SOCIAL IMPACT BOND
A social impact bond is a contract with the public sector or governing authority, where repayment and return on investment are contingent upon the achievement of desired social outcomes. Social impact bonds are being designed and implemented in early childhood education, global health, and workforce development. Worldwide, there are 194 impact bonds in 33 countries, with $420.77 million of total upfront capital.
Peterborough Prison Bond
The world’s first social impact bond, an investment in the Peterborough prison bond, raised £5m and ran for 4 years with a result of reducing reoffending of short-sentenced offenders by 9%. Seventeen investors were able to get their initial capital and a return of over 3% on their investment. The bond was backed by various charities like the Rockefeller Foundation and the Friends Provident Foundation. The bond demonstrates potential to send flows of capital to the social sector while saving taxpayer money and driving innovation.
Works Cited
Boggild-Jones, Izzy, and Emily Gustafsson-Wright. “A Global Snapshot: Impact Bonds in 2018.” Brookings, Brookings, 2 Jan. 2019.
Gustafsson-Wright, Emily, et al. “Social and Development Impact Bonds by the Numbers.” Brookings, Brookings, 2 June 2020.
Mair, Vibeka. “Investors in Peterborough Prison Bond, the World's First Social Impact Bond, to Get 3% Return.” Responsible Investor, 27 July 2017.
“US SIF Foundation Releases 2018 Biennial Report On US Sustainable, Responsible And Impact Investing Trends.” The US SIF Foundation, October 31, 2018.