Impact Bondsweb

The Potential and Limitations
of Impact Bonds
LESSONS FROM THE FIRST FIVE YEARS OF
EXPERIENCE WORLDWIDE
Emily Gustafsson-Wright
Sophie Gardiner
Vidya Putcha
j u ly 2 0 1 5
CONTENTS
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
.
.
.
.
1.1
1.2
1.3
1.4
Intractable Social Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Inadequate Resources and Delivery Failure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A New Approach to Address Social Challenges: Impact Bonds . . . . . . . . . . . . . . . . .
Contribution of This Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
1
2
2
2. Impact Bond 101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. 2.1 Impact Bond Feasibility Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 2.2 Basic Impact Bond Structure and Mechanics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 2.3 Variations on the Impact Bond Structure and Mechanics . . . . . . . . . . . . . . . . . . . . . .
4
4
6
7
3. A Landscape of Existing Social Impact Bond Transactions . . . . . . . . . . . . . . . . . . . . .

. 3.1 Geographic Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 3.2 Social Issue Area and Beneficiary Age Range . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 3.3 Capital Size and Beneficiary Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 3.4 Contract Duration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 3.5 Outcome Metrics and Outcome Payment Structures . . . . . . . . . . . . . . . . . . . . . . . .
. 3.6 Evaluation Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 3.7 Maximum Payments and Payments to Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 3.8 Social and Development Impact Bonds in the Development Stage . . . . . . . . . . . . .
11
11
11
14
17
17
20
20
22
4. What Does It Take to Get the Deal Together? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. 4.1 Who Are the Stakeholders? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 4.2 What Are the Stakeholders Motivations? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 4.3 What Are the Stakeholders Roles? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 4.4 Determination of Outcome Metrics and Payments . . . . . . . . . . . . . . . . . . . . . . . . . .
. 4.5 Challenges Faced in Deal Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 4.6 Facilitating Factors in Deal Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 4.7 Impact Bond Transaction Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 4.8 Main Takeaways on Deal Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23
23
24
26
29
30
31
35
35
5. 10 Common Claims about Impact Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

. 5.1 Summary of the Analysis of the 10 Common Claims about Impact Bonds . . . . . . . 47
6. Conclusions and Future of SIB/DIB Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Appendix 1: Research Methodology and Study Participants . . . . . . . . . . . . . . . . . . . . . . 52
Appendix 2: Existing Social Impact Bond Summary Sheets . . . . . . . . . . . . . . . . . . . . . . 55
Fact Sheet Key . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
United Kingdom SIB Fact Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
United States SIB Fact Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Australia SIB Fact Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
The Netherlands SIB Fact Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Germany SIB Fact Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Belgium SIB Fact Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Canada SIB Fact Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Portugal SIB Fact Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Appendix 3: Legislation and Policy Action to Support the Impact Bond Ecosystem . 130
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
The Potential and Limitations of Impact Bonds: Lessons from the First Five Years of Experience Worldwide
Global Economy and Development Program BROOKINGS
LIST OF FIGURES
Figure 1. Impact Bond Feasibility Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Figure 2. Impact Bond Mechanics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Figure 3. Four Stages and Components of the Impact Bond Development Process . . . . . . 7
Figure 4. SIB Development Over Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Figure 5: Active SIBs by Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Figure 6. Age of SIB Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Figure 7. Upfront Capital Commitment in SIBs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Figure 8. SIB Target Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Figure 9. SIB Contract Duration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Figure 10. Evaluation Methods Used in SIBs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Figure 11. Number of Actors by Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Figure 12. SIB Actor Primary Motivations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Figure 13. Challenges in Developing SIBs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Figure 14. Facilitating Factors in Developing SIBs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Figure 15. 10 Common Claims about Impact Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
LIST OF TABLES
Table 1. Impact Bond Actors and Roles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Table 2. Types of Impact Bond Structures and Actor Roles . . . . . . . . . . . . . . . . . . . . . . . . . 10
Table 3. Active SIBs as of March 1, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Table 4: Innovation Fund Round 1 Rate Card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Table 5. Structures of Existing SIBs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
LIST OF BOXES
Box 1: Impact Bond Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Box 2: Government Support of the SIB Ecosystem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ii
ACKNOWLEDGMENTS
our colleagues at Brookings for their research, design, and editing assistance as well as their contribution to organization and logistics. In particular we would like to thank Ines Cruzalegui for her
dedicated work on the survey as a summer intern.
Finally, we would like to thank the Bernard van
Leer Foundation for its support of this research.
The authors would like to thank numerous people

for their contributions to this study. First and foremost we would like to thank our colleague Tamar
Manuelyan Atinc, who was a co-conspirator and
thinker throughout the entire research project. This
study benefited immeasurably from her wealth of
experience, wisdom, and unstoppable gumption.
We are grateful to every individual who participated in the interviews and survey that contributed to
the data presented here. Without their time and effort we would not have been able to tell such a rich
story about the development of the impact bond
market over the past five years. We also would
like to thank the members of our Advisory Panel
(listed below) and in particular the chair, Johannes
Linn, who provided invaluable recommendations
throughout the research process. In addition, we
would like to thank Drew von Glahn for thoughtful
comments and recommendations on the paper.
We are appreciative of those people who participated in the events that we have held over the past
year and a half at the Brookings Institution and
elsewhere. Each of these conversations added to
the discussion here. We would also like to thank
The Brookings Institution is a private non-profit

organization. Its mission is to conduct high-quality, independent research and, based on that
research, to provide innovative, practical recommendations for policymakers and the public. The
conclusions and recommendations of any Brookings publication are solely those of its author(s),
and do not reflect the views of the Institution, its
management, or its other scholars.
Brookings recognizes that the value it provides
is in its absolute commitment to quality, independence and impact. Activities supported by its
donors reflect this commitment and the analysis
and recommendations are not determined or influenced by any donation.
Advisory Panel Members

J. Lawrence Aber, Professor, New York University
Orazio Attanasio, Professor, University College London
Owen Barder, Senior Fellow and Director for Europe, Center for Global Development
Claudia Costin, Senior Director for Education, World Bank
Maria del Rosario Sintes, Regional Vice President, Latin America, United Way Worldwide
Robert Dugger, Founder and Managing Partner, Hanover Provident Capital
Johannes Linn, Non-resident Senior Fellow, Brookings Institution
Joan Lombardi, Senior Fellow, Bernard van Leer Foundation
Camilo Mendez, Investment Officer, Pro Mujer
Amie Patel, Principal and Director, Emerging Markets, Imprint Capital
Andrea Phillips, Vice President, Urban Investment Group, Goldman Sachs
Mauricio Santa Maria Salamanca, Former Director of National Planning and Former Minister of Health
and Social Protection, the Republic of Colombia
Mary Wickersham, Director of the Center for Education Policy Analysis, University of Colorado, Denver
iii
I. INTRODUCTION
1.1 Intractable Social Challenges
deaths.4 Direct costs of malaria related to illness,

treatment, and premature death are estimated
to be $12 billion per year.5 One study found that,
between 1965 and 1990, economies of countries
with high malaria prevalence grew 1.3 percentage
points less per year than other countries.6
overnments, nonprofit, nongovernmental, and

multilateral organizations have long invested
resources to develop strategies and implement
programs to address pressing social issues, such
as the large number of children who are still out
of school across the world, the high rates of youth
and adult unemployment, prison recidivism, and
the burden of preventable and treatable diseases.
While some advances have been made in these
areas, enormous challenges remain that inhibit
economic and human development, leading to the
persistence of social inequities.
1.2 Inadequate Resources and Delivery Failure

Low levels of education and the prevalence of
malaria result from the inability of governments
to equitably deliver high-quality services in the
education and health sectors. This inability may
arise from lack of resources, ineffective use of
such resources, or both. In developing countries,
for instance, limited tax revenue may lead to inadequate and unstable financing for development
objectives, as the ratio of tax to GDP in poor
countries is only half of what it is in the developed
world.7 However, even when governments do have
resources and spend on services, performance is
mixed. For example, while studies on cost-effectiveness of preventive and primary curative interventions indicate that the death of a child under
the age of 5 could be avoided for as little as $10,
cross-national analysis indicates that a developing
country at average income levels spends $50,000
to $100,000 per child death averted.8 Data such
as these suggest that government failure is not
simply a function of insufficient resources for populations in need. It may also reflect undue focus
on more expensive curative or crisis-driven interventions, resources not reaching frontline service
providers, weak incentives for service providers to
In the case of education, for example, momentum

from the Millennium Development Goals led to substantial improvement in the number of children enrolled in primary school.1 Nevertheless, it is estimated that 58 million primary school children worldwide
are still out of school. Furthermore, education quality
remains low, with at least 250 million children of primary school age failing to learn the basics.2 The consequences can be hugein Nigeria, for example, it
is estimated that more than 7 percent of GDP is lost
due to forgone primary education.3
Problems with such deep consequences span
sectors and affect societal well-being in a number of ways. For example, while malaria is both
preventable and curable, the World Health Organization estimates that in 2012 there were about
207 million cases of malaria (90 percent of them
in sub-Saharan Africa) and an estimated 627,000
provide quality services, and insufficient demand

for services.9 Also, interventions for needy populations can often be very human relations-intensive,
requiring close connections with communities, social ties, and trust. Government systems that can
be bureaucratic and distant from reality on the
ground are not always the best suited to provide
these types of social services. In short, insufficient
attention to performance and to measuring and
being held accountable for results can lead to poor
outcomes even with abundant funding. These failures are often inextricably linked to political and
institutional constraints. Election cycles, budget
silos, and complex or rigid government appropriation systems can all hamper governments ability
to deliver.
decades. However, impact bonds differ in several

ways. First, in an impact bond, financing is provided upfront rather than when results are attained.
Second, results in social impact bonds are usually
related to outcomes as opposed to outputs. Third,
impact bonds can focus on the delivery of human
services as opposed to the traditional physical
infrastructure that has often been the center of
both public-private partnerships and performance
contracts. Finally, in contrast to programs such
as Program for Results (P4R) or results-based
financing (RBF) being used by the World Bank,
impact bonds bring in private sector rigor and performance management to drive results.11
To date, 44 SIBs are being utilized in developed
countries to, among other social issues, provide
high-quality preschool education, reduce prison recidivism, avoid foster care placement, and
increase youth employment. One impact bond
has been contracted in a developing country, and
several projects are underway to establish development impact bonds in various areas including
health and education.12
Nonprofits or nongovernmental organizations attempting to fill the gaps where governments fail
may face problems of their own related to financing
constraints or ineffective use of resources. These
types of organizations are often ill-equipped to deliver quality programs at the scale needed to reach
all of the needy population. Their dependence on
volatile external resources or government funding,
for the reasons described above, can add to the
challenges they face.
1.4 Contribution of This Study

This study aims to examine critically the potential
for this innovative financing mechanism to address
the financing and quality service delivery issues
described above. As there has been considerable
fervor around impact bonds in recent years, we
identified the need to provide an impartial and independent perspective with respect to the potential benefits of impact bonds.
1.3 A New Approach to Address Social

Challenges: Impact Bonds
The persistence and enormity of social problems,
despite attempts to address them, suggest a need
for diverse and innovative solutions that address
the weaknesses of traditional approaches. The
social impact bond (and the related development
impact bond), a mechanism that harnesses private capital for social services and encourages
outcome achievement by making repayment contingent upon success, has been proposed as one
way to address some of these challenges.10
The research for this study consisted of a systematic review of the literature, more than 70 structured
and informal interviews, and online surveys of 30
individuals. The interviews and surveys captured
multiple representatives of the actors involved in
every SIB contracted as of March 1, 2015, as well
as interviews with other key players in this area
(see Appendix 1 for a detailed description of research methodology and list of survey participants,
interviewees, and other contributors).
Social impact bonds (SIBs) combine some components of results- or performance-based financing and public-private partnerships, which
have been used to fund public services for many
This study provides:
An inventory of key policy actions and legislation to support the impact bond ecosystem
Clear definitions of the concepts, key players, and development processes of impact
bond transactions
An analysis of the stakeholder motivations,

key facilitating factors, and biggest challenges faced in the 38 impact bond transactions
A comprehensive inventory of all active

38 active SIBs (contracted as of March 1,
2015) as well as some of the social and
development impact bonds in the development stage
A critical examination of 10 positive claims

made about impact bonds
An analysis of the future potential of impact

bonds and any potential derivatives with a
particular focus on developing country contexts.
2. IMPACT BOND 101
mpact investing, a way of investing that seeks

both financial and social return, has become increasingly popular over the past decade. In 2014,
in a survey of 125 investors,13 the global market
was estimated to be valued at $46 billion, of which
$32 billion was invested in developing countries.14
While these numbers dont capture the entire impact investing marketin particular they miss those
impact investors based in the Global Souththey
demonstrate that the market is fairly substantial in
absolute terms. The survey also documents the rapid growth of impact investing over the past decade
and expectations of its continued growth. More and
more, investors have an interest in achieving both
financial and social returns on their investments, as
shown in a study of millennial investors.15 As a fraction of total assets under management, which were
estimated to be $64 trillion in 2012 and expected
to exceed $100 trillion by 2020, impact investing
still represents a small portion of the market. This
shows that there is still a lot of room to grow.
foundation is the outcome funder as opposed to

the government (although some combination of
government with third party is also possible).17
2.1 Impact Bond Feasibility Criteria

