I haven't had the chance to read this new article on social impact bonds yet, but here it is:

Pay for Success: How a New Kind of Bond Could Save Taxpayer Money and Improve Social Services

By Alex Goldmark

GOOD Magazine

January 27, 2012

A while back, UK's Department for Work and Pensions (DWP) created a 30 million GBP innovation fund competition to encourage "social service delivery organisations, financial intermediaries and private sector investors to work together to design and finance programmes which can help improve employment outcomes for the most vulnerable young people in society."

Today, VNFW reports details of one of the winners of DWP's competition: Triodos Bank.  Triodos will partner with a service provider, Greater Merseyside Connexions Partnership (GMCP), on a program, that will start in 2012 and run for 3 years, to help 3900 youth ages 14-24 in Merseyrside get jobs.  

The maximum payout of the social impact contract appears to be 4.5 million GBP ($7 million USD).  Triodos raised 2 million GBP to fund upfront operating costs from "a syndicate of leading UK social investors, including the Big Society Investment Fund."  The key question is whether the syndicate included for-profit investors. If it did, this would make this social impact bond the first to attract private capital. (The Peterborough prison SIB was funded by philanthropic institutions exclusively.)

Two other interesting features of this contract are that a) Social Finance, the originator of social impact bonds, does not appear to be involved and, b) the contract is not for recidivism.  These are both firsts for SIBs.  The first point means that if this works, it proves that yet another firm can act as a SIB intermediary.  The second point expands the proof of concept to an additional social problem.  Social problems addressed by SIBs, so far, are:

Peterborough, UK - adult recidivism (service delivery in progress)

Mass., US - youth recidivism (RFR released in Jan 2012)

New York, US - youth recidivism (in planning stages)

Merseyside, UK - youth employment (in planning stages)

Official Triodos release:
http://www.triodos.co.uk/en/about-triodos/news-and-media/media-releases/social-impact-bond-for-merseyside/

Here is an interesting proposed application of social impact bonds:

There are 25 million empty bedrooms in England - mostly where elderly couples have remained living in family homes.The Redbridge pilot scheme "Free Space" offers them to the chance to remain owners but to move out. The local authority pays for the cost of moving and charges an "affordable rent" (up t 80% of market rent) the proceeds of which go to the owner ( who also saved money on Council Tax and utility bills by having a smaller property.)
It is proposed that Social Impact Bonds - the scheme to attract private investment for schemes where the social benefit produces a financial return - would be suitable for these schemes.

The way SIBs worked in Peterborough, UK, government shared savings that were generated by a social intervention - in that case, avoiding a costly incarceration - with the service provider that delivered that intervention.  For SIBs to work here, a social service providers could be tasked with moving elderly couples out of family homes.  Each moved couple would generate financial return if the affordable rent on their now-vacant house (80% of market rent, as the article says), exceeded the cost of housing them elsewhere plus the cost moving them, plus the cost of operations for this social service provider.  This financial return could be split with the provider - and the social impact bond scheme could work.

The government could, however, go it alone and keep all the savings to itself.  The only reason to use social impact bonds here, in my mind, is if the government thinks that financially-incentivized providers could do a drastically better job at moving elderly couples (while adhering to social and ethical standards), or could do the job just as well but have the capacity to act on a much larger scale.  If the government can get the same efficiency and scale, then perhaps social impact bonds are not the right approach here.

Although I love Dartmouth dearly, I rarely turn to Dartmouth-related issues in this blog in my attempt to focus on social enterprise and such.  But an opinion piece by Andrew Lohse '12 in today's issue of The Dartmouth, for which I wrote op-eds back in the day, as well, is, in short, huge.

Here's the op-ed piece.  Here's the gist:

We attend a strange school where a systemic culture of abuse exists under a college president who has the power and experience to change what can only be described as a public health crisis of the utmost importance: the endemic culture of physical and psychological abuse that occupies the heart of Dartmouth’s Greek community. President Jim Yong Kim’s sterling credentials in public health are fundamentally at odds with the pervasive hazing, substance abuse and sexual assault culture that dominates campus social life.
I was a member of a fraternity that asked pledges, in order to become a brother, to: swim in a kiddie pool full of vomit, urine, fecal matter, semen and rotten food products; eat omelets made of vomit; chug cups of vinegar, which in one case caused a pledge to vomit blood; drink beers poured down fellow pledges’ ass cracks; and vomit on other pledges, among other abuses. Certainly, pledges could have refused these orders. However, under extreme peer pressure and the desire to “be a brother,” most acquiesced. While not every pledge is asked to do these things, many are. The specific tasks vary year to year, but these are things I’ve witnessed as a member of the fraternity.

