 Billion in Overseas Development Assistance ;
Even by the most generous estimations, impact financing is minuscule when put into the
context of broader capital markets, considering that the estimated size of the stock market is
8
ca. USD 73Trillion .
5
National Philantropic Trust - Charitable Giving Statistics
6
Global Impact Investing Network, 2018 Impact Investor Survey
7
The World Bank – Link to Dataset
8
The Money Project
page 6
It does not help that virtually all capital committed to impact is invested in initiatives and
projects that suffer from a common set of challenges.
Current Challenges in Impact Financing

Challenge 1: The Impact Black Box
When impact funding is deployed there is little to no visibility, creating the impact black box.
With no easy way to track funding performance or results, educated decisions on what
projects to fund and tracking the expected results become near impossible.
It is very hard to be data-driven and invest in efficient and effective impact that can be well
understood and measured. Once invested, it is virtually impossible to manage and adjust
investments, based on results.
This is why impact at any scale — regardless of the type of financing or the implementation
model — relies on expensive, inefficient infrastructures that have remained virtually
unchanged for the last four decades:
Because feedback loops are slow, much effort is put at the beginning into a detailed design,
further slowing the process. Hundreds of budget lines outline the smallest expenses,
projected over 3-5 years and departure from these projections is penalized.
With increasingly slow feedback loops, the stakes and risk perception from potential funders
also increase. This results in money that flows through a small number of trusted mediators
page 7
(see Fig 2. below). These trust mediators play a unique role in the universe of impact funding
nd therefore t rustworthy. They have managed similar projects
and delivery: they are known a
before and know the game. These large incumbents pass much of the funding (and
deliverables) down to several levels of subcontractors, with their added value being
reassuring donors that the funds are well spent.
Donors and investors agree that incumbent players are large and expensive. Yet, there is no
acceptable alternative to invest large amounts of funding into projects with long-term
impact.
Challenge 2: Inputs vs. outputs

Because of the lack of visibility into actual performance, over the years funders have
developed a series of proxy metrics that are easy to track, yet provide limited insights into
page 8
the impact delivered. Some examples of proxy metrics that are of limited value include the
number of trainings administered, number of people reached, commodities delivered,
overhead to total budget ratios, operations cost to staff cost ratios. These metrics are
essentially inputs.
In the absence of real

performance data, inputs give
stakeholders a sense of precision
but end up being
counter-productive as
implementers are not allowed to
adapt to changing realities on the
ground. In practice, implementers
become incentivized to design and resource for predictable activities. Tracking inputs skews
incentives and generates further complexity across the industry. This use of inputs favors
tried-and-tested project structures that benefit incumbents and hamper innovation.
Ultimately it drives up the cost of impact.
The only question that should matter is: What exactly has been achieved with that money?
How many children have been vaccinated? How much solar energy has been generated?
How many people have been successfully treated of a given disease? How much plastic was
taken out of the oceans? These would be outputs.
Outputs bring higher value than inputs and should be the focus as we measure and
incentivize our pursuit of impact.
Challenge 3: The double attribution problem

Impact attribution is an assessment of how much of a certain outcome was caused by the
9
contribution of specific organizations or people .
Mostly because of the slow feedback

loops, but also because of the
complexities involved in defining clear
causations and correlations, impact
attribution is among the most difficult
problems in impact. The golden
9
Social Value: Small Slices of a Bigger Pie: Attribution in SROI
page 9
standard for attribution would be the randomized control trial, which is slow, expensive and
impossible to run at scale.
Impact Attribution is a major variable influencing people’s decisions to give or not give to
10
charity, or otherwise fund or not fund impact . Impact funders — whether they are donors or
investors — expect a minimum understanding of what exactly their money has “bought”. In
practice, organizations fail to deliver on this expectation, or, in their attempt to position
themselves as data-driven, they end up creating double attribution: the same impact event is
attributed to more than one donor.
Figure 5- Comparison between traditional impact financing and output-event based financing. One offers no clear
attribution, the second one offers 100% impact attribution
Challenge 4: The cost of Evaluation

