Risky Business: Social Impact Bonds and public services

Harnessing private cash to finance public services via 'Social Impact Bonds' could be an important way to boost innovation in these services but is unlikely to appeal to mainstream investors because of the impossibly high risks they would have to shoulder, new research reveals today.

Social Impact Bonds are an innovative way of commissioning public services. Private or philanthropic investors provide the upfront finance, with government only paying them a return if and once social outcomes are achieved. However, the number of Social Impact Bonds currently underway is small, and our analysis finds that they are unlikely to appeal to mainstream investors unless some major hurdles can be overcome.

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