As Anthony Hilton is one of Britain’s most eminent financial journalists it is a pleasure to read the excitement we both share about the future of Finance thanks to Social Impact Bonds. Meanwhile we have a speech from British Prime Minister David Cameron from last week lest you missed it at the time..
4-traders (press release)
It’s great to welcome so many of the world’s top social entrepreneurs and investors to London. As Prime Minister I am frequently asked to speak at conferences. But this is a conference I actually asked to speak at. In fact, I asked to set the whole thing up. Today I want to tell you why.
We’ve got a great idea here that can transform our societies, by using the power of finance to tackle the most difficult social problems. Problems that have frustrated government after government, country after country, generation after generation. Issues like drug abuse, youth unemployment, homelessness and even global poverty. The potential for social investment is that big. So I want to make it a success in Britain and I want to sell it all over the world.
One of the most exciting innovations of recent times has been the development of social-impact bonds. These are loans raised in the markets or from private investors where the money is invested to finance and improve the social outcomes delivered by publicly funded services and the return on the bonds is linked to the success of the venture.
Thus there are bonds financing schemes to reduce youth unemployment, cut the number of prisoners who reoffend, and lower the number of children in at-risk families who get taken into care. If the outcomes are not better than they were before the schemes were put in place the investors lose out. If they do deliver, investors get a better-than-average return.