The budgets of impact projects routinely allocate anywhere between 15% and 30% of the
11
total budget to monitoring and evaluation , depending on the level of evidence required. In
addition to this self-evaluation, many projects also require external validation, which usually
involves large, multisite efforts involving more stakeholders which immediately increase
costs.
10
Beth Breeze, How donors choose charities: Findings of a study of donor perceptions of the nature and
distribution of charitable benefit. Alliance Publishing Trust, Centre for Charitable Giving and Philanthropy, London,
2010 (Breeze, 2010)
11
Corporation for National and Community Service, Office of Research and Evaluation. (2013). Budgeting for
Rigorous Evaluation: Insights from the Social Innovation Fund. (by Lily Zandniapour and Nicole
Vicinanza).Washington, DC.
page 10
Additionally, due to the operational complexity in monitoring, there is a significant time-gap

between an activity and the related monitoring effort. This makes for very slow feedback
loops, slowing down speed and agility in impact implementation. Current monitoring and
evaluation hinders an implementer's ability to act on real data and optimize impact delivery
models in real time (see Fig 1 above).
Challenge 5: Liquidity in Impact Markets

Market liquidity is a market feature whereby an individual or institution can quickly purchase
or sell an asset without causing a drastic change in the asset's price. In other words, liquidity
defines how big the trade-off is between the speed of selling an asset and the price it can be
12
sold for . In a liquid market, the trade-off is mild: selling quickly will not reduce the price
much. In a relatively illiquid market, selling it quickly will require cutting its price by some
amount.
Impact markets - such as they are - are extremely illiquid. The few impact investment
products (mostly social impact bonds), do not have any liquidity at all, which drastically
inhibits the flow of private capital into impact markets.
There are three key barriers that are preventing private capital from freely flowing into the
social impact space:
1) An unmet need among funders (including donors, investors, and payers) to quickly
and transparently see the direct impact of their contributions.
2) A lack of impact investment products that generate market rate returns based on
achievement of impact goals, as well as the lack of secondary markets to allow for
trading of these products.
3) The high costs and limited scalability of setting up highly customized, project-specific
investment products (e.g., social impact bonds) that require measurement of
long-term outcomes through burdensome evaluation methods (e.g., randomized
controlled trials).
12
Mike Moffatt. "Liquidity - Dictionary Definition of Liquidity". About.com Education. Archived from the original on 17
April 2015..
page 11
A Global Impact Marketplace

A global public and transparent Impact Marketplace would allow for easy funding, execution,
trading and of impact investment products. Such an Impact Marketplace would allow impact
buyers (i.e., donors, investors, payers, consumers) and sellers (i.e., impact implementers,
service providers, impact-minded communities, impact driven companies/corporations, etc.)
to come to a global platform, and trade events (i.e., outputs) across any sector or geography.
The Marketplace will have established market rates and returns for a set of measurable
impact events (impact outputs) that can be “bought and sold” by funders and implementers
alike. The completion of impact events will be rigorously validated using transparent and
predefined proof points specific to each type of event (see below: Verification), and each
completed impact event will be issued a digital certificate (“Token”) that is listed on a public,
immutable ledger.
Upon verification of impact events, implementers will be paid for their services and funders
will be able to easily view their return on investment, whether that be an impact return, a
financial return, or both. The Marketplace will operate efficiently by conducting transaction
settlement and impact attribution through the Proof of Impact payment platform, which will
allow for seamless transactions among all stakeholders involved.
Broader categories of impact events, or impact event types, will be the basis of the
Marketplace and will allow for easily traded -- and widely scalable -- impact
commoditization. At scale, the Impact Marketplace can allow the rapid directing of resources
to emergencies, and other priorities by increasing the flow of capital to related impact events.
The impact events listed on the Marketplace are outputs, not outcomes. Verified
immunizations, not units of child survival. The goal is to create a menu of impact event types
that are 1) highly correlated with achievement of outcomes, and 2) easily and objectively
verified.
The rationale for this decision is to simplify, standardize, and lower the cost of setting up
customized impact investment products and circumvent models that require the most
burdensome evaluation methods. In the Marketplace, each impact event type will have
predefined terms and all of the necessary information that users will need to participate,
cutting out the time and resources needed for planning, contracting, and negotiating the
terms of each customized impact investing project.
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Proof of Impact has already begun developing this global Marketplace. As we are
implementing and scaling this model, there are several prerequisites that need to be
addressed in order to unlock the full potential of the marketplace.
Prerequisites :
Individual Event Verification (Impact event proof points)
Before an impact token can be created, the unique underlying impact event needs to be
objectively verified. The verification needs to fulfil a minimum set of criteria:
- The event to be verified is an output - Girls educated, Vaccinations. Tons of CO2 - that
correlates strongly with a higher level impact outcome (Reduction in child mortality,
Financial inclusion, etc);
- The event needs to be uniquely identifiable: it needs to contain unique features that
distinguish it from any other, similar events;
- The verification needs to happen in real time, or as close to real time as possible;
- The verification should be reasonably invulnerable to human error – Ideally the
verification should as much as possible be machine-generated;
Verifying these events is an operational challenge whose difficulty increases exponentially at

