Social Impact Bonds. What?

March 29, 2012

Some governments around the world are experimenting with new financial instruments, notably ones that are most often in Canada called ‘social impact bonds’ (SiB).

Simply, a ‘social impact bond’ is a financial instrument that raises private capital, and links financial returns to the achievement of a social outcome. In a successful SiB model, these outcomes will create improvements in the system that create cost savings as well as social benefits, and so fund financial returns to the private capital.

While potentially creating new sources of investment for social interventions, Social Impact Bonds also represent new relationships, and shifting responsibilities, between non-profits, governments, and private investors. 

Here are some resources for community groups to better understand opportunities, limits and risks offered by Social Impact Bonds

Some CCEDNet members and leading CED thinkers have expressed concerns about the social impact bond model

  • Margie Mendell and Émilien Gruet have prepared a brief synthesis on the topic, summarizing how SiBs are being promoted, where they are already in place, and what some of the critiques are.
  • Social Impact Bonds – John Loxley, Canadian Centre for Policy Alternatives
  • CCEDNet’s webinar on social impact bonds with Margie Mendell and Christian Novak

Other coverage and debate

Note:  Social impact bonds are not the same thing as community bonds.  The Centre for Social Innovation in Toronto offers an excellent explanation of how they used community bonds to raise $2 million for the purchase of a building, and how others can learn from their experience.  Read more >>