Finance, Society and the Environment
Edited by Sabri Boubaker, Douglas Cumming and Duc K. Nguyen
chapter 13: Financial innovation with a social purpose: the growth of Social Impact Bonds
The UN’s Sustainable Development Goals, signed in 2015, call for a closer collaboration between the public and private sectors to solve social and environmental issues. We analyze the emergence of Social Impact Bonds (SIBs) – innovative financial instruments that join private risk-taking with public funding in a pay-for-outcome structure. SIBs were launched in 2010 in the UK and bridge the gap between private capital markets and public agencies to deliver a social outcome. After taking stock of the existing literature and lessons learned from more than sixty existing SIBs. Our contribution consists in an in-depth analysis of the financial structuring of SIBs, a theme not well covered in the literature. We found that financial structuring involves four key steps: legal structure, definition of the desired risk-return-impact, placement of the SIB and governance. We also make four recommendations to grow the sector, consisting in the creation of SIB Funds, the wide dissemination of knowledge, a standardization in processes and the definition of favorable regulations.
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.