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Are Social Impact Bonds The Future Of International Development?

29/05/2013

The financial mechanism that attaches a possible return to positive social outcomes is starting to take off in the United States. (...)
The financial mechanism that attaches a possible return to positive social is starting to take off in the United States. Will it work for non-wealthy countries? Some nonprofits are hoping to find out. In the last few years, governments and nonprofits have become increasingly interested in the idea of "social bonds" (SIBs): private sector investments in social like reducing homelessness or cutting prison re-offending rates. And it’s easy to see why. Nonprofits have long dreamed of scaling to a level where they can make more of a difference (a Gates Foundation-type difference, you might say). And governments--well, since the recession, governments have rarely been shorter on funds. SIBs are more than just a new source of cash, though. They also place risk with investors, rather than nonprofits or governments. Investors only get paid a return, if the outcome materializes--say, if the homeless rate decreases a certain level. And that potentially leaves more room for experimentation; if taxpayer money isn’t on the line, governments can afford to be innovative.Read Full Story    
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