the last mile. Solving the verification problem is critical to the ability of this model to go to
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scale. However, there is a tremendous opportunity for verification to evolve into a dynamic,
profitable market on its own.
Currently, there is relatively little

verification happening. Most outputs
that get counted by impact
implementers are either self-reported
(by front-line staff such as nurses or
community health workers), or they are
modeled based on samples collected
through surveys. Sometimes - rarely -
they are individually audited.
However, there is currently a vibrant

ecosystem of verification applications
being developed and implemented in
projects across various sensors. Most
of these are mobile-based. Some of
them use features inside mobile
phones (GPS, camera, biometrics). Others rely on combinations of specialized devices and
cell phones.
As verification models and technology evolve, they free up frontline workers to focus on
delivering impact rather than filling in paperwork. They also eliminate significant data flaws,
increasing the quality of the data and its usefulness.
IOT devices are becoming cheaper and more reliable, with new technologies vastly
13
improving problems related to batteries and connectivity .
These technology advances are making real-time, individual event verification possible at
scale and in frontier operational environments. We expect a vibrant market to emerge where
dedicated verification businesses will develop products and services for event verification.
Each type of event is different - by its nature as well as operationally - so specialized

verification models will emerge. High resolution satellite images to verify forest regeneration.
Biometrics to verify identity. QR codes scanned on delivery. Verification can be highly
specialized, and, as long as there are incentives in place, scalable verification models will
evolve.
13
Examples of such technology evolution include LoRa, narrowband IoT (NB IoT) or LTE Cat M1. These are
long-range low-power wide-area network (LPWAN) wireless communication protocols achieving extremely long
range connectivity (100km+).
page 14
As that happens, platforms such as POI will simply treat verification as a micro-service
connecting into the Marketplace APIs and providing the trigger for the impact token to be
minted.
Figure 9 The minting of impact tokens: Each event has a custom verification model. The result of the verification is a
simple standardized signal sent to PoIP APIs
Financial Structuring/ Financial Engineering

Once the event has been verified and the token is minted, you now have an official, validated
impact event. This impact event can now be privately held, transferred or transacted like any
asset, which lies the big opportunity: We can now structure financial products around impact
events.
The most basic financial structure is simply a digital attribution. Because the impact event is
unique and identified on a public ledger, there is full impact attribution. Whoever paid for the
impact event owns the token, which means they own the impact attribution. For example, a
funder gets credit for their donation and visibility into how their money was spent.
But the exciting opportunity is to build financial structures that are a bit more complex and
that would be attractive to wider segments of investors. Some examples include:
a. Simple Output tokens
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Output Tokens are verified events that are made available to a buyer in a private sale or on a
secondary market. This is the most basic model for a financial product: the buyer receives
attribution and the seller receives cash. The transaction can be pre-paid or post-paid.
Outputs can be sold/ bought clustered/ batched or individually.
b. Event-triggered Performance based tokens (PBT):

