Social impact bond
form of outcomes-based contracting
A social impact bond (SIB), also known as pay-for-success financing, pay-for-success bond (US), social benefit bond (Australia), pay-for-benefit bond (Australia), social outcomes contract (UK), social impact partnership (Europe), social impact contract (Europe), or simply a social bond, is a type of outcomes-based contracting, whereby a contractor typically attempts to effect a policy of government but does not get paid by the government unless specified goals are achieved. Geoff Mulgan claims to have coined the term while he was chief executive of the Young Foundation. The first SIB was launched by UK-based Social Finance in September 2010.
By July 2019, 132 SIBs had been initiated in 25 countries, and they were worth more than $420m. As of May 2023, 23 countries use SIBs, with (as of 2022) 276 projects in place and capital raised to the value of $745m.
History
The SIB is a non-tradeable version of social policy bonds, first conceived by Ronnie Horesh, a New Zealand economist, in 1988.
The first SIB was announced in the UK on 18 March 2010 by then Justice Secretary Jack Straw, to finance a prisoner rehabilitation program at Peterborough Prison. This grew out of research on alternative financing models by the Young Foundation, the Prime Minister's Council on Social Action (CoSA, a cross-sector advisory group) and Social Finance beginning in 2007 and published in 2009. The work was continued by the Centre for Social Impact in Australia, and other NGOs and private companies.
In Australia, the intention to trial SIBs was announced in New South Wales in November 2010 by Premier Kristina Keneally of the Australian Labor Party.
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