And here is Dartblog, a blog that focuses on events related to Dartmouth, writing about the op-ed piece and posting an earlier version of it.

Great news from the White House on social impact bonds and pay-for-success contracts:

Today, in keeping with that October 21^st commitment, we are pleased to announce that the Department of Justice and the Department of Labor will support Pay for Success pilots through 2012 funding competitions. The Department of Justice plans to give priority funding consideration in 2012 Second Chance Act grant solicitations to highly qualified applicants who incorporate a Pay for Success model in their program design. The Department of Labor will also launch Pay for Success funding opportunities through the Workforce Innovation Fund by early spring, making up to $20 million available for programs that focus on employment and training outcomes. Federal agencies will be releasing more information on these, and potentially other, opportunities in the coming weeks and months.

More here: http://www.whitehouse.gov/blog/2012/01/24/pay-success-new-results-oriented-federal-commitment-underserved-americans

There has been a boom in course offerings for social enterprise and impact investing around Harvard University.  Here are some of the classes I've seen being offered this year.

Entrepreneurship in the Private and Social Sectors, a class taught jointly between HBS and HKS, a class for which I'm a teaching assistant. Taught by Richard Cavanagh and Robert Higgins.  This class was taught at HKS, and has taken on new form as a joint offering across the river.

Social Impact Investing: Field Course at HBS, taught by Michael Chu.  In this field course, students select and advise a social enterprise that has received, or has the potential to obtain, funding from impact investors.

Social Innovation Lab: Field Course at HBS, taught by Allen Grossman and Dutch Leonard.

The above courses are taught at Harvard's new i-Lab.  The Innovation Lab is Harvard's most recent attempt to introduce cross-disciplinary curricular and extracurricular offerings.  The idea, as I have heard it, is that students from across disciplines can better tackle the world's problems, which never respect disciplinary boundaries.

New Frontiers in Philanthropy, Social Enterprise and Impact Investing at HKS, taught by David Wood and James Bildner.  David takes a policy perspective on impact investing, thinking about how government should react to the trend.

Social Entrepreneurship at HLS, taught by Suzanne McKechnie Klahr.  Suzanne has taught this class at Stanford and is visiting Harvard Law School this winter as she teaches Harvard Law's first entrepreneurship class.

Social Entrepreneurship and Global Innovation, at the College, taught by Gordon Bloom.  Gordon taught this class at Stanford, Princeton, and at the Kennedy school, and now teaches it to undergraduates in the Yard.

Now that I'm back from India, I'm excited to report that Stanford Social Innovation Review published my article on social impact bonds:

Social Impact Bonds: Lessons from the field
Stanford Social Innovation Review
By Michael Belinsky
January 12, 2012

And Massachusetts released two requests for proposals regarding pay-for-success contracts, in juvenile youth recidivism and chronic homelessness.  The state press release is here:

http://www.mass.gov/anf/press-releases/ma-first-to-pursue-pay-for-success-contracts.html

I found a really interesting study on horizontal capital aggregation for social enterprises (the process of syndicating distinct pools of impact capital matched to the multiple phases of an social enterprises' development and growth).

    Overall, our analysis confirms that a variety of contrasting investment models and investment expectations exist, and the poor coordination of impact investors creates inefficiencies and redundancies that obstruct the efficient flow of capital system-wide. We conclude that the aggregation of capital can benefit businesses when investors are first and foremost aligned by return expectation.
    Our research indicates that social capital mobilization is early in its development and lacking market mechanisms common to other asset classes. While developed markets enjoy a well-worn path of “upround” private equity sources, there is little, if any, of this “vertical” capital aggregation ladder for social entrepreneurs operating in underserved markets. Consequently, much of the capital formation needed to support the scaling of social enterprises will necessarily be “horizontal”—meaning that capital sources are much more varied than pure equity investors and may include philanthropy, “soft” loans, quasi-equity, and private equity. The hand-off between these participants would not necessarily require valuation increases. Instead, such participants may require systems or organizational infrastructure development, increased management capacity, and a more rigorously stress-tested business model to attract follow-on investors.

