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Social Impact Bonds

Social Impact Bonds are a financial tool being developed in the UK to provide a new way to invest money in social outcomes. Government agrees to pay for measurable outcomes of social projects, and this prospective income can then be used to raise bond financing from commercial, public or social investors. This is possible where outcomes are measurable and lead to tangible public financial savings. Social Impact Bonds could play a particularly important role in financing preventative programmes, though it remains unclear how much they will be used primarily to spread already proven models (with reasonably reliable risk) or whether they will be used to finance innovation.