Four basic criteria are necessary for impact bonds
to come to fruition (see Figure 1). In addition to
these criteria, there must be a set of actors who
possess the expertise, will, and dedication required to carry out the transaction.
Meaningful and measurable outcomes:Meaningful outcomes should minimally be indicative of outcomes that are predictive of the life trajectory of
an individual. If an outcome has no evidence that
demonstrates that it will lead to better outcomes later
on, paying for it doesnt make a great deal of sense.
While interventions should by no means be limited
to the outcomes that are interesting to outcomes
funders, when choosing outcomes for repayment
in a SIB, ultimately the outcome must be attractive
to them. This likely means that the outcome metric
should be a meaningful proxy for longer-term economic outcomes or be aligned with a broader political agenda of some kind.18 Outcomes may represent cost avoidance or potentially fiscal savings. The
term often used to describe this is that outcomes are
monetizable. Measurable outcomes are outcomes
that can be measured in a specific context, particularly given resource constraints. In other words, not
only must you have the tools with which to measure
the outcomes, but systems must also be in place to
accurately and consistently measure them. For that
A particular class of impact investing, social impact bonds (SIB), also called pay-for-success
(PFS) in the United States and social benefit
bonds (SBB) in Australia, has gained particular
attention in recent years. In this model, private
investors put up capital to fund a social intervention and governments repay the investor only if an
agreed-upon outcome is achieved.16
Development impact bond (DIB) is a term used
for a SIB that is implemented in low- and middle-income countries where a donor agency or a
reason, the simpler the outcomes to measure, the

better they are for the success of an impact bond.
Hence, the use of administrative data, where available, makes good sense as an outcome measure.
There is potentially even more promise with the collection of real-time data that can be used to manage
programs and make course corrections along the
way.
Evidence of success in achieving outcomes: Evidence of success in achieving outcomes should

come from evaluations of interventions that closely mirror the services and how they are delivered
in an intervention supported by an impact bond.
These evaluations are best if they come from a
context similar to the one in which an impact bond
is planned, though this is not absolutely necessary. At the very least, evidence should probably
be available at the country level for an impact
bond to be considered feasible. In our view, rigorous evaluations are recommended, such as
randomized control trials or other techniques that
compare outcomes for a group receiving a service
with another group that does not receive a service,
while also accounting for differences between the
groups compared. Ultimately, however, the extent
to which evidence must be rigorous is very dependent on the risk appetite of the investors and the
requirements of outcome funders.
Reasonable time horizon to achieve outcomes:

A time horizon for achieving outcomes is reasonable if there is substantial evidence from previous
evaluations that the specified outcomes will occur
within this time frame. At the same time, a reasonable time horizon is one in which outcomes are
measurable and therefore indicative of future lifelong opportunities for the individuals. A reasonable
time horizon will also be one in which investors
and outcome funders are able and willing to make
and receive payments given, for instance, legal
and political conditions in a country.
Figure 1. Impact Bond Feasibility Criteria
Meaningful
and
Measurable
Outcomes
Appropriate
Legal and
Political
Conditions
Impact
Bond
Feasibility
Reasonable
Time Horizon
to Achieve
Outcomes
Evidence of
Success in
Achieving
Outcomes
have contract protections and are incentivized to

provide capital for the impact bond. Other relevant
issues that may influence the feasibility of an impact bond include how governments treat hybrid
investments, which include debt and equity components, and how they treat various stakeholders
involved in a deal that may be located outside of
a country.19
Appropriate legal and political conditions:Appropriate political conditions are those that demonstrate support for the services delivered in an
impact bond by relevant stakeholders, including
local, state, and national governments, as well as
investors. Support for a particular service may be
found in a policy framework or strategy document
or may be demonstrated in previous funding allocated to services. In addition, appropriate legal
conditions will enable governments (in their role
as outcome funders) to pay for outcomes beyond
the fiscal year in which a contract is made and
for that matter to pay for outcomes at all. This is
often necessary since most public expenditure is
committed on a yearly basis. It may also be necessary for legal conditions to support the ability of
the government to direct funds to an intermediary
in a transaction and for the intermediary to have
the authority to make certain decisions, such as
selecting a service provider. Legal conditions will
also facilitate a transaction such that investors
2.2 Basic Impact Bond Structure and

Mechanics
The basic impact bond structure and mechanics
are shown in Figure 2. In this basic model four
major types of actors are usually involved in an
impact bond transaction, in addition to the population in need. Investors provide capital for a
service provider to deliver social services to a
population in need. The outcome funder (government, or in the case of a development impact
bond, a third party) agrees to repay the investors
Figure 2. Impact Bond Mechanics
INVESTORS
7. Return of Principal
plus Interest
1. Investment of Principal
2. Coordinate, Structure Deal, &
Manage Performance
6. Pay for Success
INTERMEDIARY
SERVICE PROVIDER
OUTCOME FUNDER
3. Deliver Services
5. Evaluate Impact
4. Achieve Outcomes
EVALUATOR
POPULATION
IN NEED
if pre-determined outcomes are achieved. The intermediary can play multiple roles but often has
the responsibility of raising capital and bringing
the stakeholders together to determine and agree
upon the transactional details. In addition to these
four players, an evaluator may be used to evaluate the outcomes.
cial challenge; an assessment of feasibility for developing an impact bond based on a set of criteria
(see Figure 1); the raising of capital from senior
and/or subordinate lenders or grant makers; the
defining of the intervention, outcomes metrics,
and evaluation methodology; the procurement
of a service provider (which can occur through
various different processes21); the negotiation of
contracts between stakeholders; the provision of
the services; performance management (in some
cases); and evaluation. The order in which these
components take place can vary greatly across
deals. For example, in some cases a service provider is identified early on in the process, allowing inclusion of service provider-specific data in
the feasibility analysis; in other cases, the service
provider is procured after the identification of an
intervention and after a feasibility analysis is conducted. Similarly, the capital can be raised before
or after securing an outcome funder depending on
the circumstances. We describe these differences in more detail in the third section of this study
where we analyze the process of deal development
across all 38 transactions included in our study.
2.3 Variations on the Impact Bond Structure

and Mechanics
The design of an impact bond can vary greatly in
terms of the composition of the players involved,
their roles, and the timeline and process of putting
the deal together based on what we see across
the 38 SIBs included in this study.
The development process for an impact bond
transaction is unique to each deal, though four
major stages of the process are fairly consistent
across deals: a feasibility study, structuring the
deal, implementation, and evaluation and repayment.20 Within those stages, as shown in Figure
3, there are some basic components of each deal
process. These include the identification of a so-
Figure 3. Four Stages and Components of the Impact Bond Development Process
Identify
Social
Challenge
Determine
Feasibility
Based on
Impact Bond
Criteria
Structuring
the Deal
Raise Capital
Determine
Intervention
and
Outcome
Metrics
Implementation
Provide
Services
Manage
Performance
Evaluation and
Repayment
Evaluate
Achieve
Outcomes
and Repay
Investors
Feasibility
Study
Procure
Service
Provider
Negotiate
and Finalize
Contracts
Table 1 provides a more varied description of the

potential roles that each of the parties can hold in
this process and offers examples of the types of
entities that can take on each responsibility. The
table also includes additional actors: lawyers, who
provide the necessary legal advice and contracting for these deals to take place; technical assistance providers, who can provide guidance to
both governments and service providers in these
transactions; and validators, who validate the
Table 1. Impact Bond Actors and Roles
IMPACT BOND
ACTOR
Service provider
EXAMPLES OF POTENTIAL TYPES

OF ENTITIES
ROLE
Provide social service in transaction
Possible:
Provide capital for social service
Nonprofit or nongovernmental organization,

public sector service provider, cooperative,
non-profit or for-profit social enterprise, forprofit business25
Provide data related to service provision and

outcomes
Investors
Senior lenders
Subordinate
lenders
Grant makers
Provide capital to service providers upfront or Individual, trust, foundation, (impact)

over the duration of the contract
investment firm, commercial bank, credit
union, community development financial
Investors with highest priority in repayment if
institution (CDFI), public sector entity,
outcomes are met
nonprofit entity (including service providers
themselves), government agency (other than
Investors with lower ranking priority in repayment
outcome funder)
if outcomes are met
Investors who are not repaid regardless of
outcomes being met
Possible:
Establish company (SPV/LLC26) to manage capital
and conduct performance management (this can
include participating as board members), receive
outcome payments and pay investors
Intermediaries
Possible: Raise capital, structure deal, establish

company (SPV/LLC), manage partners, receive
outcome payments and pay investors, conduct
performance management of service provision
Nonprofit (financial structuring entity

or social policy research organization),
commercial bank, impact investment firm,
government agency, for-profit business
Outcome Funders
Pay for outcomes
Government agency, foundation,

development agency
Possible:
Determine outcome metrics and repayment
terms
Evaluators
Assess outcomes of program
Independent evaluation firm, research

institution, university, government agency
Validators
Validate rigor of evaluation to assess

outcomes
Independent evaluation firm, research

institution, university, government agency
Lawyers
Advise on structure of deal, represent various

actors involved in deal
Law firm
Technical Assistance
Providers
Advise outcome funders (governments)

and service providers on design and
implementation of deal
Nonprofit or nongovernmental organization,

university, development agency
Source: Authors research.

rigor of the outcome evaluation. The bolded text in

column two indicates the basic impact bond model role (as seen in Figure 2) and the un-bolded
text describes additional roles that this actor can
assume. The third column demonstrates the wide
variation in types of entities that can take on the
different functions. There is considerable flexibility
in terms of the roles that different entities can play,
provided that the necessary expertise is present in
the organization.
(SPV)24 is created as a conduit for funds in the deal

and the outcome payment contract is with the SPV.
In these cases, the structure distinctions are based
on the actor with majority control (the most board
seats or greatest leadership role) of the SPV. In
the first type of contract structure, a managed impact bond structure, the outcome funder holds
the contract with the intermediary, or a majority intermediary-controlled SPV, and plays an important
leadership role throughout the process of the deal
and is responsible for performance management
of the service provision. In the second type, an
intermediated impact bond structure, the outcome funder holds a contract with the investors
or a majority investor-controlled SPV. The intermediary often still plays a large role in developing
the deal and is contracted by the SPV for performance management. Finally, in a direct impact
bond structure, the service provider contracts
directly with the outcome funder. The service provider takes on a more central role, including inhouse performance management. The difference
in ownership of the SPV is significant because
outcome payments often flow into the SPV from
the outcome funder, and what remains in the SPV
after investors have been repaid is kept by the
owner of the SPV.
Today, there are two general models in which

impact bonds are developed; as an individual transaction impact bond for one outcome
payment contract, or as an impact bond fund
for multiple outcome payment contracts around
the same social issue. In the latter model, a rate
card22 is issued that establishes the payment per
individual outcome. Partnerships of service providers and intermediaries then bid for a contract at
a discounted rate of the outcome payments. The
outcome funder (government) selects winning bidders based on the discount on the payments and
other criteria. Through a fund, the outcome funder
is able to set up many SIBs at once. (See Box 1 for
more on impact bond funds.)
Across the individual transaction impact bonds and
impact bonds within funds, the contract structures
can be divided into three rough categories based
on the actor that holds the contract with the outcome funder and thus has the greatest responsibility in the deal.23 Often a special purpose vehicle
Table 2 provides a full description of the actors

responsible for each role by type of impact bond
structure, where white arrows indicate the defining
differences between types.
Table 2. Types of Impact Bond Structures and Actor Roles
ROLE
ACTOR RESPONSIBLE BY TYPE OF IMPACT BOND STRUCTURE

Managed
Intermediated
Identify Social Challenge Outcome funder and/

or intermediary and/or
service provider and/
or technical assistance
provider
Direct
Outcome funder and/or Outcome funder and/or

intermediary
intermediary
Determine Feasibility Intermediary

Based on Impact Bond
Criteria
Intermediary and/or
service provider
and/or investor
Outcome funder and/

service provider
Intermediary
Intermediary and/or
service provider and/or
investor
Intermediary and/or
outcome funder
Outcome funder and/or

investor
Outcome funder and/

investor
Outcome funder or
intermediary
Contracting with Intermediary or majority

Outcome Funder intermediary-controlled
SPV
Investors or majority
investor-controlled
SPV
Service provider
or majority service
provider-controlled SPV
Provide Services Service provider
Service provider
Service provider
Intermediary
(commissioned by
investors or majority
investor-controlled
SPV)
Service provider
Evaluator or outcome
funder
Outcome funder or
external validator
Raise Capital Intermediary
Define Outcome Metrics Outcome funder and/or

investor
Procure Service Provider Intermediary and
outcome funder
Manage Intermediary
Performance
Measure/Validate Outcome Evaluator or outcome

Achievement funder
Source: Adapted from Goodall (2014).
10
3. A LANDSCAPE OF EXISTING SOCIAL

IMPACT BOND TRANSACTIONS
he first SIB was implemented in 2010 in the

United Kingdom for the purpose of reducing
prison recidivism among short-term male prisoners. This was followed by several more in the U.K.
and by the first SIB outside of the U.K., one in the
United States, also for prison recidivism. After five
years, the social impact bond market has grown to
include 44 transactions.27 Table 3 lists the 38 SIB
transactions included in our study or those contracted before March 1, 2015, our inclusion cutoff
date (see Appendix 2 for detailed fact sheets of
each deal). Later in March and in May of 2015,
a new fund that includes four deals and two additional individual deals were announced in the
U.K. Many more transactions are in development.
In addition, one development impact bond (DIB)
was signed in April, 2015 in Rajasthan, India for
girls education. The last subsection here discusses other DIBs that are currently in development.
number of SIBs is the United States, with seven

as of March 1, 2015. Continental Europes first
SIBs were established in Germany and the Netherlands, followed by Belgium and Portugal. Australia has implemented two SIBs, and Canada has
developed one SIB.
The development of the SIB market has been accelerating, as demonstrated in Figure 4. After the
first SIB was launched in the U.K in 2010, there
was a two-year long period with no new SIBs, followed by the first and second rounds of the first SIB
fund in the U.K. at the end of 2012. The first SIB
was launched in the U.S. in January of 2013, followed by the two additional SIBs in the U.S., two
SIBs in Australia and the first two SIBs in mainland
Europe at the end of 2013. The number of deals
grew consistently through 2014, followed by a huge
jump at the end of 2014 with the second SIB fund in
the U.K. and two more deals in the U.S.
3.1 Geographic Distribution
3.2 Social Issue Area and Beneficiary Age