Source:

COORDINATING  IMPACT CAPITAL: A New Approach to Investing in Small and Growing Businesses

An Examination of Impact Investors and Phased Investing for the Launch and Growth of Social Enterprises, John Kohler, Thane Kreiner, Jessica Sawhney, July 2011.

Here's a great article on co-locating nonprofits to capture economies of scale.

Expand Your Nonprofit’s Mission Through Co-Location, Jean Butzen, 11 Jan 2012, Stanford Social Innovation Review.

There is a more general movement to reduce back office costs for nonprofits.  SeaChange Capital Partners helps nonprofits, among other services, merge to reduce costs.  Their idea - and their leadership - comes from Goldman Sachs.  They saw an especially strong need for M&A in the nonprofit sector because too often multiple nearly-identical service providers compete for and split the same donor pools and then eat away at that money with their own backend systems and other SG&A expenses.  (Of course donors may have an interest in funding several manifestations of the same service, for example to discover which version works best.)  And not all nonprofit operations could reduce operational costs - or live through post-merger integration that is difficult even in environments where employees are not as mission-driven.

An interesting bit about impact investment funds from the WSJ:

Only a small number of donor-advised funds also have social impact investment screens or goals, but they are attracting more interest. For example, the socially responsible pool within Schwab Charitable, the second-largest national donor-advised fund by assets after Fidelity Charitable, has more than tripled to $7.5 million since its introduction in 2009. The pool is invested in the Parnassus Equity Income Fund (PRBLX).

More here.

Here is a small batch of interesting writing on social enterprise and social investment.

In Search of a New Model for Government-Social Enterprise Collaboration, 6 Jan 2012, in the Stanford Social Innovation Review by K Sree Kumar, CEO of Intellicap, a rising Indian management consulting firm that specializes in microfinance.

An overview of NSW Australia's social import bond request for proposals (see RFP here), 10 Jan 2012, by Steve Goldberg, Managing Director of Social Finance US.  Steve also runs the blog Billions of Drops in Millions of Buckets in which this article is published and which is eponymous with the book he has written.

Malnutrition in India is widespread, 10 Jan 2012, NYT: "Roughly 42 percent of all Indian children under age 5 suffer from malnutrition..."

The Speed issue of Google's new Think Quarterly magazine.

A great article by Katie Gilbert about Steve Rothchild's human capital performance bonds came out yesterday in the Institutional Investor.  Some interesting quotes:

On states looking into SIBs:

The state of Massachusetts formally sought out information about pay-for-success contracting over the summer, and this winter will issue a request for proposals from pubic social programs interested in the model. In New York City, a pay-for-success system will soon be applied to a program that works with the adolescent portion of the adult justice system and seeks to lower the chance that they’ll recidivate. New York State is also exploring the concept, and hopes to present a concrete pilot to test pay-for-success in six months to a year. Similar signs of interest are springing up in Virginia, Michigan, Indiana, and parts of California.

On potential sources of funding for SIBs:

Palandjian confirms that she’s had early conversations about the potential of pay-for-success investments with a handful of pension funds, and is generating the most interest from schemes with Economically Targeted Investment programs, which encourage a focus on investments in the pension fund’s geographic region that offer strong risk-adjusted returns in addition to some economic payoff in the pension fund’s geographic region — a snug fit for pay-for-success products, says Palandjian. It’s still too early for any of these funds to comment publicly on their possible interest in these investments.

On a SIB as an asset uncorrelated with the market: 

“I think one interesting characteristic is that this really does offer the promise of being a very noncorrelated asset for an institutional investor,” says Bugg-Levine. He points out that such an investment would carry two main types of risk: execution risk (the possibility that the nonprofits will not achieve their desired outcome) and political risk (the chance that the government side of the contract will not make good on its promise to pay investors out of the savings it incurs). Typical market risk doesn’t directly impact the investment at all.

Of course this investment is susceptible to macroeconomic risks (i.e., systemic risk) in the same way that the rest of the market is. If economic downturn drives up unemployment, as it has over the past 2-3 years, then a downturn in consumer demand will depress the market, while an increase in unemployment will not only increase criminal activity (the two are typically correlated) but also make it harder for people to get jobs and thereby increase the cost of obtaining the social outcomes (e.g., increased employment, decreased recidivism, housing the homeless) that social impact bonds seek to deliver.  So macroeconomic risk affects social impact bonds at least through the execution risk that Bugg-Levine mentions in the above quote.

