Monday, January 17, 2011

The Potential of Social Impact Bonds

Dr Peter Shergold, the CEO of the Centre for Social Impact, discusses the idea of Social Impact Bonds with their developer, Sir Ronald Cohen, director of Social Finance Ltd, a social investment bank in London, here.

Put simply, a social impact bond allows the private sector to invest in areas of traditionally government-funded service delivery, and receive scaled returns, paid by the government, upon target social outcomes being achieved.  These returns are funded by the savings to government achieved by the improved social outcomes, for example, a reduction in the re-offending rate of a group of prisoners, which reduces future public expense on police, courts and prisons.

To find out more about Social Impact Bonds, see a paper by Social Finance entitled "Towards a New Social Economy"

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