Range
SIBs have thus far developed on three continentsEurope, North America, and Australia.
The highest number of impact bonds can be found
in their origin country of the U.K., which has 24
SIBs.28 The high number of transactions in the
U.K. is driven in part by two SIB funds that were
established by government: the Innovation Fund,
which comprises 10 SIB deals (six in Round 1
and four in Round 2) in employment, and the Fair
Chance Fund, which comprises seven SIBs in social welfare (see Box 1 for more on these impact
bond funds). The country with the second-highest
Among the 38 SIBs included in this study are four

broad social issue areas in SIB transactions to
date: education, employment, criminal justice, and
social welfare.29 While many of the first SIBs were
in the social issue area of criminal justice (four
SIBs), other areas have since gained traction. In
particular, the social welfare (18 SIBs) and employment (13 SIBs) have come to represent the largest social issue areas in the SIB market in terms
of numbers of deals (see Figure 5). Social welfare,
11
Table 3. Active SIBs as of March 1, 2015
PROGRAM NAME
SECTOR
ONE Service
COUNTRY
YEAR OF
CONTRACT
SIGNING
Criminal Justice
United Kingdom
2010
Triodos New Horizons
Employment
United Kingdom
2012
ThinkForward
Employment
United Kingdom
2012
Links 4 Life Programme
Employment
United Kingdom
2012
Advance Programme
Employment
United Kingdom
2012
Nottingham Futures
Employment
United Kingdom
2012
Living Balance
Employment
United Kingdom
2012
T&T Innovation
Employment
United Kingdom
2012
3SC Capitalise Programme
Employment
United Kingdom
2012
Energise Innovation
Employment
United Kingdom
2012
Prevista
Employment
United Kingdom
2012
Street Impact
Social Welfare
United Kingdom
2012
Thames Reach Ace
Social Welfare
United Kingdom
2012
Essex Family Therapy
Social Welfare
United Kingdom
2012
Its All About Me (IAAM)
Social Welfare
United Kingdom
2013
Local Solutions
Social Welfare
United Kingdom
2014
Your Chance
Social Welfare
United Kingdom
2014
Home Group
Social Welfare
United Kingdom
2014
Fusion Housing
Social Welfare
United Kingdom
2014
Ambition East Midlands
Social Welfare
United Kingdom
2014
Aspire Gloucestershire
Social Welfare
United Kingdom
2014
Rewriting Futures
Social Welfare
United Kingdom
2014
Manchester City Council Vulnerable Children
Social Welfare
United Kingdom
2014
Outcomes for Children Birmingham
Social Welfare
United Kingdom
2014
Criminal Justice
United States
2013
Education
United States
2013
Increasing Employment and Improving Public Safety
Criminal Justice
United States
2013
Juvenile Justice Pay for Success Initiative
Criminal Justice
United States
2014
Education
United States
2014
Partnering for Family Success Program
Social Welfare
United States
2014
Chronic Individual Homelessness Pay for Success Initiative
Social Welfare
United States
2014
Newpin Social Benefit Bond
Social Welfare
Australia
2013
Benevolent Society Social Benefit Bond
Social Welfare
Australia
2013
Social Impact Bond Rotterdam
Employment
The Netherlands
2013
Eleven Augsberg
Employment
Germany
2013
NYC ABLE Project for Incarcerated Youth

Utah High Quality Preschool Program
Child-Parent Center Pay for Success Initiative
Duo for a Job

Sweet Dreams Supported Living Project
Junior Code Academy
Employment
Belgium
2014
Social Welfare
Canada
2014
Education
Portugal
2015

12
Figure 4. SIB Development Over Time

40
Portugal
35
Canada
Belgium
30
Netherlands
25
Germany
20
U.S.
U.K.
Australia
15
10
5
Jan-15
Nov-14
Jul-14
Sep-14
May-14
Mar-14
Jan-14
Nov-13
Sep-13
Jul-13
Mar-13
May-13
Jan-13
Nov-12
Sep-12
Jul-12
May-12
Mar-12
Jan-12
Nov-11
Sep-11
Jul-11
May-11
Jan-11
Mar-11
Nov-10
Sep-10
Jul-10
Mar-10
May-10
Figure 5: Active SIBs by Sector
as the largest share of all SIB deals, includes a

broad range of issues including adoption or longterm foster care placement, family strengthening
to avoid foster care, homelessness, and holistic
support of disadvantaged young people. Of the
three education SIBs, two are for preschool education and one is for information technology education for primary school students. It is important
to highlight that the likely reason that SIBs started in the area of criminal justice is that the sector
closely aligns with the SIB feasibility criteria. The
criminal justice system has clearly defined and
monetizable outcomes, and there is high political
commitment due to the large number of negative
outcomes and resulting community pressure.
Criminal
Justice
4
Education
3
Social Welfare
18
Employment
13

Note: Social welfare includes adoption or long-term foster care
placement, family strengthening to avoid foster care, homelessness, and holistic support of disadvantaged young people.
Though the sectors in Figure 5 cover traditional

sectors of government service provision, the interventions used in the existing SIBs are almost always not included in core government services or
provide unique combinations of government services. Core government services include primary
education, law enforcement, and social protection
for the elderly, among many others. In particular,
SIBs have been used as a tool to fund interventions where inputs are fairly complex but outcomes
are simple to measure. For example, pre-primary
education, mentoring for youth, and family therapy
13
are all high-impact, cross-sector interventions that

fall outside core government services and where
service provision by nongovernmental organizations is common, if not the norm.
ages 8 to 9. All existing SIBs focus on vulnerable

populations with income and other vulnerability criteria used for targeting.
3.3 Capital Size and Beneficiary Number
The sector of the SIB is closely related to the population that the program serves. Figure 6 shows the
distribution of ages of the target populations of the
active SIBs. Five SIBs in the areas of homelessness
and criminal recidivism work with adult populations
and have no maximum age limit. Twenty-two SIBs
focus on young adults, working on criminal recidivism or broad employment support programs. Six
of the family support and adoption SIBs focus on
children, with two focusing exclusively on older children and two in Australia focusing exclusively on
younger children. The three SIBs in the education
sector focus on children around age 4 and those
It is a challenge to accurately capture the investment size of the different SIBs because the investment structures differ greatly across deals. First,
the capital committed can be drawn upfront or in
partial amounts over time. Second, in many deals,
particularly in the U.K., funds are recycled through
the program by reinvesting early payments from
the outcome funder back into the program to fund
operating costs. In these cases, the payments
from the outcome funder to the program are much
greater than the payments the investors receive.
Figure 6. Age of SIB Beneficiaries

ONE Service
Thames Reach Ace
Street Impact
Duo for a Job
Fair Chance Fund (x7)
The NYC ABLE Project for Incarcerated Youth
Eleven Augsberg
Innovation Fund Round 1 (x6)
**Innovation Fund Round 2 (x4)
Junior Code Academy
*Partnering for Family Success Program
*Sweet Dreams Supported Living Project
*Benevolent Society Social Benefit Bond
*Newpin Social Benefit Bond
Portugal
Canada
Belgium
Netherlands
Germany
Australia
U.S.
U.K.
10
15
20
25
30
35

*Program works with parents, but the intended beneficiaries are the children
**Think Forward in the Innovation Fund Round 2 works with 14- to 18-year-olds, rather than 14- to 16-year-olds.
14
40
The investment structures in the 38 existing SIBs

vary in their similarity to debt, a more conservative investment with a fixed repayment timeline
and interest rate, and equity, a riskier investment
where repayment and interest are dependent on
the recipients performance. Most of the deals
have characteristics of both debt and equity. All
deals offer variable returns based on outcomes,
as in an equity investment. Many of the deals have
caps on returns and set interest rates for given
outcomes, which is more like a debt investment.
In the U.S., deals have tended to be structured
more like debt, while U.K. deals have tended to be
structured more like equity.
which may include senior investment, subordinate

investment, recoverable grants, non-recoverable
grants, or investment guarantees. Subordinate
investment is repaid after senior investment, making it more risky. Subordinate investment is often
structured as an equity investment, while senior
investment is often structured as debt. Non-recoverable grants are not repaid, and investment
guarantees are triggered to pay investors only if
the program is unsuccessful. Investment and repayment structures are discussed further later in
this section, and detailed information of the investment and repayment terms can be found in the
fact sheets in Appendix 2.
As Figure 7 demonstrates, various SIB deals

have been financed by layered capital structures,
Figure 7 shows that the upfront capital commitment in the U.S. has tended to be higher than in
Figure 7. Upfront Capital Commitment in SIBs
Links 4 Life Programme, U.K.

Aspire Gloucestershire, U.K.
3SC Capitalise Progrmme, U.K.
Local Solutions, U.K.
Ambition East Midlands, U.K.
Home Group, U.K.
Your Chance, U.K.
T&T Innovation, U.K.
Street Impact, U.K.
ThinkForward, U.K.
Energise Innovation, U.K.
Fusion Housing, U.K.
Rewriting Futures, U.K.
Outcomes for Children Birmingham, U.K.
Manchester City Council Vulnerble Children, U.K.
Triodos New Horizons, U.K.**
Nottingham Futures, U.K.**
Its All About Me (IAAM), U.K.
Advance Programme, U.K.
Essex Family Therapy, U.K.
ONE Service, U.K.
Junior Code Academy, Portugal
Duo for a Job, Belgium
Social Impact Bond Rotterdam The Netherlands
Sweet Dreams Supported Living Project, Canada
The Newpin Social Benefit Bond, Australia
Benevolent Society Social Benefit Bond, Australia
Partnering for Family Success Program, U.S.
Utah High Quality Preschool Program, U.S.
Increasing Employment and Improving Public Safety, U.S.
Juvenile Justice Pay for Success Initiative, U.S.
The NYC ABLE Project for Incarcerated Youth, U.S.
Child-Parent Center Pay for Success Initiatie, U.S.*
Chronic Individual Homelessness Pay for Success Initiative, U.S
Senior Investment
Subordinate Investment
Recoverable Grants or
Investment Guarantees
Non-Recoverable Grants
10
15
20
USD millions
No publicly available information for Thames Reach Ace, Prevista, Living Balance, and Eleven Augsberg.
*Division of investment between senior and subordinate investors is not public
**Approximate
15
25
in others.30 In many cases, the intermediary is paid

a closing fee or a success fee out of the program
budget. Intermediaries are also often paid for performance management during implementation. The
cost of pipeline development has fallen largely on the
intermediaries to raise on their own (often through
philanthropy), though as the market develops intermediaries are looking for new ways to sustainably
fund these services. In some cases, service providers also receive success fees if the program reaches certain goals. Legal services to date have been
mostly provided on a pro bono or low bono basis.
the U.K., where capital recycling is more common.

Nevertheless, in the cases where this recycling of
outcome funder payments occurs, the total amount
that goes toward the intervention is often much
larger. The smallest amount of upfront capital commitment is in the SIB in Portugal, with $148,000,
and the largest is in the SIB in Massachusetts, with
$24.5 million in upfront capital commitment, though
the vast majority of this is from grants. The largest
upfront capital commitment not including grants is
the Child-Parent Center Pay for Success Initiative
in the U.S. in Chicago ($16.9 million). The U.S. has
used subordinate investment, grants, and guarantees in SIB structures more than any other country,
ranging from 91 percent of the total upfront capital
to 9 percent. Australia and the U.K. have also used
the split structures.
The number of beneficiaries that the program

reaches is another measure of scale. Figure 9
shows the variation in the number of target beneficiaries in each deal. In the deals that work with
entire families to improve outcomes for children,
we have included only the number of children
reached as they are the ultimate beneficiaries.
Which costs are included in the contract varies immensely. All the deals cover service provision with
the capital committed, but fees for the intermediary,
legal services, evaluations, and other activities are
covered within the contracts of some deals and not
Twenty-five of the 38 SIBs serve populations

equal to or smaller than 1,000 individuals. The
Figure 8. SIB Target Beneficiaries

10,000
Number of Target Beneficiaries
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
Canada
Portugal
U.K.
U.K.
Germany
U.K.
U.K.
U.K.
Netherlands
U.K.
Belgium
U.K.
U.K.
U.S.
U.K.
U.K.
U.K.
U.K.
U.K.
Australia
U.K.
U.K.
U.K.
U.S.
U.S.
U.K.
U.K.
Australia
U.K.
U.S.
U.S.
U.K.
U.K.
U.K.
U.S.
U.K.
U.S.

Note: The SIBs in Australia, Canada, and the SIB in the U.S. with 270 beneficiaries work with parents and children, but we have
included only the children as they are the ultimate beneficiaries. Number of target beneficiaries for the Prevista SIB is not publicly
available
16
3.5 Outcome Metrics and Outcome Payment

Structures
smallest SIB, in Canada, seeks to keep 22 children and their mothers together. The largest SIB
with a publicly available number of beneficiaries
targets approximately 10,000 youth in the U.S.
criminal justice system.
The outcome metrics and payment structures are

unique to each deal and are challenging to summarize. For a detailed description of each deals
outcome metrics and payment structure, please
see the fact sheets in Appendix 2.
3.4 Contract Duration

The duration of the contracts between the actors
in the SIBs is relatively short, though significant
in that service providers are often accustomed to
year-by-year contracting. It is worth noting that
contract duration is often not equivalent to the duration of service provision. Of the 38 SIBs,31 16
have contract durations of three years or less,
14 have contract durations of four to five years,
and seven have contracts that are longer than
five years (Figure 10). The shortest contract duration is for 20 months, and the longest for 120
months. The U.K. fund deals have tended to have
the shortest contract duration, while the individual
transactions in the U.K. and in the U.S. and Australia have had the longest contracts.
There are two broad categories of outcome metrics and payment schedules. In the first, prices are
set for outcomes per participant and are paid on
a monthly, quarterly, or yearly basis. As a note,
many of the metrics of success in these deals are
outputs (completion of an activity), rather than outcomes (measures of impact on the individual). The
deals within this category include the two funds
for youth employment and welfare in the U.K., the
two deals for homelessness in the U.K., the four
deals for family support in the U.K., the two deals
for preschool in the U.S., and the deal for adult
homelessness in the U.S. The SIB actors submit the evidence of their outcomes for payments
on a time frame specified in the contract terms.
Figure 9. SIB Contract Duration

140
120
Months*
100
80
60
50
20
Portugal
Belgium
Germany
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.S.
Netherlands
U.K.
Australia
U.S.
U.S.
Canada
U.S.
U.S.
U.S.
Australia
U.K.
U.K.
U.K.