A Performance Based Token is a smart contract by which a buyer and a seller agree to purchase
verified individual events at a pre-agreed price. Transactions can occur clustered or
individual and the payment can be made up-front, in real time or at delivery. In an
event-triggered PBT, the buyer puts forward an offer to purchase specific events (i.e.:
individual trees planted) at a pre-agreed price. This offer is locked in a smart contract and
the Money gets transferred into an escrow account. Every time an impact event is
verified, the corresponding amount of money is released in the seller’s account/ wallet.
c. Outcome Tokens are structured on top of an impact theses that uses available evidence
to model correlations between outputs and outcomes. An example of an outcome token
would be a token corresponding to a ton of CO2 sequestered out of the atmosphere
(outcome). This outcome would be essentially a portfolio combining a pre-defined
number of outputs (individual trees planted), based on the assumption that there are X
trees necessary to absorb 1 ton of CO2 in one year.
d. Tokenized Impact Indexes are outcome tokens structured around impact thesis that are
more complex than a simple outcome correlation. For example, a Child Survival index
would be balanced around different types of individual events that correlate to child
survival: Pregnancy Milestones, Ante-Natal Care Visits, Immunization, Nutrition, etc.
page 16
e. Tokenized Impact Bonds. A tokenized impact bond is structured around an offer made by
an outcome underwriter (outcome buyer) to pay a pre-agreed amount if a certain
outcome is achieved. For example, an Underwriter would offer a payment of 30mil EUR
for a min 5% reduction in child mortality in a given community. Investors purchase
individual events (outputs) that are known to correlate with the respective outcome – i.e.
immunizations, ante-natal-care visits, etc. Once sufficient output events have been
verified, the outcome milestone is met and the Underwriter is paying investors their
investment plus a premium. Investors make a profit for putting capital towards
immunizations and the underwriter gets 100% outcome attribution while only paying for
success.
f. Tokenized loans; A tokenized loan allows a community/ recipient to borrow money for a
specific purpose (build a hospital, build a school, roll out broadband, upgrade grid,
irrigation scheme) and then pay back the lenders over a pre-agreed period of time.
Tokens get issued to lenders and the capital thus collected is invested in the agreed
purpose.
g. Others (Complex financial products, Futures, Other Impact products,). Once impact
events are liquid and viewed in the market as an asset class, more complex financial
products can be structured and listed for trading. Other sectors and markets – financial
and non-financial - can benefit from integrating elements of event verification and/ or
page 17
tokenized outputs into their products. Donor-Advised funds can use them to track
performance. Companies can use them to reward milestones or loyalty along their value
chains. Corporations can put impact assets on their balance sheet to prove their impact
14
portfolio/footprint – either voluntarily or as part of regulatory compliance . Businesses
can offer buyers in one part of the world the opportunity to invest in specific outputs on
the other side of the world, through simple acts of product purchase.
Figure 13 – Impact Collateral. Unique impact events in SDG categories 3, 7 and 14 are currently flowing into the Impact
Marketplace. Impact events that are delivered and validated, can now be pooled across the platform to create
collateral for investment products (From Real POI Use cases – see also annexes for more details).
14
Examples of such compliance requirements include: Carbon Credits, ESG Requirements as well as regulatory
requirements in specialized sectors and geographies. In Mozambique, for example, companies in the mining
sector are required to prove investments in community projects proportional with their profits. In India, companies
above a certain size are required to invest in training of their staff.
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Blockchain’s Value Add

