Impact bond

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Social concerns - financing.


An impact bond is a method of financing welfare and other social services, with investment returns being linked with achieving specified social objectives.

Impact bonds are a contract between three parties:

  • Outcome payers, or commissioners, who identify the social issues and pay if the contracted outcomes are achieved. Outcome payers are often government agencies or philanthropic donors.
  • Service providers, who work to achieve the outcomes and are paid for achieved outcomes. Service providers can be private companies, NGOs or other nonprofit organisations.
  • Investors, who provide upfront funding to finance the project, and are repaid based on the outcomes being achieved. Investors may be nonprofit foundations, corporates, banks or other private investors.

Impact bonds include social impact bonds (SIBs) and development impact bonds (DIBs).

(Source - Impact bonds - Government Outcomes Lab.)

See also

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