(For-profit organisation)

Social Finance, a London private-equity firm, backs various social entrepreneurs and non-profit groups around the world by selling Social Impact Bonds (SIBs), a new investment product, to governments and various investors.

Through a Social Impact Bond, private investment is used to pay for interventions, for example reducing recidivism among low-level criminals, which are delivered by service providers with a proven track record. Financial returns to investors are made by the public sector on the basis of improved social outcomes. If an SIB-funded program meets its targets, bondholders are repaid their initial investment plus interest. If outcomes do not improve, then investors do not recover their investment.

As a new investment product, SIBs are innovative in combining financial returns and social returns into a viable market.

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Year established