We explained above the importance of verifying unique, individual events. Once verified, and
in order to make them attributable, these unique events require a digital confirmation that
contains all the unique variables. A digital representation to the real life, verified event. This
digital representation is called a Token.
Each time a child is vaccinated there is a new token issued. Every time a TB case is treated or
a pound of plastic is taken out of the environment, there are corresponding tokens issued.
However, digital entries into a ledger is not enough – simple digital entries can be copied,
multiplied or tampered with. This would be an unacceptable risk in our model, where the
corresponding events are priced and monetized and therefore need to maintain unicity.
Some of these risks can be addressed with checks and balances, audits, governance etc. and
if our purpose would be simply to track these events (as a smarter alternative to traditional
15
Monitoring and Evaluation), centralized, public databases (such as DHIS2 ) would be the best
model to adopt.
But since these tokens are valued and monetized, in order to make trading possible investors
need the option to hold impact tokens — essentially holding full attribution for unique
events — without having to have any relationship with any organization or entity, or having to
16
understand/ evaluate reliability of any one monitoring database . As long as they prove
token holding they prove attribution. This means that they can trade these tokens, essentially
taking their money out and passing the attribution to someone else. And because all tokens
are listed on a public, immutable ledger, they can trust that they are genuine and they can
even track their history if trading on a secondary market. This will accelerate the emergence
of global impact capital markets accessible to anyone, anywhere in the world.
Which is the best blockchain for Impact?

Proof of Impact is an impact company, not a blockchain company. As such, we regard the
blockchain as a critical tool in our infrastructure, but not our core business. We see ourselves
as agnostic to blockchains and keen to integrate any/ as many blockchains as necessary to
deliver on our core business.
15
District Health Information Software 2 (DHIS2) is an open source, web-based health management information
system (HMIS) platform. Today, DHIS2 is the world's largest HMIS platform, in use by 67 low and middle-income
countries (project site).
16
This principle remains true even in the likely scenario where POI maintains custody of the tokens on behalf of
users, in “hot wallets”.
page 19
17
Currently 4k+ developers contribute code across 2.8k public blockchains every month ,
globally. This is just core development. Further resources are dedicated to building
permissioned layers and infrastructure on top of these blockchains. Many of these
developers are best in class and they are members of active communities building a global
infrastructure that changes every day. They solve complex problems that transcend
technology and touch upon security, governance and game theory.
As a first-principle company in this emerging space, it is our responsibility to build on top of

the existing infrastructure - and indeed evolve with and contribute to this infrastructure as it is
growing into a global force.
We chose to build our prototype on the Ethereum Blockchain out of convenience. Ethereum
has the biggest developer team in crypto, by far. On average, 216 developers contribute
code every month to Ethereum’s repos (not including hard forks and secondary layers). This
is more than 4X the number of active developers that contribute to Bitcoin’s repos (ca 50
18
developers per month), the second most active project .
Although we are working on Ethereum, the POI architecture is designed such that we can
easily integrate any other blockchain or token: for example, a token issued on a different
platform can be easily integrated into the PoI protocol and structured into an impact product,
connected to a payment or any other transaction.
The value of public blockchains

Our value proposition to investors and the wider impact space is around transparency,
attribution, traceability and investability. A public blockchain’s immutability is a critical
argument in favour of using blockchain (vs. a centralized database) for our model.
Do we need a native token?

POI does not have a native token. Verified individual events have corresponding tokens on
our platform that can be traded (either as digital confirmations of value/ attribution or as
securities), but there is no native token used for payments across our platform. Some of our
impact tokens are fungible, others are non-fungible.
We decided against issuing a dedicated token for two important reasons:
1) We would like investors to be able to pay directly with cash and invest only in the sort
of impact that they want to; We do not want to “lock” buyers or sellers into our
platform, or create an additional transaction layer necessary to participate in the
marketplace.;
2) Some of our user segments should not be expected to be blockchain literate. Among
others, we work with low income and low tech users and we also work with large,
17
Electric Capital, The Dev Report. March 2019 (Link to report)
18
Ibid
page 20
traditional partners (governments, large Non-Profits, multi-nationals). We believe that

