“The hottest idea in social-service provision” – The New York Times
Social impact bonds (SIBs) are designed to overcome the challenges governments have in investing in prevention and early intervention. They mitigate the risks of failure and bring in impact investors, who want to test innovation and scale successful programmes. Investors provide flexible funding to programmes that are designed to be responsive to the needs of vulnerable groups to improve their lives.
Social impact bonds provide investment to address social problems and look to fund preventative interventions. They link financial success to the delivery of measured social outcomes. If, and only if, the social outcome improves, the outcome payor repays the investors for their initial investment plus a return for the financial risks they took.
Since Social Finance pioneered Social impact bonds in 2010, the concept has captured widespread interest across the globe. There are currently more than 120 SIBs in 24 countries, mobilising more than £300m of investment into tackling complex social issues such as refugee employment support, loneliness among the elderly, rehousing and reskilling homeless youth, and diabetes prevention.