The article mentions the $100 million dollars that Obama's 2012 budget designated toward pay-for-success approaches.  I have seen this mentioned again and again, and nobody seems to realize that the money is simply an effort to raise awareness about the pay-for-success model and signal federal government interest. The money itself is not nearly enough to do any serious program, especially when divided across 5 agencies (Education, Labor, Justice, the Social Security Administration, and the Corporation for National and Community Services).

 Katie Gilbert, the article's author, has been following and writing about social enterprise and impact investment for some time, apparently.  I haven't had the chance to read these articles, but some of the ones that caught my eye are:

The Appeal of the Social Impact Bond
June 13, 2011
The Institutional Investor

http://www.institutionalinvestor.com/Article/2847158/Search/The-Appeal-of-the-Social-Impact-Bond.html?Keywords=Katie+Gilbert&OB=D&DatePeriod=0

Impact Investors Move Closer to Getting Their Own Exchanges
January 05, 2012
The Institutional Investor 

http://www.institutionalinvestor.com/Article/2950096/Search/Impact-Investors-Move-Closer-to-Getting-Their-Own-Exchanges.html?Keywords=Katie+Gilbert&OB=D&DatePeriod=0

And today's article:


The Latest in Socially Conscious Investing: Human Capital Performance Bonds 

January 09, 2012
The Institutional Investor
http://www.institutionalinvestor.com/Article/2958534/The-Latest-in-Socially-Conscious-Investing-Human-Capital-Performance-Bonds.html

I recently got interested in the various corporate forms that social enterprises can take when pursuing double or triple bottom lines (financial, social, and environmental returns).  I write here about Google.org's interesting dual structure, as well as benefit corporations and L3Cs.  In future blog posts I want to address some more fundamental questions about corporate form, including:

- What are the key questions social entrepreneurs should ask when choosing which corporate form to start their organization with?  Among those questions are, what sort of money do I want to raise, in what amounts, and what tradeoffs in ownership and other restrictions am I willing to make for that funding?

Google.org
My first interaction with these corporate forms was through a case study on Google.org, which I wrote at the Kennedy school and will soon publish through the HKS case study office.  Google.org was not a hybrid corporate structure, but simply united Google Foundation, a 501c3, with Google.org, a division/arm of Google, Inc.  Google.org's structure allowed it to consider grant, PRI, equity, and other investments into nonprofits, for-profits, and other types of corporate organization.  It essentially was free to make a broad range of investments into a broad range of companies in a way that most other companies cannot do.

Benefit Corporations

Benefit corporations are a new class of corporation for which legislation has passed in 7 states so far: MD, VT, VA, NJ, HI, CA, and NY.  They have two requirements.

Requirement 1: They must operate for general public benefit – that is, “a material positive impact on society and the environment as measured a 3rd party standard through activities that promote the combination of special benefits.”  The 3rd party standard means that they must be independent (not related to party it's measuring) and transparent in its methodology. Their evaluation mechanism must be public, and all changes to it must be reported publicly.

Requirement 2: They might, but are not required to, operate for specific public benefit by providing individuals or communities with beneficial products or services, promoting economic opportunity beyond job creation, improving environment or health, promoting arts / science / knowledge, etc.

Shareholders in this form have a right to action if general public benefit is not taken into account.  This means that anyone who owns shares in the company can file suit if they believe the general public benefit is not being met.  This separates the stakeholders of the company from the shareholders.  The stakeholders are all the members affected by the general public benefit - society, environment, etc. - while the shareholders are those who receive the private benefit of ownership.

Formation.  To form, these organizations, like others, must file articles of incorporation with the secretary of state in the state in which they wish to incorporate; must clearly state benefit corporation status; draft bylaws including mission statement; hold organizational meetings; and issue stock.  Two-thirds vote is required for an existing corporation to transform to a benefit corporation.

Management. The organization is managed by directors, who must consider stakeholders in their daily operation.

Taxation. There are no tax exemptions (e.g., such as the ones granted to a 501c3).  Only benefit corporations incorporated in Philadelphia receive a tax favored status.

Capitalization.  Can receive equity, debt, and PRI.