as much as possible, we should “hide” the blockchain component from users. We
believe that the winning model has the blockchain solving specific problems at a
platform level, without hampering the user experience.
page 21
The Impact Marketplace
The Marketplace is designed for two primary users: Impact Implementers (sellers) and
Impact Buyers:
1) Impact Implementers (Sellers) include anyone who has the capability to implement a
relevant impact event. They can include any type of company or organization or
individuals. A local hospital delivering immunizations. A non-profit distributing clean
cookstoves. A school. A multinational or a small company wanting to demonstrate the
social and environmental standards they adhere to in their manufacturing or
production processes. Intermediaries in supply chains who want to make the
economic distribution of their supply chain transparent. Local health providers that
want to access additional sources of income. Local communities planting trees or
cleaning beaches.
2) Impact Funders (Buyers) can include traditional institutional and individual impact
donors (i.e., who give unrestricted funds that are not contingent on an impact event),
investors seeking impact return only (i.e., who give donations that are linked to the
achievement of impact events, but not linked to a financial return), investors seeking
both impact and financial return, and payers who pay upon successful impact
delivery (e.g., government entities, philanthropy).
Just like in any marketplace model, the two primary user types have different needs and
different navigation options/ experiences in the Marketplace and, as needed, dedicated
pieces of infrastructure (wallets, admin panels, dashboards). The Marketplace is in the public
domain for anyone to view the available impact tokens, track their history, research their
context and study the order book. As the Marketplace matures, more impact events will be
added, others will be removed, and those with the greatest success will continue to be
funded until the outcome is achieved.
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Impact Seller: The User Experience

At scale, sellers have the ability to browse a searchable menu of impact event types and
view how much they would be paid for successful submission of unique events. They also
have the ability to suggest new categories of events and offer them to buyers.
The Marketplace will also indicate which impact event types have committed capital that is
ready to be deployed. This searchable menu of impact event types, and associated price per
impact event, will be publicly available and will allow Implementers to learn which impact
areas funders care about and demonstrate why they should join the Marketplace.
Currently – as we grow the marketplace and define quality verification standards -

implementers need hands on guidance on how to structure their data, proof points and
operations to become suitable for platform access.
Step 1: Onboarding
Sellers complete a standard signup and account creation, followed by an onboarding
process. The onboarding allows Sellers to create a profile that includes choosing their
industry characteristics (e.g., industries, SDG focus areas) and selecting one or more of their
preferred funding mechanisms (i.e., paid upon impact event, selling future impact events,
and/or receiving non-contingent donations with no impact event). Implementers will be able
to fill out and upload their organizational characteristics (e.g., tax status, prior audits, and
annual reports).
page 23
Step 2: Selecting Impact Events

Upon creating a profile, sellers are directed back to the searchable menu of impact event
types. For each impact event type, they will be able to look up the definition, price per impact
event, delivery requirements, exclusion criteria, and other information needed to determine
their capability to deliver verification that achieve the impact event. Sellers will then select
the impact event types that they would like to add to their profiles, along with their track
record and evidence base of completing these impact event types. Sellers also have the
option to propose adding impact event types not on the menu for consideration. After the
impact event types are added to the Seller’s profile, they will be able to see near-real-time
which impact event types have open capital committed by Buyers (i.e., capital for any
Implementer to gain upon completion of an impact event) and which impact event types do
19
not have capital committed.
Sellers will also be matched with Buyers who have committed closed capital (i.e., capital in
which Buyers choose the Sellers who will receive the funding). Sellers and Buyers will be
able to view their matches and then have the ability to communicate and share information
on an enhanced messaging platform. Sellers and Buyers can then commit to engage in a
partnership based on a selected amount of capital or selected number of impact events or
any other variables. Sellers and Buyers can also agree to pursue and set their own terms for a
donation or loan on this enhanced messaging platform .
Step 3: Delivering and Tracking Impact Events

Sellers will then begin to deliver verification proof for their selected impact event types. For
each impact event type, Sellers will need to track and input all required data points (as
instructed on the impact event type menu) to verify their completion of each unique impact
event. For tracking purpose, Sellers will be instructed to select whether they will submit their
data manually (e.g., by uploading timestamps, photos, bar codes, vitals, and other necessary
data points into the Marketplace data entry page), or automatically by connecting the
organization’s existing data entry systems and delivered through an API connection. Once the
data has been validated a corresponding token is created and added to the ledger. From this
moment on, the impact event can be traded.
Step 4: Payments and Dashboards

