23 July 2020 Sustainable Development News

Social Impact Bonds: why invest in this financing model?

The interim reports on three Social Impact Bonds, funded by the Gulbenkian Foundation, show that the expected outcomes have either been achieved or exceeded.

Bootcamp Academia de Código promotes employment by providing training in computer programming in the municipality of Fundão.

In recent years, the Calouste Gulbenkian Foundation has financed three Social Impact Bonds (SIBs), the interim reports of which were recently presented by MAZE, an impact investment firm created by the Foundation. The reports show that the three projects – Bootcamp Academia de Código, Projeto Família and Faz-Te Forward, have achieved all the proposed outcomes, which will likely lead to full repayment of the principal and confirm the potential of this financing instrument for the public, private and third sectors.

 

So how exactly does a SIB work and what are the benefits compared to a traditional financing model?

In this special three-part report about Social Impact Bonds, the main assumptions of this innovative financing instrument are:

Outcomes contracts

Part I – A novel financing model focused on delivering better outcomes in public service provision.

Innovation in the public sector

Part II – The public sector tests innovative solutions and only pays for the outcomes achieved.

‘Recycling’ investment

Part III – The private social investor receives full repayment if the project achieves the expected outcomes.