L3C

L3Cs were created to facilitate PRI investment, yet the IRS has not yet cleared -- and may not ultimately clear -- L3Cs for PRI investment.  The reason that being cleared for PRI investment is beneficial is that PRI comes with high transaction costs, with $15,000 - $40,000 for an opinion letter from a lawyer regarding whether PRI investment into a specific company would be allowed by the IRS.  Errors in judgment about PRI investments are costly, possibly involving personal liability.  The most common type of PRI is economic development money flowing into impoverished neighborhoods.

According to Wikipedia, L3C enabling legislation has passed in Illinois, Louisiana, Maine, Michigan, North Carolina, Utah, Vermont, and Wyoming.  

This organization keeps tabs on all the L3Cs organized throughout the country.

Since making my previous list of social impact stock exchanges, I have found some other places where organizations and projects can get listed.

South African Social Investment Exchange (SASIX). This is the first social impact investment platform in South Africa.  It makes "carefully selected social development projects available as investment opportunities with a social return". Each project is valued and then broken up into $6 shares.  Investors can buy each share, and if all the shares are bought then project implementation begins.  This is similar to Kiva and other crowdsourcing investment vehicles that aggregate small investments into a larger loan to an individual or a business.  As far as I understand, investors receive no return on their shares.  I also could not find a way for investors to re-sell their shares.  So this seems to be a grant rather than a liquid investment. 

NEXII Impact Exchange Platform.  Started by SASIX's founder, this organization appears to list socially-responsible companies (and possibly also projects).  I could not find a list of the companies currently listed on the exchange, nor whether the exchange is operational, but I think NEXII only launched this platform in July 2011. 

Small roundup of latest on social stock exchanges that aim to facilitate impact investing.

England
"The world’s first stock exchange for social enterprises will be set up in London with the help of money raised from dormant bank accounts, the government has announced.
The Social Stock Exchange (SSE) will be established in the capital with the help of £850,000 from the dormant accounts and it should help improve access to capital for social entrepreneurs."
(source)

Singapore
Impact Investment Exchange Asia (http://www.asiaiix.com)

China
"In 2007 NPI introduced the concept of venture philanthropy, and today the venture philanthropy funds exceed RMB 50 million and support more than 300 nonprofits and social enterprises. In 2010 NPI designed and operated the Shanghai Social Innovation Park, which I had the opportunity to visit, where I met with a number of social enterprises that are pushing the envelope of creativity." (source)

There has been a flood of writing on capital markets and social enterprise in the past several months.  I round up all the writing I have seen on the topic here.

A New Approach to Funding Social Enterprises
by Antony Bugg-Levine, Bruce Kogut, and Nalin Kulatilaka
Harvard Business Review
Jan-Feb 2012
http://www.ssireview.org/articles/entry/social_impact_markets

Social Impact Markets
Andrew Wolk
Stanford Social Innovation Review
Winter 2012
http://www.ssireview.org/articles/entry/social_impact_markets

Impact Investing (several articles)
MIT Innovations
Summer 2011
http://www.mitpressjournals.org/toc/itgg/6/3

Insight into the Impact Investment Market
JP Morgan Social Finance Research
14 December 2011
http://www.thegiin.org/cgi-bin/iowa/resources/research/334.html

The Promise of Impact Investing
V Kasturi Rangan, Sarah Appleby, Laura Moon
Nov. 4, 2011
HBS Note

The Harvard Business Review has an interesting piece in its upcoming magazine on the value of financial engineering for social enterprises.  I have a couple of responses to some of the points made in the article.

1. The social-finance gap is another way of describing positive externalities.

But many, if not most, social enterprises cannot fund themselves entirely through sales or investment. They are not profitable enough to access traditional financial markets, resulting in a financial-social return gap. The social value of providing poor people with affordable health care, basic foodstuffs, or safe cleaning products is enormous, but the cost of private funding often outweighs the monetary return

What the authors are describing here economists call externalities.  Social enterprises engage in activities that have positive externalities – that is, the social value of those activities to society is greater than the private value of those activities to the individuals that pay for them.  Consider for example the provision of food.  The provision of food by Kroger or Whole Foods to a person with average income in the US can be described as a transaction that has no externalities.  This is a generalization, of course, that assumes that all the costs and benefits of producing and consuming this good are captured in the price of the good.)  Therefore the private value of providing this good, or its price, equals the value to society of having this good provided.

Now consider the provision of food to an impoverished person who lives in government or other types of shelter.  The provision of food to that person carries both a private and a social return, with the latter being that society has an interest in feeding people that would otherwise go hungry.  That social benefit is not reflected in the price of the food that the poor person would purchase in at a place like Kroger or Whole Foods because those prices reflect just the intersection of the private marginal cost of producing the food and the private marginal benefit to the consumer of the food.