*Duration of contract signed by SIB participants; not duration of service provision
Note: The NYC ABLE Project for Incarcerated Youth SIB contract duration not publicly available.
17
Box 1: Impact Bond Funds

As of March 1, 2015 there were two active impact bond funds in the world, the Innovation Fund and the
Fair Chance Fund, both in the U.K. The Innovation Fund aims to improve education and employment
outcomes for youth and was launched in two rounds: the first six SIBs in April of 2012 and next four
SIBs in November of 2012. The Fair Chance Fund, including seven SIBs aiming to improve housing, education, and employment for homeless youth, was launched in December of 2014. Since this
studys cut-off, the U.K. launched the Youth Engagement Fund in mid-March of 2015, including four
SIBs for youth education and employment.
To establish these impact bond funds, the commissioning government department (the Department
for Work and Pensions in the case of the Innovation Fund and Youth Engagement Fund, and the Department for Communities and Local Government in the case of the Fair Chance Fund) produced a list
of outcomes and prices it was willing to pay for each outcome, called a rate card. The list and prices
were developed through extensive research on the cost savings of reduced remedial assistance, such
as unemployment benefits, that each outcome will yield.
Table 4: Innovation Fund Round 1 Rate Card
PAYMENT PER
INDIVIDUAL
OUTCOME
Improved behavior at school (Measured by a letter from a teacher)
800
Stop persistent truancy (absent for over 10% of school days per year)
1,300
Achievement of First National Qualifications Framework (NQF) Level 2 qualification
2,200
Achievement of First NQF Level 1 qualification
700
Entry into first employment including a training element
2,600
Entry into sustained employment
1,000
Completion of first NQL Level 3 training/ vocational qualifications
3,300
Successful completion of an ESOL course
1,200
Entry into education at NQF level 4
2,000
Source: Centre for Social Impact Bonds (2013).

Note: Outcomes can only be claimed once per individual. Total payments per individual are capped at 8,200 and each SIB
contract has a maximum payment cap across all individuals.
The commissioning department (the outcome funder) then committed a pool of funding to pay for
outcomes. In the case of the Fair Chance Fund, the commissioning departments funding was supplemented by funding from the U.K. Cabinet Office, and in the Youth Engagement Fund, funding was
supplemented by the U.K. Cabinet Office and Ministry of Justice. Partnerships of service providers,
investors and, in some cases, intermediaries were invited to bid for contracts within the fund, bidding
at a discount to the rates in the rate card. Contracts were then awarded to bidders based on a number
of factors, including the discount of their bid.
After service provision began, the service provider or intermediary may submit claims of outcomes,
using various forms of administrative data, on a monthly or quarterly basis to the commissioner. The
outcome payments are then reinvested, or recycled, to continue funding service provision. Capital
recycling allows for lower upfront capital commitment than SIBs where outcome payments are not
recycled.
18
cohorts are paid if that cohort achieves a reduction

in recidivism of 10 percent or more, in comparison with the control group. If none of the cohorts
meet these ambitious interim targets, payments
will be made at the end of the project if all three
cohorts achieve a reduction in recidivism of 7.5
percent or more. Similarly in the three SIBs in the
U.S. for criminal justice, payments occur only if the
percentage change in comparison to the control
group is above an established threshold. In the
SIBs in Germany and Canada, payments occur
only if a set number of participants achieve the
given outcome.
In the U.K. funds (see Box 1), outcomes can be

claimed only once per individual. In the family support deals in the U.K., there are either one-time
or weekly payments for childrens participation in
the program (essentially funding the service) and
additional one-time payments for positive outputs
or outcomes.
In the second category of outcome metrics and
payment structures, outcomes are measured
for the group of participants in comparison to a
control group and are paid at one, two, or four
intervals over the contract. The SIB contracts include agreed-upon payments for each percentage change in the outcome metric or metrics.
The deals in this category include the one deal
for criminal justice in the U.K., the three deals for
criminal justice in the U.S., the one deal for family
support in the U.S., the two deals for family support in Australia, the one deal for youth employment in Belgium, and the one deal for youth information technology education in Portugal. Two of
the three deals in the U.S. for recidivism reduction
also have outcomes at an individual level, as in
the first category of metrics. The Newpin Social
Benefit Bond has slightly different metrics for the
payments from the outcome funder to the service
provider and from the service provider to investors; it is the only SIB with two sets of outcome
metrics. The SIBs in Germany, the Netherlands,
and Canada do not fall particularly neatly into either of the two categories. In Canada, payments
are made per individual outcome at the end of
the program. In Germany, investors are paid their
principal and 3 percent interest at the end of the
program if 20 of approximately 100 participants
achieve the outcome. The payment structure for
the SIB in the Netherlands is not public, though
is based on reduction in participants months of
unemployment benefits.
In contrast to the threshold levels, capital protection and early termination opportunities act as
protection mechanisms for investors in SIBs with
group-based outcomes. In six SIBs, investors are
not placing 100 percent of their capital at risk. The
investments for two of the SIBs for criminal justice
in the U.S. are protected at 9 percent and 75 percent, respectively; this means that the investor will
recoup that share of the investment regardless of
program results. In the SIBs in Australia, senior
capital in one deal is 100 percent protected and in
the second deal is 75 percent protected for years
one to three and 50 percent protected after that.
For the SIB in the Netherlands, 33 percent of the
investment is protected, and for the Home Group
SIB in the U.K., 10 percent of the investment is
protected.
Nearly all of the SIBs have some stipulations in
the contract releasing parties from their obligations if any party is unable to complete the minimum agreed-upon responsibilities, but three SIBs
have additional early termination opportunities for
investors. In the SIB in New York City for criminal
justice, the investor had the opportunity to terminate the deal after three years. In the Benevolent
Society SIB in Australia, the investment is structured similarly to traditional bond issuance, and
the bonds are readily salable at any time. In the
Newpin SIB in Australia, the investors have the
opportunity to terminate the deal each year in
years three through seven if the restoration rate
Six of the SIB deals that pay based on group

outcomes also have set outcome thresholds that
must be met for payments to begin, increasing the
risk to investors. In the SIB for criminal justice in
the U.K., interim payments for each of the three
19
of children with their families is below 45 percent.

To date, two SIB contracts have been reduced in
duration. There was a contract duration reduction
of two-years in the ONE Service SIB in Peterborough, U.K. due to a new national program in the
U.K. that provides the intervention the SIB is based
upon.32 There was also a contract duration reduction in the SIB for criminal justice in New York City
because targets were not reached by year three of
the contract. The change has brought up a number of important questions about the alteration of
SIB contracts in changing government contexts.33
use of special education, placement in out-ofhome care (residential or foster care), employment status, and incarceration.
In the SIBs where payments are based on the
comparison of the program beneficiaries to other
comparable groups, more complex evaluations are
required. As a note, some SIBs use a combination
of outputs or outcomes at an individual level and
outcomes in comparison with other groups. In six
SIBs, outcomes are measured in comparison to a
historical baseline. Concurrent control or comparison groups were used for comparison in eight SIBs,
of which four used matched comparison groupsa
quasi-experimental evaluation methodand four
used a randomized control trial (RCT).
3.6 Evaluation Type

The type of evaluation method used to determine
outcome payments depends on the outcome metrics being measured and the requirements of the
stakeholders involved. For the SIBs with set payments for outcomes per individual, administrative
data are often used to determine outcome payments. Figure 10 shows that in most cases outcome payments are determined by a validation
of service provider or government administrative
data. Examples of the administrative data include
3.7 Maximum Payments and Payments to Date

As all returns in the existing SIBs are variable depending on outcomes and each has its own risk
profile, it is impossible to make direct comparisons
in the returns to investors across deals. However,
all deals do establish a maximum potential return
for investors or a maximum amount of money that
Figure 10. Evaluation Methods Used in SIBs
30
Number of SIBs
25
20
25
20
5
0
Validated
Administrative Data
Historical
Comparison
Quasi-experimental
Randomized
Control Trial

Note: The evaluation method for the NYC ABLE Project for Incarcerated Youth SIB and Child-Parent
Center Pay for Success Initiative are not publicly available.
20
the outcome funder will pay, also known as a maximum contract value. The only deal with no maximum contract value is the Its All About Me SIB for
adoption in the U.K., where outcome funders can
elect to join the program (see Section 4.3).
portunity to earn success fees and deferred service

fees in one of the SIBs for criminal recidivism in
the U.S. In two of the Fair Chance Fund SIBs and
the two London Homelessness SIBs in the U.K.,
service providers have made equity investments
alongside senior fixed-interest loans and stand to
gain any additional payments once the senior loans
have been paid. In the four family support SIBs in
the U.K., recurring payments for participation and
one-time outcome payments (discussed in the outcome metrics section above) are divided between
investors and the service provider based on established terms. This arrangement essentially provides operating costs for the service provider when
an individual begins to participate in the program.
Of the 12 programs that had a public maximum

average annual return to investors, seven of the
rates of return were less than 7.5 percent. The
maximum average annual return in Germany was
the lowest, at 3 percent. The SIB in Canada and
the SIB for adult homelessness in the U.S. have
maximum average annual returns of 5 percent
and 5.33 percent, respectively. The SIB for juvenile criminal recidivism in Massachusetts and the
SIB for family support in Ohio in the U.S. have set
maximum average annual returns of 5 percent for
senior investors and 2 percent for subordinate investors, but investors have the opportunity to earn
significant additional success fees.34 In the Utah
and Chicago SIBs for preschool in the U.S., investors can earn up to 7.26 percent and 6 percent
average annual return, respectively. The Belgian
SIB has a maximum rate of return of 6 percent.
The four SIBs with a maximum average annual return over 7.5 percent are in Australia (two),
the Netherlands, and the U.K.35 where maximum
average annual return for senior investors ranges
from 9 percent to 15 percent and for subordinate
investors (only the Benevolent Society SIB) is a
maximum of 30 percent average annual return.
So far, few deals have completed at least one set

of payments to investors. In the ONE Service SIB
in Peterborough U.K., interim payments, as noted
previously, are made for each of three cohorts if
the percentage difference in outcomes between
the treatment and control groups is greater than
10 percent, or a payment is made at the end of
the program if the percentage difference between
the treatment and control group exceeds 7.5 percent across all of the three cohorts. To date, one of
the cohorts has reached evaluation, achieving an
impressive reduction in recidivism of 8.4 percent
relative to a comparable national baseline. This
percentage change does not meet the interim payment target, but is on track for the overall payment
at the end of the program.36
Three SIBs have disclosed a target or maximum

internal rate of return (IRR), a more holistic measure of returns that takes into account all cash
flows over the period of the investment. The approximate IRR for the SIB in Portugal is 2 percent.
The maximum IRR for the SIB in Peterborough in
the U.K. is 13 percent, and the maximum implied
annual IRR for the SIB in New York state in the
U.S. is 12.5 percent.
Government payments for outcomes in the first

round of the Innovation Fund in the U.K., which
comprises six SIBs, will complete payments in the
summer of 2015, and the second round, which has
four SIBs, will complete payments a few months
later. Of the 10 total SIBs, at least two have already fully repaid investors and will pay investors
the additional outcomes payments through the
rest of the year as a return on the investment.
Performance-based payment to service providers

merits its own discussion. Service providers have
the opportunity to earn success fees in three of the
SIBs in the U.K. Innovation Fund and have the op-
The Newpin Social Benefit Bond in Australia has

disclosed that investors received a 7.5 percent
interest payment in the first year of the program,
21
which is in the middle of the range of interest that

investors can receive.37
A number of other SIBs are under exploration

across Asia and the Pacific. In Malaysia, the
government has started to explore the possibility of
utilizing SIBs as a way to provide social services.
The Seoul Metropolitan Government in South Korea signed a memorandum of understanding with
a private investor for a SIB for child welfare.40 In
New Zealand, the Ministry of Health41 is leading
work to pilot SIBs in the country, and in Australia
there is interest in expanding the existing impact
bond market.
Finally, the SIB for criminal justice in New York City

fell short of targets in year three of the intervention
leading to a loss for the senior investor, Goldman
Sachs, of $1.2 million, and a loss for the loan guarantor, Bloomberg Philanthropies, of $6 million.38
3.8 Social and Development Impact Bonds in

the Development Stage
Exploration and design of potential SIBs and DIBs

are also occurring across Africa. In South Africa,
an impact bond innovation fund at an advanced
stage of development will support the provision
of early childhood services for children up to age
2. Three other DIBs are in development in South
Africa, in the areas of criminal justice, business
development services for small and medium-size
enterprises, and tuberculosis prevention. In Mozambique, several private investors are exploring
the possibility of establishing an impact bond for
malaria. In Uganda, impact bonds for Rhodesian
sleeping sickness, education, and family planning
are also in development. In addition, DIBs are in
exploratory phases in Swaziland related to HIV
and tuberculosis prevention, in Morocco for youth
job creation, and in Ghana for a funding facility for
small and medium-size enterprises and workforce
training programs.42 In the Middle East, the World
Bank is working on a DIB for workforce development and employment in Palestine.43
In addition to the 38 existing SIBs surveyed in our

study, the recently announced six SIBs in the U.K.
and one DIB in India, dozens of SIBs and DIBs are
being developed across the world.
In the United States, the Social Innovation Fund
within the Corporation for National and Community Service (see Box 2) has led the effort of supporting SIB development through eight grants to
ecosystem builders; these organizations, in turn,
have agreed to provide 43 sub-grants to state and
local governments for technical assistance. The
deals being developed through this fund cover
social welfare (including early childhood development, child welfare, homelessness, and housing),
health (including teen pregnancy prevention and
asthma prevention), criminal recidivism, education, and resource management. At a recent conference hosted by ReadyNation and the Institute
for Child Success, 33 delegations from across the
U.S. discussed their efforts to develop SIBs for
early childhood development interventions.
In the Latin America and the Caribbean region, the

