The power of the Social Impact Bond (SIB) lies in its alignment of all stakeholders’ interests around achieving social outcomes. Stakeholders in SIBs—nonprofits, government, investors, and communities—would all benefit from successful SIB programs:
NONPROFIT SERVICE PROVIDERS
Nonprofits would have unprecedented access to growth capital to expand their operations. This stable and predictable revenue stream would allow them to spend less time fundraising and more time focusing on their core competencies—serving vulnerable populations in need. Nonprofits would also benefit from increased coordination among organizations working on similar issues, raising their effectiveness.
Governments would be able to transfer the financial risk of funding prevention to the private sector. As a result, they would only pay for what works, attaining accountability for taxpayer dollars. At the same time, they would achieve better results for its citizens with less public expense, even after an appropriate financial return is paid to investors.
Investors would put capital to work that achieves both meaningful social impact and financial returns, and have the opportunity to participate in a new asset class with the benefits of portfolio diversification. They would be able to apply investment capital in sectors such as homelessness, which have historically only been funded by government and philanthropy.
Individuals, families, and communities would benefit from wider availability of effective prevention services, breaking the cycle of reliance on crisis-driven interventions. They would be able to lead healthier and more productive lives.