The Proof of Impact Protocol has a payment layer that allows fiat and crypto deposits and
withdrawals. The impact event payment will automatically be processed through the Proof of
Impact payment and settlement platform and placed in the Implementer’s account. This can
happen manually or through smart contracts, depending on the structure of tokens traded.
Implementers will be able to link existing bank accounts to the Marketplace and transfer
funds accordingly. Implementers will also be able to view an interactive dashboard that
19
If the available supply of impact events with committed capital is exhausted, Implementers will be automatically
notified when a new Funder has committed capital.
page 24
tracks their impact events delivered (submitted, validation passed, validation failed), total
funding, and total impact. This will be a downloadable and exportable document that can be
used for future fundraising purposes.
Impact Buyers: The User Experience

Prior to sign-up, Buyers will also be able to explore the Marketplace, browse a searchable
menu of impact event types, and view the cost of each impact event type and the associated
return on investment they could expect to receive for each impact event completed, as
applicable (i.e., if they are seeking a financial return in addition to their impact return).
Step 1: Buyer Onboarding

Onboarding for Buyers will include the standard account creation and linking to payment
methods, followed by the Buyer selecting their preferred type(s). As noted above, there are
different segments of buyers:
1. Institutional or individual funders (i.e., giving unrestricted funds that are not contingent
on an impact event)
2. Investors seeking impact return only (i.e., donations linked to achievement of impact
events, but not linked to a financial return)
3. Investors seeking both impact and financial return
4. Payers who pay upon successful impact delivery (e.g., government entities,
philanthropy)
Buyers can define their own preferences if they want to: impact areas of interest, target
geographical areas, and select from the publicly available menu of impact event types that
they would like to fund.
Step 2: Research and Due Diligence

Prior to committing capital, different buyer types will have different informational needs
regarding the validation requirements and proof points for each impact event type,
evidence-base and track record of the Implementer, and target population, among other
design factors. For this reason, Buyers would have the option of committing capital to impact
event types as a commodity, agnostic to which Implementer delivers the impact event, or
they could select a specific Seller profile that they are comfortable supporting and commit
capital to pay for impact events delivered by that specific Implementer. Based on the Seller’s
profile selections, they will also be automatically matched by the Marketplace to sellers that
share the same focus areas for funding consideration.
Step 3: Deploying Capital and Generating Returns

Buyers can deploy capital at different times: upfront, performance-based, or instant:
page 25
- impact investors commit capital upfront, but that capital is still only deployed when
impact events are delivered. The key is that they don't receive their financial return
until impact is delivered at scale.
- Buyers seeking impact and financial returns will deploy their capital upfront with the
potential to gain their original funding back plus a financial return upon the successful
delivery and validation of impact events
The Table 1 below illustrates the flow of capital depending on the role of the Funder and
Implementer.
Table 1: Capital Flow by Stakeholder
Buyer
Investor Investor
Steps Seller
Funder (Impact (Impact + Payer
Only) Financial)
1. Onboarding Create profile, Choose preferred Funder type(s), select desired impact
selects impact event types from menu
event types,
match to
funders
2. Impact Delivery Deliver impact, Donate capital Conduct due Conduct due Conduct
collect data (not diligence on diligence on due
dependent on Implementer Implementer diligence
impact event s, commit s, enter on impact
completion) capital desired event
returns, validation,
commit commit
capital capital +
return
3. Impact Upload data, N/A N/A N/A N/A
Validation predefined
validation
process occurs
4. Capital Receive N/A Payments Payments Pays
Deployment payment for sent to sent to investors
impact events Implementer Implementer back their
completed for for capital
completed completed
impact impact
events events
5. Returns on N/A Receives Receives Receives Pays
Investment impact impact impact and financial
attribution returns
page 26
financial returns to
returns investor
Upon successful completion of the impact events, capital (including upfront funding and
returns) will be automatically deployed to the appropriate stakeholders.
Step 4: Tracking and Managing Impact