Multilateral Investment Fund, a member of the Inter-American Development Bank Group, launched
an effort in March of 2014 to support SIBs in the
region. The commitment includes $2.3 million in
grants to support the ecosystem for SIBs in the
region and $3 million in investment capital to facilitate the launch of up to three SIBs. Several other
impact bonds are in early stages of discussion in
the region.
In Ontario, Canada, a process has begun to develop SIBs in the areas of social welfare (housing
and at-risk youth) and employment. In Portugal, a
150 million euro ($165 million39) social innovation
fund to support SIBs has been established. Several countries in Scandinavia have also expressed
interest in exploring the use of SIBs. The U.K continues to rapidly develop SIBs and will likely produce many more in the next few years.
22
4. WHAT DOES IT TAKE TO GET

THE DEAL TOGETHER?
4.1 Who Are the Stakeholders?
t this early stage, the process of developing a

SIB contract can be more complex than other
forms of government contracting. The process is
also unique in each deal depending on the individuals and organizations involved and the roles that
each plays. This section will first discuss the characteristics of the actors in the 38 deals included in
our study, their motivations for coming to the table,
and their roles in these transactions. The second
subsection will explain the process and analyze
the greatest challenges and facilitating factors in
this process across the 38 deals.
As the SIBs 101 section of this study explains, the

simplified version of the SIB structure comprises
four actors: investor, service provider, outcome
funder, and intermediary. In the 38 deals included in this study, these categories are used to define different roles; however, the number of actors
within each category varies, actors can fall into
multiple categories, the types of entities within
each category can differ greatly (see Table 1), and
their roles can vary substantially across the deals.
Figure 11. Number of Actors by Type

Outcome Funders
Service Providers
2
3 to 5
Intermediaries
6 to 8
Senior Investors
9 to 14
Subordinate Investors
15 to 24
Grant makers/guarantors
25 to 40
41 to 60
Evaluators
Technical Assistance Providers

0
10
15
20
25
30
35
40
Not public or
not determined

Note: The number of senior investors is not public in seven deals and the evaluator has not been confirmed in one. Grant makers/
guarantors category encompasses both recoverable and non-recoverable grant makers. Evaluators include parallel evaluations
outside of the SIB contract. Outcome funders count multiple levels of government and sources of funding, though the funds may
finally be channeled through one actor. The Its All About Me SIB has an unlimited number of service providers and outcome
funders, but has been counted as 11 for each as that is the number contracted as of April 2015.
23
Figure 11 shows the variation in the number of actors within each category.
SIBs, which is still a nascent market, states that

the outcome funders are motivated to enter a SIB
by monetizable savings in remedial services, the
reduction in risk if the service is not successful,
and the benefit to society if outcomes are successful.44 Service providers are said to be motivated to join a SIB because it provides them with
a stable, long-term revenue stream, allowing them
to achieve outcomes, and because a SIB might
allow them to scale a program.45 Investors in SIBs
are said to be motivated by social and financial
return, with some variation across the spectrum
in finance-first vs. impact-first motivation.46 Investors could experience a loss of principal, a return
of principal, or a return of principal plus interest.
For-profit investors include commercial investors
that prioritize a return on their investment, impact
investors that are looking for a balance of social
and financial returns, and social investors that are
willing to risk their capital completely for social
good. The types of foundations that invest in SIBs
also vary greatly, from foundations motivated by
the opportunity to make program-related investments, which allow them to earn back their money
and recycle funding into another grant or investment, to foundations that are comfortable making
a non-recoverable investment.47 Each of these
investors has different motivations, which can lend
itself to a layered capital structure.
As Figure 11 demonstrates, all deals have outcome

funders, service providers, and senior investors.
The evaluator has yet to be confirmed in one deal,
but all deals will have evaluators. All but two SIBs
have an actor that is considered an intermediary
body. Technical assistance providers, subordinate
investors, and grant makers and guarantors are
optional types of actors. Furthermore, organizations often fall under multiple categories. For example, outcome funders also act as evaluators in
many deals by validating administrative data. Other cases of crossover include organizations acting
as both service providers and investors, intermediaries and investors, senior investors and subordinate investors, intermediaries and evaluators,
intermediaries and technical assistance providers,
and service providers and evaluators.
Across the deals there are almost always one outcome funder and one intermediary body. Various
deals, however, have large numbers of service
providers and senior and subordinate investors.
In some cases the intermediary will market the
investment to a number of investors or an investment bank that manages investments on behalf
of their clients. For example, in the case of the Increasing Employment and Improving Public Safety bond in New York state, Bank of America Merrill
Lynch managed the investment of 44 individual
investors.
Figure 12 shows the results of our survey of actors involved in SIBs on their primary motivations
for involvement in the SIB. It is important to note
that actors participated in our survey after completing the deal development, rather than during
the process. However, we believe that the survey
responses bring up questions that accurately reflect the thinking and concerns in the field. Figure
12 does not include either subordinate investors
or grant makers/guarantors because there are too
few of these types of investors across the deals to
make robust generalizations.
4.2 What Are the Stakeholders Motivations?

One of the stated strengths of impact bonds is that
they bring to the table a multitude of stakeholders,
each having different motivations for participating.
In our research we have found that motivation for
entering into an impact bond contract does indeed
vary both across and within the existing deals that
we have surveyed, although in some areas the
value proposition for some stakeholders is common.
The literature that has been written thus far on
The survey responses largely confirm what has

been said in the literature about actor motivations.
The motivations for outcome funders were spread
24
Figure 12. SIB Actor Primary Motivations

Opportunity to demonstrate (test) innovative
financial model to address social problems
Opportunity to improve collaboration among
public, private, and development funders
Opportunity to scale up intervention that works
Opportunity to test innovative social intervention
Equal combination of social and financial returns
Social return/Outcome achievement
Financial return/Savings
0%
Outcome funders
Intermediaries
5%
10%
15% 20%
25%
30%
Percentage of Actor Responses
Service providers
35%
40%
Senior investors
Source: Brookings Institution survey.

Actor respondents: senior investors (12), service providers (12), intermediaries (19), outcome funders (18)
culture of monitoring and evaluation, funding for

preventive services, and long-term contracts were
motivators to enter the SIB.
relatively evenly across all of the categories. However, in our survey and in our interviews, the opportunity to scale a promising intervention in the
presence of budget constraints was frequently
emphasized. Other government motivations outside of those include avoiding budget silos, procurement issues, hurdles in the budgeting process, and political barriers. In comparison to the
literature, reducing the risk of service provision
was not mentioned as a motivation and savings
was a relatively low priority, though this is not exhaustive. One possible explanation is that governments and investors carried out extensive due diligence before the deal was signed and therefore
do not consider the service risky.
Our survey demonstrates that the most significant

motivations for senior investors are the opportunity to test an innovative financial model for social
services and an equal combination of social and
financial return. In our interviews, senior investors
confirmed that they were motivated by the opportunity to recycle grants after the project; however,
it was not just foundations that were interested in
this. Other organizations also provide grants as
part of their corporate social responsibility work
or community involvement, and these organizations indicated interest in recycling these funds.
Program-related investment is one of the primary forms of investment, particularly in the United
Kingdom where they account for most, if not all,
of investments. As mentioned, many of the senior
investors are investment institutions that raise in-
Figure 13 shows that service providers are largely

motivated by the opportunity to scale successful
interventions and achieve outcomes, which is consistent with the literature. In our interviews, service providers also mentioned that developing a
25
4.3 What Are the Stakeholders Roles?
vestment from their clients. Client interest in social

return was cited as a motivating factor for these
institutions to be involved in SIBs. Lastly, publicity
was explicitly and implicitly discussed as a motivation for investors to be involved in SIBs. The motivation to invest in a SIB appears to be much higher if it is the first in its country or sector, because
of the greater publicity. Our research confirms the
literatures assertion that investors are motivated
by both social and financial return and adds that
investors are interested in SIBs specifically to test
an innovative financial model.
In the Impact Bond 101 section, we noted that impact bonds can vary greatly in the composition of
actors involved, the actors roles, and the process
of putting the deal together. The actors overarching
roles are defined by whether they are investors, intermediaries, outcome funders, service providers,
technical assistance providers, or evaluators, as described in the Impact Bond 101 section. The specific
activities that actors take on are largely determined
by the structure of the deal and the local context.
The motivations for intermediaries to be involved

in SIBs are rarely discussed in what has been written about SIBs. In many of the deals, the intermediary is paid for its contribution through grants
external to the SIB, often from a philanthropic
entity, but might earn a success fee in the SIB if
the program achieves its target outcomes. It is important to note that like investors, various types
of organizations serve as intermediaries and their
motivations are influenced by the mandate of their
organization. Each organization is ultimately trying to fulfill its role as a transaction and project
manager. The survey responses indicated that intermediaries are motivated by the opportunity to
test innovative financial models to address social
problems and to achieve outcomes. Many intermediaries in our interviews noted that they had left
careers in finance to use their skills to improve social outcomes. The motivations for intermediaries
also depend on the stage of the SIB market.
To explain the variation in roles, we can start by

categorizing the existing SIBs into the two broad
impact bond models described in the Impact Bond
101 section: individual transaction impact bonds and
impact bond funds with established rate cards. The
two funds with rate cards are the Innovation Fund
and the Fair Chance Fund in the U.K. The Innovation
Fund took place in two rounds, the first with six SIB
contracts and the second with four. The Fair Chance
Fund awarded seven SIB contracts. The Youth Engagement Fund is the third fund that was launched
in the U.K., but because its first four contracts were
awarded after March 1, 2015, they are not included in our analysis. In these funds, the government
did a great deal of research and issued the tender
with a rate card for outcomes. The rate cards include
approximately 10 outcomes, and each has a price
attached to it that the government is willing to pay
(see fact sheets in Appendix 2). Teams of service
providers and intermediaries bid at a discount on
those outcomes to win the contracts. Though not
considered in the same category, the government
also issued a rate card for the London Homelessness SIBs, and teams of service providers and intermediaries bid against this rate card. Two contracts
were awarded. In Massachusetts, the state government established a Social Innovation Financing
Trust Fund for SIB outcome payments in two sectors; however, the government did not issue a rate
card for the establishment of outcome metrics and
therefore not a fund model like the U.K. funds. In
the other deals, all parties have identified outcomes
and payments together.
As the field continues to mature, the motivations for

actors to enter the field may change. If there is less
publicity around each SIB as more develop, outcome funders and investors may be less motivated
to engage in a SIB. Intermediaries and investors
both listed the opportunity to test an innovative financial model as one of their greatest motivations;
as the model becomes more mainstream, this may
be of less importance, though the intermediaries
and investors may be driven by the desire to continue to refine and improve the model.
26
is funding the service through outcome payments

from the national government. The other structure
that is unique is that of the Its All About Me bond
for adoption of hard-to-place children, also in the
U.K. In this bond, investors have committed a set
amount, and the outcome funders (local governments known as Local Authorities) and service
providers have the opportunity to join the SIB and
receive upfront capital as cases arise of particularly hard-to-place children. Further investment could
be raised, based on the success of the program.
Furthermore, the existing SIBs can be categorized

into one of three types of deal structures: direct,
intermediated, or managed. As mentioned in the
Impact Bond 101 section, in direct deals, the outcome funder holds a contract with the service provider or majority service provider-controlled special purpose vehicle; in intermediated deals, the
outcome funder holds a contract with the investor
or a majority investor-controlled SPV; and in managed deals, the outcome funder holds a contract
with the intermediary or majority intermediary-controlled SPV. As mentioned previously, it is challenging to cleanly divide the deals across these
categories because the actors can serve multiple
roles. In particular, there are many intermediated
deals in which the intermediary also invests. Managed deals are distinct from these intermediated
deals in that the intermediaries in managed deals
have not invested in the SIBs to date. Table 5 categorizes the 38 SIBs included in this study into one
of the three SIB structures. Notably, all of the SIBs
in the U.S. are managed, while all but two of the
SIBs in the U.K. are direct or intermediated, which
could be an indicator of the maturation of the U.K.
market or simply high government interest.
In most of the intermediated deals, the government initiated the deal, while the intermediary
determined feasibility, structured the deal, raised
capital, and provided ongoing performance management. The intermediary also often helps in
initiating the deal by identifying service providers
that will fit the feasibility criteria.
In the majority of managed deals, the government
initiated the deal and the intermediary developed
the feasibility study, raised capital, and managed
the performance of the program. The only deviation from these roles was in one case where the
service provider and technical assistance provider
initiated the deal.
In most of the direct deals, the government initiated the deal; the intermediary determined the
feasibility, structured the deal, and raised the capital; and the service provider was then responsible for implementing the service and managing
performance. In a couple of cases, intermediary
actors or service providers initiated or helped initiate the deal by bringing the case to government.
In one case the service provider led the feasibility
study and structuring, and in two cases the service provider was responsible for raising capital.
In comparison to the intermediated and managed
structures, service providers have the greatest
responsibility in the direct structure. Two unique
cases within the direct structures are worth mentioning. In the Nottingham Futures deal, part of the
Innovation Fund in the U.K., the Nottingham City
Council is the investor and intermediary and
also runs the service. This is essentially a pay-forresults contract, as the Nottingham City Council
Though the categories above help to provide an

overview of the roles played by each actor, no
deals are carried out in exactly the same way.
The relative strengths and interests of the actors
and the specifics of the legal structure foster each
SIBs distinctive dynamics. For example, in one
direct deal, the service provider led the development of the financial model structure because it
had the in-house technical capacity to do so. The
diversity of structures and roles demonstrates the
potential for this tool to be adapted to specific contexts. One characteristic that is consistent across
all of the SIBs is the close collaborative relationship between all players. Collaboration has been
particularly critical in this early stage of the market
and may evolve as actors become more practiced
in this space.
27
PROGRAM/ SIB NAME
Table 5. Structures of Existing SIBs
COUNTRY
MODEL
STRUCTURE
Nottingham Futures
ThinkForward
Advance Programme
T&T Innovation
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Rate Card Fund (Innovation Fund)

Direct
Intermediated
Intermediated
Intermediated
Intermediated
Intermediated

Energise Innovation
Living Balance
Prevista
United Kingdom
United Kingdom
United Kingdom
United Kingdom

Home Group
Local Solutions
Fusion Housing
Rewriting Futures
Your Chance
Street Impact
Thames Reach Ace
ONE Service
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United States
Chronic Individual Homelessness Pay for

Success Initiative
Increasing Employment and Improving Public
Safety
Duo for a Job
Junior Code Academy
Eleven Augsberg
United States
United States
United States
United States
Intermediated
Intermediated
Managed
Not publicly
available
Rate Card Fund (Fair Chance Fund)
Direct
Direct
Direct
Direct
Intermediated
Intermediated
Intermediated
Rate Card Transaction**
Direct
Rate Card Transaction**
Direct
Individual Transaction
Direct
Direct
Direct
Intermediated
Managed
Individual Transaction (part of Massachusetts Managed
Social Innovation Financing Trust Fund)
Individual Transaction (part of Massachusetts Managed
Social Innovation Financing Trust Fund)
Managed
Managed
Managed
United States
United States
Canada
Australia
Australia
Belgium
The Netherlands
Portugal
Germany
Managed
Managed
Direct
Direct*
Direct*
Direct
Intermediated
Intermediated
Managed
Source: Goodall (2014) and authors research.

