Enshrining an Olympic legacy for London with SIBs sounds like a sound plan while in Michigan, the dire financial straits of Detroir are driving a need for services funded in an innovative fashion…
£5m Bond Launched To Boost London 2012’s Legacy And Social Impact
blue & green tomorrow
A leading social enterprise has teamed up with sustainable bank Triodos to raise £5m in bonds that will help preserve the legacy of London 2012, just over a year since the Games concluded.
Greenwich Leisure Limited (GLL) is offering investors annual interest of 5% over the bond’s five year lifespan. Minimum investment is £2,000, but GLL employees can invest as little as £200.
The £5m raised will go towards developing sport and leisure facilities, including two venues at the Queen Elizabeth Olympic Park in London – the main hub of the 2012 Games. Both locations – the Copper Box Arena and the Aquatics Centre – are planned to be accessible to local residents and community groups, as well as elite athletes.
From The Daily: Success With Social Bonds?
The Michigan Daily
This month, Michigan became the eighth state chosen to receive aid from the Social Impact Bond Technical Assistance Lab at Harvard University’s John F. Kennedy School of Government. The crux of this social impact bond model is that private investors team up with state governments to create and finance social-service programs. The bonds, also known as pay-for-success contracts, allow governments to explore solutions to persistent social problems while saving taxpayer dollars. In light of recent budget cuts made by the states GOP leadership and legislature, the advent of this program comes with good timing. However, because of the lack of sufficient empirical evidence on the success of the program, the state must proceed with caution.
SIB Lab’s venture into social-impact bonds is the largest in the United States to date. The bonds provide states with money for programs that were previously underfunded to tackle pressing issues such as recidivism, lack of early-childhood education, homelessness and more. If the programs succeed, taxpayers pay the investors back with a profit. Bonuses are also awarded if programs exceed target levels. If the programs do not succeed, however, taxpayers incur no cost, and investors receive no returns.
What makes the bonds worthwhile is that through pay-for-success contracts, states are able to reap the benefits of these programs with little risk up front. The contracts encourage private investment and also allow state governments to reallocate existing funds to other underfunded matters. Additionally, fellows from the SIB Lab monitor the programs, eliminating the possibility of investor corruption and an expensive bill for the government and taxpayers, as was the case when school administrators fabricated test scores to receive money from the No Child Left Behind program.