Social Impact Bonds

Investors may fund social programs, By Todd Wallack, June 27, 2011, Boston Globe: “Massachusetts could be among the first states in the country to raise money for social services by offering investors the chance to earn profits on programs they establish. The approach is known as ‘social impact bonds’ or ‘pay for success.’ It is based on the idea that if programs backed by investors succeed in reducing, for example, the number of inmates in prison or the homeless population, governments will realize big savings, which they can tap to pay off investors with healthy returns. If the programs fail, the government would owe little or nothing. The administration of Governor Deval Patrick is already sifting through more than two dozen suggestions from nonprofits on how to create such performance-based programs…”