*Goodall 2014 category is intermediated, though authors research suggests that this is a direct contract structure with the service
provider holding the contract and providing performance management. In the Newpin SIB, in contrast to the other direct structures,
the intermediary owns the SPV that controls funds between the service provider and the investors.
**These London Homelessness SIBs are not considered a Fund, though service providers did bid against a rate card for the contracts.
28
4.4 Determination of Outcome Metrics and

Payments
capital is being recycled, less capital is required

upfront and investors can make smaller, though
riskier, investments. These investments have
higher risk because the program does not begin
with the capital it needs to run the service throughout the SIB; it must achieve sufficient outcomes
each year to fund the following.
In all types of deals, one of the most critical and

complex parts of the process of developing the
SIB is to determine the outcomes metrics and corresponding payments. The design of the outcome
metrics influences the design of the preferred intervention and selection of provider, which in turn
influences the investment needed and funding
commitment from the outcome funder. Finding a
balance between the metrics, financing, and outcome payments can be a big challenge and often
requires collaboration from all actors (see also
discussion in Impact Bond 101 on feasibility criteria for impact bonds and Section 4.5). Ultimately,
these choices are all intimately linked with implementation risk and the extent to which investors
and outcome funders believe in the service providers ability to achieve a set outcome.
In contrast to the process of developing a rate card

in the U.K., the process of developing outcome
metrics and payments in many of the individual
transactions has involved significant input from
actors outside the outcome funder. The outcomes
in the individual transactions are often more complex and observable only after longer periods of
time than in the rate card-based funds, as they
frequently involve evaluations with comparisons
to control groups or historical data. Although outcomes of these deals may be more challenging
to measure, various actors in the deals said that
choosing the simplest set of outcomes and metrics
possible makes the resulting SIB program significantly easier to operate. Simple metrics provide
a clear focus for the service provider and reduce
resources needed for evaluation. Although a simple metric may not capture every outcome that
matters to all actors, a measure that is a proxy for
other meaningful outcomes could be sufficient. Additionally, using administrative data from a single
source that can be easily aggregated simplifies the
evaluation process and can reduce costs. Lastly,
there must be sufficient evidence that the service
providers can achieve the given outcomes for investors to support the SIB. The degree of evidence
needed varies by deal based on each investors
appetite for risk. Often there is evidence on individual components of interventions or evidence of the
intervention with a similar target population, but no
evidence of the impact of combined programs with
the exact target population of the SIB.
In the deals where rate cards were issued by the

government, a great deal of research was necessary early on to determine the value to them of the
proposed outcomes and the commercial viability
for service providers to achieve the outcome for
the set price. As referenced in the discussion of
feasibility in the second section of this study, the
outcomes had to be both measurable and monetizable. For example, in the Innovation Fund, a
very comprehensive review of historical data was
conducted in the Department of Education. The
outcomes on the rate cards for both funds in the
U.K. include outcomes such as entry into employment, which can be measured immediately using
data on participants and do not require long evaluations, as in some of the other deals. However,
outcomes cannot necessarily be attributed to the
intervention, as there is no counterfactual comparison. The payments from the government to
the program (or SPV) during the intervention are
used to continue funding service provision, a process known as capital recycling. At the end of the
program, investors or service providers as investors receive what remains in the program SPV. If
Many SIBs have tiered outcome metrics and payments, where some outcomes are backed by a
great deal of evidence and highly likely to occur
and others may be less certain to occur but are
still of high value to the outcome funder.
29
4.5 Challenges Faced in Deal Development
years. Of the actors we interviewed and surveyed,

24 said that complexity of the SIB structure, given
the lack of precedent, was the greatest challenge
in setting up the SIB. Many also said that they anticipated that the time to develop the deals would
decrease as the market matured. That is what we
see in the U.K., where deal development is almost
always six to nine months. Figure 13 shows the
results of our survey on the further challenges in
developing a SIB. It confirms that developing the
technical aspects of the deal without precedent is
one of the greatest challenges; the lack of financial mechanisms in place and lack of favorable legal conditions in place are at least somewhat of a
challenge for at least 80 percent and 60 percent
of actors, respectively. The financial costs of the
The process of trying to agree on the best metrics,

financing, and payment structures is complex and
is particularly challenging with limited precedent at
this early stage in the market. This form of government budgeting requires advanced financial modeling and navigation of procurement regulations,
almost always necessitating at least one legal
representative for each actor involved. As an example of this complexity, the legal counsel to the
intermediary in the Massachuesetts recidivism SIB
reported that 27 contracts were written and more
than 1,100 legal hours were billed to develop the
bond.48 Across the 38 deals analyzed in this study,
deal development ranged from six months to three
Figure 13. Challenges in Developing SIBs

Financial mechanisms in place
Existing capacity to scale up social service
Availability of monetizable outcomes
Coordination among actors involved in the SIB/DIB
Availability of evidence that service provider could
produce desired outcomes
Availability of measurable outcomes
Financial costs of the deal
Favorable legal conditiions in place
Private investor convinced of significant return
Wait time to see measurable results
Availability of technical advice
Election cycles
Presence of philanthropic actor willing to bear risk
Willingness of payors to repay investors
Willingness of government to support the
social service itself
Willingness of government to support
SIB transaction
0%
10%
20%
30%
40%
50%
60%
70%
80%
90% 100%
Percentage of Actors Responses

A Big Challenge
Somewhat of a Challenge
Not a challenge

Actor respondents: investors (16), service providers (7), intermediaries (13), outcome funders (6)
30
deal, the hours required to put the deal together,

was also cited as a big challenge or somewhat of a
challenge for over 60 percent of actors.
ernment entity paying for outcomes. There are two

types of wrong pocket problemsvertical and horizontal. An example of a vertical wrong pocket problem is in the Portuguese SIB where the national
government gets the savings from fewer students
repeating grades (because they fund municipalities
on a per student per year basis), yet the municipal government is the outcome funder in the SIB. A
horizontal wrong pocket problem is when costs and
savings are experienced by different government
agencies at the same level, for example, the Ministry of Justice and the Ministry of Health. In the SIB in
the Netherlands, both horizontal and vertical wrong
pocket problems exist, as there were incongruences in spending and savings between the municipal
and national government and between the Ministry
of Education and the Ministry of Social Services. In
all of these cases, the SIB was contracted despite
the presence of this problem. The Social Outcomes
Fund and Commissioning Better Outcomes Fund
in the U.K. and federal grants in the U.S. (see Box
2) have helped resolve wrong pocket problems by
supplementing outcome funds with grants from the
executive offices.
As discussed in the section on the development

of outcome metrics, the availability of measurable
and monetizable outcomes was a significant challenge for actors in these SIBs. Availability of evidence that the service provider could produce the
outcomes was similarly a big challenge or somewhat of a challenge for over 60 percent of actors.
It is worth noting, however, that the wait time to
see measurable results was cited as a challenge
by less than half of actors, although it is often said
that this poses a challenge to investor commitment and government interest.
The existing capacity of the service provider to
scale the intervention was another challenge
identified by the actors. Scaling an intervention is a complex, non-linear process that has
been the subject of its own set of literature.49
Government support was not a challenge for the
actors in these deals, likely because, as the previous section on stakeholder roles indicated, government was often the initiating entity of the SIB.
4.6 Facilitating factors in deal development

A number of facilitating factors helped the 38 deals
come to fruition. Figure 14 lists the factors that
were most significant in facilitating the deal development process.
Two other challenges were raised in our interviews with the SIB actors. First, in addition to the
challenges of deciding on outcome metrics, deciding on an evaluation method of the metrics can be
a roadblock to the process. A randomized control
trial is the most rigorous evaluation method available, but it requires that the intervention be randomly assigned to some members of the target
population and not to others in order to create a
statistically equivalent control group to compare
with the treatment group. In at least two SIBs, the
exclusion of the control group from services led
to heated debate over evaluation method, almost
ending the deal development.
Consistent with the challenges section, measurable and monetizable outcomes were very important or important for all actors surveyed, though
monetizable outcomes were very important in
fewer cases than measurable outcomes. The evidence of the service providers ability to achieve
the outcomes was also very important to actors,
evidenced both in the robust evidence category and the existing capacity to provide the social
service category. The credibility and capacity of
the intermediary and the availability of technical
advice were also facilitating factors, likely because
these actors can help navigate the complex deal
development process.
The other challenge that arose was the wrong

pocket problem, where the government entity saving money from the SIB service was not the gov-
31
Figure 14. Facilitating Factors in Developing SIBs

Outcomes measurable
Government support for transaction
Robust evidence that service provider could
produce desired outcomes
Credibility/capacity of intermediary
Existing capacity to provide social service
Potential savings from investment
Necessary financial mechanisms in place
Private investor saw possibility of social return
Presence of philanthropic actor willing to bear
the greatest risk
Availability of technical advice
Extent to which the intervention is preventive
in nature
Necessary legal conditions in place
Outcomes monetizable
Potential to adapt the intervention on the
basis of data
Availability of legal advice
Private investor saw possibility of significant
financial return
0%
10%
20%
30%
40%
50%
60%
70%
80%
90% 100%
Percentage of Actors Responses

Very Important
Important
Not Important

Actor respondents: investors (15), service providers (8), intermediaries (16), outcome funders (6)
As a reflection of the responses presented in the

previous section indicating that government support was not a challenge, government support was
cited as a very important facilitating factor in deal
development for 87 percent of the actors surveyed
and important for the other 13 percent. The transaction is dependent on coordination with government in order to reach the target population, and
outcome payments from government are at the
heart of the deal.
was said to be very important in the deals where

there was this form of investment and not important in the deals where there was no subordinate
investment or grants.
Lastly, the figure shows that 97 percent of actors
surveyed found the preventive nature of the programs to be a very important or important facilitating factor and that 86 percent found the potential
to adapt the program based on data to be a very
important or important facilitating factor. Investment in preventive services and program flexibility
are two of the commonly stated strengths of SIBs,
which will be discussed in the following section.
Figure 14 also shows that private investors interest in social return was more helpful for the
process than their interest in financial return. The
presence of philanthropic or subordinate investors
32
and clear definition of roles also helped improve

the operations of SIBs.
In our interviews, actors emphasized the importance of individual abilities and relationships in facilitating deal development. Within the team in the
government working on the Innovation Fund in the
U.K., they developed a team with the right mix of
skills, including program implementing, economic
and social analysis, marketing, project management, and social investment. In Utah and in Australia, an advocate and a social service provider had
backgrounds in finance and economics, respectively, which greatly facilitated deal development.
The personality traits of the individuals also matter.
Actors also need perseverance and drive to push
the SIB deal development process through the
complications and challenges to completion. Individual champions who possess many of these traits
can be the key to successfully arranging a SIB.
For the Innovation Fund in the U.K., communication of the government request for proposals
(RFP) and allowing the investment market sufficient lead time to develop proposals helped in the
process. The Department for Work and Pensions
even hosted speed dating nights for investors,
intermediaries, and service providers to meet one
another.
The introduction of private sector mentality to social service provision can also be an important facilitating factor. For example, in two of the deals
the private sector investor was able to push the
government to reform its referral process so that
the service provider could improve its planning.
Lastly, there has been a great deal of funding that
has gone into organizations building the ecosystem for SIBs. In addition to the invaluable grants
for intermediary and technical assistance providers, government support of the SIB ecosystem
in some parts of the world has been critical (described in Box 2).
In addition to the characteristics of the individuals,

the relationships between individuals are equally important. In Utah, all of the actors involved in
the deal had already known each other through
local connections. In the small Canadian town of
Saskatoon, all of the actors were able to develop close relationships, which facilitated the deal
development. Communication between the actors
Box 2: Government Support of the SIB Ecosystem

