Two great core SIB stories today – from the prison system of Alabama to a government supported UK fund to invest in SIBs – all encouraging news!
Social Impact Bond Fund Attracts Bank And Pension Funds As Part Of £25m Investment
David Ainsworth – Civil Society
A fund to invest in social impact bonds run by Bridges Ventures, the specialist social lender, has announced it has raised £25m, including investments from the worlds of banking and pension funds.
The Bridges Social Impact Bond Fund was launched in 2013, with Big Society Capital as a cornerstone investor, and initially attracted investment worth £14m from a number of charitable foundations.
It has today announced new investors worth another £11m. Investors in this tranche are the European Investment Fund, Great Manchester Pension Fund, Merseyside Pension Fund, Deutsche Bank, The Prince of Wales’s Charitable Foundation, Trust for London and The Highwood Foundation.
If the state of Alabama presented a plan to reduce the rate of former inmates returning to prison, would you invest in it for a return pending the state’s success? As an investor, you would have an incentive to demand the best plan possible oversee the state’s implementation. If the state were to fail, you would receive nothing.
That setup is how a social impact bond works. A social impact bond is defined as “a set of contracts, the basis of which is an agreement by government to pay investors for an improvement in a specific social outcome once it has been achieved.” The policy has also been called a “pay for success” bond.