Buyers have access to streamlined dashboards and analytics tools that will allow them to
view and manage all of their investments in one location. They have the ability to view total
committed capital versus deployed capital (by sector, category, impact event type, country,
Seller, etc), view their impact and financial summaries, and receive automated notifications
when individual impact events (or larger impact and financial goals) are achieved. They can
also see their aggregated impact in the wider context of impact delivered in the respective
category/ geographic area/
timeframe. The Platform also
provides exportable financial
reports, tax information, and audit
reports needed for external
reporting purposes.
page 27
Conclusion
The emergence of global Impact capital markets will bring together all segments of impact
stakeholders as well as investors, funders, large small and medium companies, governments
and communities to buy and sell/ deliver impact outputs and outcomes.
In order for these impact capital markets to emerge, several prerequisites need to be
fulfilled. These are related to fast, reliable event verification at scale, financial engineering
and trading infrastructure.
Proof of Impact is addressing these prerequisites and is building the world’s first liquid impact
capital marketplace. Through a streamlined and transparent process that allows buyers to
know the precise impact of their time and resources, the POI Marketplace will rapidly
accelerate the pace of private capital investments into social and environmental programs,
and harness the engine of capitalism for social good.
At Proof of Impact, our hope is that the Marketplace will provide a venue for people across
the world to work together in ensuring prosperity for all and protecting our planet. Our dream
is to not only achieve the SDGs by 2030, but also provide a tool to rapidly solve new
problems that arise for our future generations. Will you join us?
November 2019
page 28
ANNEXES
page 29
Annex 1: Proof of Impact Use case: Impact origination & Investment structure for Child Survival
in Ethiopia
page 30
Annex 2: - Proof of Impact Use case: Impact origination & Investment structure for Solar Energy
page 31
Annex 3: Proof of Impact Use case: Impact origination & Investment structure for Ocean
Cleaning
page 32

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Unlocking the Intrinsic

Value of ​Impact​ through

White Paper v1.0

By combining emerging technology with transparency and financial engineering, we

Context: Changemakers and the Purpose Economy

Impact: the currency of the changemaker generation

Spearheaded by the Changemakers, a new economic paradigm is here:

The Purpose Economy​. Powered by impact.

As consumers, businesses and policymakers adjust to The Purpose Economy, a need is

Impact Financing today

The Size of the impact market

Current Challenges in Impact Financing

Challenge 2: Inputs vs. outputs

In the absence of real

Ultimately it drives up the cost of impact.

Challenge 3: The double attribution problem

Mostly because of the slow feedback

Challenge 4: The cost of Evaluation

Additionally, due to the operational complexity in monitoring, there is a significant time-gap

Challenge 5: Liquidity in Impact Markets

A Global Impact Marketplace

Verifying these events is an operational challenge whose difficulty increases exponentially at

Currently, there is relatively little

However, there is currently a vibrant

Each type of event is different - by its nature as well as operationally - so specialized

Financial Structuring/ Financial Engineering

a. Simple Output tokens

b. Event-triggered Performance based tokens (PBT)​:

Blockchain’s Value Add

Which is the best blockchain for Impact?

As a first-principle company in this emerging space, it is our responsibility to build on top of

The value of public blockchains

Do we need a native token?

We decided against issuing a dedicated token for two important reasons:

traditional partners (governments, large Non-Profits, multi-nationals). We believe that

The Impact Marketplace

Impact Seller: The User Experience

Currently – as we grow the marketplace and define quality verification standards -

Step 2: Selecting Impact Events

Step 3: Delivering and Tracking Impact Events

Step 4: Payments and Dashboards

Impact Buyers: The User Experience

Step 1: Buyer Onboarding

Step 2: Research and Due Diligence

Step 3: Deploying Capital and Generating Returns

Table 1: Capital Flow by Stakeholder

Step 4: Tracking and Managing Impact

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Value of Impact through

The Purpose Economy. Powered by impact.

b. Event-triggered Performance based tokens (PBT):