Over the past five years, state and national governments have taken multiple steps to develop the
enabling conditions for future SIBs by introducing policy frameworks and legislation related to the exploration, design, and implementation of SIBs. A summary of these can be found in Appendix 3.
Governments have demonstrated their commitment to SIBs by developing policy frameworks, which
outline strategies for future action, and in introducing legislation, which authorize discrete activities.
The U.K. government has one of the most advanced support systems for SIBs. The Prime Ministers
Cabinet Office hosts a Centre for Social Impact Bonds within the Social Investment Finance Team. Its
role is to analyze and facilitate the SIB market in the U.K. The Cabinet Office launched a20 million
($31 million50) Social Outcomes Fund in November of 2012 to add to outcome funds available for
SIBs. This central fund is critical in facilitating SIBs where government savings accrue over a number
of departments, making it challenging for a single department to fund outcomes. The Big Lottery Fund,
which distributes a portion of the funds raised through the U.K. National Lottery, established a similar
40 million ($62 million51) Commissioning Better Outcomes Fund to contribute funding for outcome
payments.52
In the U.S., the Obama administration is working to establish a similar national fund to support outcome funding for SIBs. The White House has requested funding for SIBs (PFS) in each White House
33
budget request since the 2012 fiscal year, with the request rising from $100 million to approximately
$500 million. However, Congress has yet to approve any of these requests. Notably, the budget requests since the 2014 fiscal year have included a request for a $300 million PFS (SIB) Incentive Fund,
which is modeled after the U.K.s Social Outcomes Fund and intended to smooth savings across levels and departments of government.53 In May 2015 there were two bipartisan PFS (SIB) funding bills in
committee in each of the houses of Congress, both called the Social Impact Partnership Act. Sponsors
are Representatives Todd Young (R-Ind.) and John Delaney (D-Md.) in the House and Senators Orrin
Hatch (R-Utah) and Michael Bennet (D-Col.) in the Senate.54
Outside of the appropriations process, the White House has established a Social Innovation Fund
(SIF) within the Corporation for National and Community Service, a federal agency. In 2014, SIF
awarded grants to eight organizations to facilitate the development of SIBs in the U.S. One of the
recipients is the Harvard Kennedy Schools Social Impact Bond Technical Assistance Lab, which partners with local and state governments to receive technical assistance in developing PFS projects
related to design, implementation, and evaluation of policy initiatives.55 Other federal agencies supporting PFS include the Department of Justice through the Second Chance Act, the Department of
Labor through the Workforce Innovation Fund and the Workforce Innovation and Opportunity Act, and
the Office of Management and Budget through the Performance Partnership Pilots for Disconnected
Youth program.56 At the state level in the U.S., 10 states have introduced legislation to authorize PFS
deals, but only Massachusetts and Utah have passed this legislation.
Outside of the U.S. and the U.K., other countries have established policy frameworks supporting SIB
development. For example, the government of the state of New South Wales, Australia, implemented
a Social Impact Investment Policy in 2015 outlining 10 actions that the government plans to take to
support the growth of social impact investments. These key actions are centered on increasing the
number of social impact investment transactions, growing the market and removing barriers, and
building the capacity of market participants.57 Another example of a countrys demonstrated interest in
SIBs in future planning is Canadas 2012 Economic Action Plan, which called for greater exploration
of the potential of SIBs.58
Other legislation has also supported the SIB ecosystem indirectly by creating incentives for investors
to finance them. For example, in the U.K., legislation enacted in 2014 calls for tax relief to individuals
making investments in qualifying social enterprises.59 In the U.S., the Community Reinvestment Act
(CRA) of 1977 encourages depository institutions to meet the credit needs of the communities where
they do business, including low- and moderate-income neighborhoods. The CRA can be leveraged to
encourage banks to invest in SIBs. Federal, state, and local agencies have also implemented other
policies to encourage investments in SIBs.
Although the actions required to develop the ecosystem for SIBs vary greatly by context, governments
can use these examples of engagement in policy and legislation as they look to furthering their engagement with SIBs.
34
4.7 Impact Bond Transaction Costs
Finally, the development of innovation funds or

rate cards (see discussion above), which allow for
larger investments over multiple service providers
or for the achievement of multiple outcomes, are
another way to reduce relative transactions costs.
Beyond the investment amount for the service provision are additional costs to the transaction that
include intermediary services and technical assistance, evaluation, and legal fees. These amounts
can be structured either within the deal or outside
the deal. From our review of the landscape, it is
apparent that the first impact bonds have been
time-intensive and costly operations. Much of the
initial work was done on a pro bono basis, and
some of it has been designed with success payments to be paid to intermediaries if the deal is
successful in achieving outcomes. As the impact
bond market grows, some developments could
reduce these costs or at least make them more
sustainable. First off, there will be some reduction
in transactions costs that result from learnings
and standardization of processes. Nevertheless,
for new actors in new settings, adaptation of these
processes will be necessary. Second, some intermediaries are beginning to conduct initial scoping
exercises for impact bond transactions in which
they build in the costs for their time. Third, the development of philanthropic and government support for scoping and feasibility exercises will help
to make this work possible for actors wanting to
engage (see Box 2). A SIB development fund has
recently been established, for example, for the development of three SIBs in Utah. This collaborative financing model brings together public, philanthropic, and private capital to support the critical
development phase for the SIB transactions.60
4.8 Main Takeaways on Deal Development

1. The impact bond model is evolving and
flexible. There are two main types of SIB
models (individual impact bond or fund),
and each deal can be structured differently depending on context and the actors involved. This variation seen across all SIBs
provides an opportunity to tailor deals to
specific contexts.
2. Developing a SIB can be a complicated
process. Among the reasons are the need
for appealing and achievable outcomes, a
capable and reliable service provider (and
the due diligence necessary to determine
this), the enabling legal and financial environment, and the willingness of multiple parties to try something new and collaborate.
3. It is likely that deal development will become easier. Over time, systems will be
developed for standardization, lessons will
be learned, and the model will be refined.
Already in five years, there has been a
move in some locations toward simplifying
the deal structure.
35
5. 10 COMMON CLAIMS ABOUT

IMPACT BONDS
n the past five years, since the first social impact

bond was implemented, there has been a great
deal of buzz around SIBs as demonstrated by an
increasing number of reports and online media discussions on the topic (SIBs made Harvard Business Reviews List of Audacious Ideas for Solving
the Worlds Problems in 201261). Less has been
written about development impact bonds, though
this area is receiving greater attention of late.62
Social impact bonds have the potential to substantially transform the

social sector, support poor and vulnerable communities and create new
financial flows for human service
delivery by offering an innovative
way to scale what works and break
the cycle for crisis-driven services.
In this section, based on a comprehensive review

of what has been written about impact bonds, we
Judith Rodin, President

The Rockefeller Foundation
Figure 15. 10 Common Claims about Impact Bonds

1. CROWD-IN PRIVATE
FUNDING
2. INVEST IN
PREVENTION
10. SUSTAIN IMPACT
9. BUILD A CULTURE OF
MONITORING+EVALUATION
3. REDUCE RISK FOR

GOVERNMENT
8. INCENTIVIZE
COLLABORATION
4. FOCUS ON OUTCOMES
7. DRIVE PERFORMANCE
MANAGEMENT
5. ACHIEVE SCALE
6. FOSTER INNOVATION
IN DELIVERY
36
identify 10 common claims about what they are

able to achieve (see Figure 15). We then compare
these claims to the findings from our extensive
interviews and online survey of all existing transactions to date and we analyze how these claims
stack up to the reality on the ground.
traditionally had an asset-based approach and

have struggled to fund social services can now do
so with impact bonds. The prospects of recycling
such capital, once outcomes are achieved, could
drive more funding into social services via impact
bonds. Third, finding good opportunities for philanthropic investments is a costly business, eating up
an estimated 15 to 20 percent of grants provided;
impact bonds have the potential of reducing such
infrastructure costs for the outcome funder, thereby expanding the pool of investable funds. Finally, private funding can leverage public funding by
demonstrating the potential of programs to deliver
outcomes (and potentially fiscal savings), which
may be attractive to the traditional private funders,
leading them to invest more.
1. IMPACT BONDS CROWD-IN
PRIVATE FUNDING
There are two parts to the claim found in the literature that impact bonds crowd-in private funding.
One is that impact bonds crowd-in funding from
the same private investors (mainly foundations)
that typically contribute to social services through
grants. The second is that impact bonds bring in
new and different types of investors, which adds to
the total amount of private funding for social services.
Fresh capital from new private actors

Impact bonds are also said to be able to attract additional funding by drawing in new types of private
funders that otherwise wouldnt have invested in
social services (or at least not the specific social
service in question). Such new investors include,
for example, high-net-worth individuals seeking investments beyond traditional capital markets due
to their desire to achieve social good as well as
credit unions, commercial investors and banks,
and pension funds (See Box 2).64
Additional capital from traditional private

actors
There are several arguments for why impact bonds
have the potential to bring in more funding for social services from traditional private actors. First,
the opportunity to receive a financial return on a
socially beneficial investment may be a convincing proposition to many traditional private funders
such as foundations. Program-related investment
(PRI), which can be funded by either program or
investment funds, are aimed at achieving program
goals but with the expectation of at least a modest financial return. To date, PRI capital has been
minor for several reasons. Those engaging in PRI
have historically been asset-based lenders financing, for example, housing and economic development projects that are income-generating. Impact
bonds provide a way for foundations to make PRIs
in human capital rather than contributing capital to
typical infrastructure investments, but this requires
a different analytic mindset and acceptance of
credit approval.63 This would also mean that they
could use PRI beyond the usual additions to their
existing grant programs. Second, community development financial institutions (CDFIs) that have
Impact bonds, by design, draw in private funding

for investment to advance social goals. Given the
growing market for social investing opportunities, it
may be fair to say that impact bonds have led to an
increase in social financing by mainstream investors. A close look at the private investors involved
in the 38 deals to date does seem to indicate that
indeed fresh capital has come to some social service sectors from new players. One example is
Goldman Sachs, which has invested in four SIBs
in the U.S. It is important to note that two of the
investments came directly from Goldman Sachs
impact investing business, the Urban Investment
Group (UIG), while the other two came from the
Goldman Sachs Social Impact Fund, managed by
UIG. These investments are part of the investment
37
if they equate to some additionality in the pool of

resources for social challenges. First, it is important to note that in the short run, if outcomes are
achieved, outcome funders (governments) will
have to pay for the services. Hence, financially, it
may be a wash unless government does indeed
save more than what it pays investors in that short
term. But true additionality could be achieved by
private funding if the bigger picture of potential
longer-term, cross-sectoral, and societal benefits
is considered. Also, SIBs may contribute to additionality by leveraging public sector funds through
a demonstration effect around the return on investment for certain kinds of social services. Finally, additionality may be achieved by reducing
costs for government procurement of social services and by reducing costs of doing due diligence
by foundations if those savings are transferred toward the social services themselves. If they do not
equate to additionality from traditional donors but
rather represent a shift from grants to loans, this
could potentially harm social services.
banking firms CRA activities (see Box 2 for more

on this topic), which could turn out to be an important driver of the impact bond market in the U.S.
ABN AMRO Bank, which invested in reducing time
on unemployment benefits in the Netherlands,
also drew funds from an innovation fund within the
bank but with a different regulatory framework behind it. In addition, there is an observable increase
in interest in double bottom line investments, and
SIBs provide a concrete way of doing so. As noted
earlier, the impact investing market is large and
growing, and a recent survey of private investors
showed an increased appetite among millennials
in achieving social returns together with financial
returns. A shift from mainstream investing to social
investing may bring additional funds to the social
sector.
Our survey demonstrated that 40 percent of investors (of multiple types) who were surveyed were
primarily interested in the opportunity to test an
innovative financial model to address social problems. About 24 percent responded that they were
primarily interested in achieving an equal combination of financial and social returns, while less
than 5 percent were motivated by the possibility of
achieving financial returns alone. A more nuanced
view across different types of investors shows
that In the pool of philanthropic investors, SIBs do
seem to have attracted larger sums of capital from
traditional investors (e.g., J.B. Pritzker and the
Pritzker Family Foundation, which have traditionally granted funds to the early childhood sector),
though of course it is difficult to know how much
these traditional investors would have contributed
to the sector in the absence of the SIB. In sum,
SIBs have brought funding for addressing social
challenges from both traditional investors and new
investors.
Do impact bonds crowd-in private

funding?
Yes. This does not by definition mean,
however, that this constitutes additional
capital (though it is possible that it could).
Is there room to grow?
Yes.
2. IMPACT BONDS PRIORITIZE

PREVENTION
Impact bonds are said to focus on funding preventive services, rather the traditional remedial
interventions.65 Preventive services are services
that reduce or eliminate negative social outcomes
and potentially high remediation costs for both
the public and private sectors in the longer term.
The degree to which a service is preventive relates to the timing of its delivery and the outcomes
that are being measured. This claim is based on
the expectation that outcome funders are, in an
What private funding does do is address immediate liquidity and potentially political constraints
that governments face in allowing for the financing
of preventive services. The question is whether
these resources represent a shift in assets under management from one sector to another or
38
ly childhood program in the U.S. showed that if the

program were to be implemented at full scale
targeting the most disadvantaged 20 percent of
children in the countyGDP would be 1.2 percent
higher and federal revenue would be $136 billion
greater 75 years from implementation.66 A recent
longitudinal study of an ECD program in Jamaica
found that 20 years later, program participants had
25 percent higher earnings than peers who did not
participate in the program.67
PFS financings monetize the

economic value of positive social
impact from prevention and early
intervention programs while
providing a net cost savings to the
public sector.
Godeke Consulting, 2013
impact bond, driven either by the desire to achieve
a positive outcome or by the fact that the achievement of that outcome avoids costs in the longer
term. This cost avoidance can be reaped by the
outcome funder itself, other public sector entities,
society as a whole, or all three. Over time, the expectation is that a shift into preventive services will
increase the cost-effectiveness of delivering the
desired outcomes.
As shown in Section 3, few programs are financed

through SIBs that target the youngest populationof the 38 SIBs studied, four serve children
during the early childhood years exclusively, two
serve children from birth to teen years, 13 serve
adults exclusively, and the remaining SIBs serve
children over age four and young adults. Notably,
one of the two preschool SIBs in the U.S. utilizes
the Child Parent Center model discussed above.
While, without a doubt, there are many beneficial
preventive interventions for older populations, potential investors and outcome funders might also
consider using SIBs to focus on preventive interventions for the youngest age ranges for which
there is a higher rate of return on the investment.
All but one SIB included in our study are explicitly

structured around the prevention of some negative outcome such as returning to prison, remaining homeless, needing remedial education, or
being unemployed. The one exception is the Portuguese SIB, which aims to improve student problem solving and could indirectly prevent negative
outcomes through improved student learning.
Do impact bonds prioritize prevention?

