Worth reading today, a brief resume of how and why SIBs work…
There’s been a lot of highfalutin finance talk about SIBs, and how they work. In this post, I’ll break down the SIB model into a simple concept. And I’ll do it by using the classic problem of how to create supportive housing (later, I’ll introduce the plans to implement similar programs right here in our home state of Colorado).
The Financial Institution – SIBs are intriguing investments for any institution that has both large sums of money and the appetite to invest in emerging ways to make a return on their invested dollars. For the sake of our example, let’s say the willing participant is Wells Fargo — one of the great business icons of the West.
Now, Wells Fargo has $10 million dollars burning a hole in its pocket. The powers that be at Wells Fargo are looking for investments that accomplish two things: 1. earn a respectable return; and 2. brand the bank as a business that cares about building and strengthening the fabric of community in the West.