A Social Impact Bond (SIB) is a financing mechanism that combines outcome payments, cooperation between public and private sector, and impact investing to resolve social problems. Initially developed by Social Finance as a mechanism of separation between the cost of a social intervention and the cost of actually obtaining results, SIBs allow public spending to be transformed towards cost efficient, preventive policies.

A SIB has one or more investors providing the working capital needed by the intervention, one or more service provider specialized in the social problem at hand, and one or more outcome payers form the public sector that repay the investors if and when the expected results are achieved.


Social Impact Bonds in the World

Social Impact Bonds (SIBs) have mainly been structured for the following issue areas: workforce development, homelessness, family and child welfare, and education in early years.

Case Study:

First SIB: 2010 in Peterborough Prison  to finance rehabilitation services for prisoners with short sentences ir order to reduce recidivism rates. 

Place: Peterborough (UK)
Sector: Criminal Justice System
Duration: 5 years
17 investors
Recollected Capital: 5 millon pounds
Outcome Payers: Big Lottery Fund, UK Ministry for Justice
Beneficiaries: 2.000
Results: Recidivism rate reduced by 9%
Complete return on investment

Social Impact Bond in Colombia

Inversor Corporation manages the investment, providing constant support and performance management for service providers, and overseeing all project schedules, budgets, and goal fulfillment.

First SIB in an emerging market was signed in 2017 in Colombia: employment of vulnerable population in many cases victims of the 50 year long armed conflict

Place: Colombia

Issue Area: Workforce Development

Duration: 1,5 years

3 investors

Capital Raised: COP 2.200.000

Outcome Payers: Prosperidad Social, BID FOMIN

Participants: 514

Results:  TBD