Positive externalities like the one that results from feeding the hungry lead to an underproduction of the relevant service or good.  Society has an interest in seeing more of these transactions than currently occur.  In the case of food, the price point may be above that which many poor people can afford and therefore many transactions that society may prefer to happen do not take place.  (Conversely, negative externalities result in overproduction of relevant goods and services.)  This is one of the basic justifications for government intervention in the marketplace:  if the government can subsidize this type transaction, then more will take place.

The financial-social gap that the authors mention, therefore, is a gap between the value that the customer is willing to pay for the good or service that the social enterprise is offering and the value that society gets from having that good or service be provided.

Government subsidy is one way to “internalize the externality” – that is, to make the private value (the price) reflect the social value.  In this case, government subsidy would reduce the price of the good and thereby increase the quantity demanded of the good.  More of the good will be sold, reflecting, in perfect scenarios, the social benefit of the good.

2. There is financially-better way to accomplish the financing that the authors describe.

To see how the process works, imagine that a social enterprise operating in Africa requires an investment of $100,000 to build new health clinics and expects the clinics to earn $5,000 a year—a return of 5% on the investment.
Unfortunately, 5% is too low to attract private sources of capital. Traditionally the enterprise would obtain the $100,000 from a charitable foundation instead. But suppose the enterprise asked the donor for only $50,000. It could then offer a financial investor a 10% return on the remaining $50,000. The donor would receive no repayment—but it would have $50,000 to give to another socially worthy enterprise.

The private investor in this example gets a 5% return on $100,000 (or $5000) in the first scenario and a 10% return on $50,000 (or $5000) in the second scenario.  The investor prefers the latter scenario because, although the amount of the money he gets is the same, he now has to invest less to obtain that amount and therefore has a higher ROI.  The investor is able to access the higher, 10%, ROI in the second scenario because a philanthropic funder fronts $50,000, or half of the total needed investment, to the social enterprise.  Because one of the goals in the article is to explain how social enterprises can access for-profit funding, this scenario accomplishes that by showing how two investors with different return expectations accomplish that.

However, the social enterprise can access the same capital if the philanthropic funder were to simply GIVE the private investor $5000.  Consider this scenario:  A private investor wants a 10% ROI, but sees an investment of $100,000 that yields only 5%, or $5000.  If a funder were to offer the investor an additional $5000 contingent on the investment taking place, the investor now sees an ROI of ( [$5000 + $5000] / $100,000 = ) 10%.  In the scenario the authors describe, the philanthropic funder spends $50,000 to obtain a for-profit investment.  In my scenario, the funder spends on one-tenth of that, $5000.  The social enterprise sees the same investment amount of $100,000.  And the for-profit investor is now arguably on the hook for the entire clinic.

My scenario has several problems.  First, the philanthropic funders have legal, political and personal considerations when making their investments.  The country’s legal regime may not allow them to give money directly to for-profit investors.  (For example, I do not think that Citi Foundation can simply give money to Citigroup to increase their return in microfinance investments.)  The political regime may also look down on this transfer of money.  Finally, philanthropies may have trouble raising money from donors if their money goes into the pockets of “other donors” – that is, rich investors.

Despite all that, the funder accomplishes more with less in my example, and has money left over to fund additional clinics.

3. Social impact bonds resemble infrastructure projects.

 Social impact bonds. Another innovation, the social impact bond, deserves special notice for its ability to help governments fund infrastructure and services, especially as public budgets are cut and municipal bond markets are stressed. Launched in the UK in 2010, this type of bond is sold to private investors who are paid a return only if the public project succeeds—if, say, a rehabilitation program lowers the rate of recidivism among newly released prisoners

I love that the authors mention infrastructure here.  Social impact bonds act very similar to governments’ current infrastructure projects, where the government temporarily leases assets to private companies in return for a performance-based return on the infrastructure that those companies create.  I will write more on this similarly – and on what infrastructure contracts can teach us about social impact bonds – in a later post.

Source:

Harvard Business Review

A New Approach to Funding Social Enterprises

by Antony Bugg-Levine, Bruce Kogut, and Nalin Kulatilaka

http://hbr.org/2012/01/a-new-approach-to-funding-social-enterprises/ar/pr