Yes.
Some of the interventions could be considered

more preventive than others based on the extent
to which they have the potential to prevent multiple negative outcomes across an individuals lifetime and therefore yield potentially larger savings
for government and society. There is extensive literature highlighting the importance of intervening
early in an individuals life. For example, a study
of the Child-Parent Center Education Program in
Chicago in the U.S., which provides educational
and family support services between the ages
of 3 and 9, finds that program participation was
linked to higher educational attainment, income,
socio-economic status, and health insurance coverage, as well as lower rates of justice system involvement and substance abuse for up to 25 years
after the program. A study of the Abecedarian ear-

Yes. It would be prudent to focus more on
younger children to achieve larger societal
benefits.
3. IMPACT BONDS REDUCE

RISK FOR GOVERNMENT
The theory is fairly simple. Since outcome funders
(government) pay for services only when outcomes
are achieved, they are able to avoid several types
of risk that they might otherwise be exposed to.
These risks include budget management risk, or
paying for services without getting the outcomes
they hope to achieve; fiduciary risk, or paying for
39
perverse or bad outcomes; and execution risk,

which is associated with scaling a known intervention. There are also risks associated with innovative approaches that have not been tested, as well
as risks associated with taking promising pilot or
small-scale programs to scale. Governments are
typically reluctant to take these risks, which leads to
limited innovation in public services funded through
the traditional budget process. By shifting the risk
to the investor and paying only when outcomes are
attained, as is done in a SIB, public funds can become instruments for innovative solutions without
the risk. In the end, advocates say, impact bonds
ensure that taxpayers money is spent on services
that achieve intended objectives.68
of the intervention, thereby cherry-picking the

easy cases and denying services to those most
in need. The most risky beneficiaries may then be
left to those least equipped to address their needs,
and the results can be costly. Another example is
when investors have the possibility to terminate a
contract prematurely, resulting in the stranding
of needy populations. The short and potentially
long-term costs of abandoning these individuals
midway through an intervention could be very high
and would be borne by government as the funder
of last resort. This would particularly be true when
governments are outsourcing social services. Interestingly, our surveys and interviews indicate that
the transfer of risk isnt actually the primary driver
for governments to get involved in SIBs. Some outcome funders in the study cited the possibility of
circumventing rigid government budget silos and
procurement processes and the ability to overcome politics, while most said that the opportunity
to scale was the primary driving factor.
In a SIB structure, much of the risk associated with

financing a social service is shifted from government to investors or guarantors. If outcomes arent
achieved, the government does not have to pay for
the intervention. In a DIB, this can be the same,
if the government joins a third-party entity as the
outcome funder or if the government is completely
outside of the transaction, in which case it assumes
no risk. Though in a SIB risk is inherently shifted
from government, it would be possible to analyze
the magnitude of the risk of the programs through
potential investor losses. However, because most
of the SIBs are still in early stages, we have yet to
observe the riskiness of these investments across
all of the deals. In the SIB for criminal justice in New
York City, the risk was indeed substantially reduced
for government when targets were not met by the
end of the third year of the SIB contract. In this
case, the government did not have to pay for the
provision of services.69
Do impact bonds reduce risk for

government?
Yes. But not all risks are mitigated.
Risk is likely to be reduced as long as
solid due diligence is conducted before
entering deals.
4. IMPACT BONDS SHIFT

FOCUS TO OUTCOMES
One of the biggest claims made about impact
bonds is that they encourage key stakeholders
to focus on the achievement of social outcomes.
The way impact bonds work is that outcomes are
identified by the stakeholders, and the contract
between them incentivizes the achievement of
those outcomes by paying for success. The determination of outcomes depends on how the impact bond is structuredin the various models the
outcomes that trigger payment can be determined
jointly, by the intermediary, or by the outcome
A much more nuanced perspective on government risk should be considered. In some instances, it is possible that not all of the types of risks
described above are removed from government.
For example, governments have the risk that they
will ultimately bear the costs for any unintended
consequences for impact bond beneficiaries. This
can occur if service providers are able to choose
themselves which beneficiaries are the recipients
40
funder. This differs greatly from the lions share of

social service financing and provision, which often
doesnt consider how effective programs are in
delivering outcomes. Even when they do look at
performance, it is argued, it is usually related to
outputs as opposed to outcomes. With this emphasis on outcomes comes not just a focus on
what matters but also transparency in government
procurement of service providers.70
SIBs have resulted in more flexibility to do what

works in service provision by allowing for course
adjustment along the way. In our study, we found
that the extent to which performance management and thereby course adjustment takes place
actually varies a great deal (see discussion under
claim 7), so the extent to which services are being
delivered differently than they would have otherwise also varies.
The concept of outcome-based financing is not

new. In fact, it has been around in public financial management circles for a long time. In developed countries and even in some developing
countries, as discussed in the introduction, performance-based contracts have been in contracting for public infrastructure projects for decades.
In the development arena, we have seen in recent years an increasing interest among donors
in results-based financing and output-based aid
through such tools as Cash on Delivery (Center
for Global Development) and results-based financing (RBF) and Program for Results Lending
(P4R) (World Bank). These tools can differ from
impact bonds in several ways. First, impact bonds
provide upfront capital as opposed to delivering it
when outcomes are achieved. Second, they bring
private sector discipline into performance management and outcome achievement.
Do impact bonds shift the focus to

outcomes?
Yes.
Yes.
5. IMPACT BONDS ACHIEVE

SCALE
Another one of the most common claims about impact bonds is that they can help to achieve scale.
The literature highlights that the majority of nongovernmental service providers operate at very small
scale due to financial and capacity constraints. Impact bonds, it is said, can open up access to growth
capital and allow these service providers to bring
their services to a larger population, including different segments of the population or different geographical areas. The expectation among some impact bond promoters is that impact bonds can play
a significant role in addressing some of the enormous social challenges faced globally today.
Overall we see that SIBs have led to a substantial

shift in thinking around procurement and provision
of social services among government and service
providers in the deals that we surveyed. For example, one stakeholder involved in the SIB for homelessness in Massachusetts stated that there has
been a complete shift to outcome-driven procurement in this sector. Service providers are chosen
based on their ability to deliver outcomes instead
of based on platitudes. One government official in
the United States said, We are just tired of paying for programs that dont work, so this [impact
bond] structure helps us get the outcomes that we
want. Service providers are incentivized to deliver
outcomes since they face reputational risk if they
do not. In some cases, though not the majority,
The term scale is a highly relative concept. The

question is, scale with respect to what? Do the
impact bond-hypers mean that impact bonds can
really address the outsize costs that would be associated with reaching every needy member of the
population for a given preventive intervention? For
malaria control in Africa alone, the estimated funding gap is $3.6 billion.71 Delivering good-quality
universal education from preschool through lower
secondary levels in low- and lower-middle-income
countries is estimated to have an average annual
41
The social impact bond is a

promising new product within
the impact investing sector, with
potential to become a multibilliondollar source of growth capital to
fund effective social programs.
An examination of the current SIB market shows

that in the majority of the deals, the number of individuals reached is fairly small. Of the 38 SIBs,
25 of them serve populations equal to or less than
1,000 individuals. Of those SIBs on which public
data exist, the smallest SIB, in Canada, serves 22
people, and the largest SIB targets approximately 9,000 individuals. Another way to examine the
question of whether these programs are reaching
any kind of scale in terms of reaching all of the
needy population would be to look at the proportion of the needy population being served through
a given program. In Utah, for example, the goal is
to reach about 50 percent of the needy population
in the school district with the preschool SIB,74 while
in Ohio, the focus is less on reaching scale and
more on the innovation of combining services.
Social Finance U.S., 2012

cost of $239 billion per year between 2015 and
2030, with an estimated average annual financing gap of $22 billion across the same period.72
Very few examples exist of truly reaching scale
with social programs in developing country contexts. These include, for instance, two large government programs to address poverty and human
development indicators: Oportunidades in Mexico
and Bolsa Familia in Brazil, both of which have
been successful in achieving their goals through
their conditional cash transfers to poor families.73
In developing country contexts with large-scale

problems, both in terms of depth and breadth, it
is likely that to have any substantial impact will require something larger than an individual impact
bond transaction. The fund model may be a promising way to achieve this. Nevertheless, the challenge will be finding sufficient capacity to provide
services to such large populations.
There is scale relative to the size of the target

population, in scaling one intervention to other
cities or places, and scale as in a large program.
In a lot of the SIBs trying to reach the most vulnerable people, they seem to be reaching a fair
size of their target population (Canada, Ohio, and
Australia all have very targeted populations), and
they wouldnt have been reached otherwise. In the
U.K., the Innovation Fund, Fair Chance Fund, and
the countrywide adoption deal are good examples
of creating structures for scaling services.
Do impact bonds achieve scale?

In absolute terms, no. In relative terms
(specific target populations), somewhat.
Possibly through impact bond funds.
A different take on the concept of scale could

be that impact bonds can serve as catalysts to
achieve scale in that they may encourage a government to take on the funding or service provision
in the future. An alternative, perhaps more conservative, view of achieving scale is that impact
bonds simply serve to expand services to a larger
population than is currently being served. Finally,
scale may mean something beyond numbers of
people servedit could be related, for example,
to putting in place the systemic infrastructure for
supervision, training, monitoring, and evaluation.
6. IMPACT BONDS FOSTER

INNOVATION IN DELIVERY
Impact bonds are also said to have the ability
to foster innovation in the delivery of social servicessomething that governments are often
unwilling or unable to do because of funding or
political constraints. We have seen innovation in
delivery to refer to two related but slightly different
concepts in the literature on impact bonds. The
first is the introduction of a new way to provide
42
delivered within prison walls, which also had not

been done before. In this case the impact bond is
heavily backstopped by philanthropic capital. In the
Portuguese SIB, an information technology system
developed and tested in the United States is being
used among young children to help them develop
critical thinking skills. In this case, there was a great
deal of support from government to focus on innovation, the investment amount was small, and it was
backed by philanthropic funding. Other examples of
innovation include using new combinations of interventions such as in Cuyahoga County, Ohio, where
the aim to reunite children in foster care with their
biological parents who were experiencing homelessness required multiple types of services. In the
U.K., the Innovation Fund supported 10 initiatives
that provided mentorship programs at scale.
services from the start of an intervention. The second is the ability to innovate or adapt along the
way. The latter we will discuss in more detail in the
following section on performance management.
While the term innovation is defined as something new and different, how innovative something
is relates very much to the context in which it is
being introduced. In the context of innovation in
service delivery, a broader definition of innovation
should include a range of options such that an intervention could be considered innovative if it has
never been implemented:

at all
with a given population
in a particular service delivery setting
by a particular service provider
in a given geographical area
in combination with other interventions
some or all of the above
At least so far, SIBs have not supported many

highly innovative interventions but some have
supported interventions that are being delivered in
different ways or to different populations. As the
market develops, it will be interesting to see the
degree to which investors are willing to invest in
completely innovative methods of addressing social challenges.
In our landscaping exercise, none of the 38 SIBs

falls into the first category of never having being implemented. There is not a single intervention that
has never been used before this SIB transaction.
We suspect that this relates closely to the risk appetite of investors linking to the third impact bond
criteria mentioned in Section 2: There must be evidence of success in achieving outcomes. There
may be investors out there who have a large appetite for risk and would be willing to invest in an intervention for which there is very little or no evidence,
but in the existing SIBs this was not the case. Other instruments, such as innovation challenges, are
likely to be better suited for this purpose.
Do impact bonds foster innovation?

Mostly no, but to some extent yes, in
that services have been provided in new
combinations, to new populations, or in
new settings.
Maybe. There is greater scope for work
in conjunction with innovation platforms
to do the kinds of experimentation that
we have seen rather than greenfield
investments.
Nevertheless, quite a few interventions are innovative in that they are being delivered in new and
different settings, by different service providers or
in combination with other interventions. One example of an intervention that was innovative in multiple aspects is the Rikers Island SIB for reducing
prison recidivism in New York. Here, a previously
utilized and proven therapy is being used with a
younger population than ever before, and it is being
7. IMPACT BONDS DRIVE

PERFORMANCE
MANAGEMENT
Impact bonds are said to drive performance management, which in turn leads to the achievement
43
DIBs create a financial incentive to

find the most effective and efficient
ways of delivering the services
and commodities that people need.
Because interventions are financed
by private investors, there is more
flexibility than there would be under
traditional public sector contracts
to adapt interventions according
to feedback loops and changing
circumstances on the ground.
party in that the organization had both the finance

and nonprofit sector expertise or even social sector-specific expertise. A good example of this was
in the SIB in Massachusetts for young men and
women in the juvenile justice system. The intermediary in this case happened to have one member
of the team with deep knowledge of this sector. In
combination with a very strong data management
system within the service provider, this allowed for
a great deal of flexibility, learning, and adaptation
in the process. In other cases there appeared to
be very little learning by doing and adaptation in
service delivery. Few deals reported using data to
make course adjustments along the way.
Center for Global Development, 2013
Do impact bonds drive performance

management?
Yes, though it is not clear that much
course adjustment is occurring.
of outcomes as discussed in claim 4. Performance

management systems help to ensure that service
providers are on track in delivering the necessary
components of their intervention. While some
providers have the ability to develop and follow
performance management strategies in-house,
many dont have the capacity or resources to do
so. Governments and donor agencies generally do not have this capacity either. Furthermore,
government-funded nonprofit service provision
is often inflexible and leaves little room to adapt
along the way. Impact bonds, it is argued, bring in
private sector expertise in performance management and release nonprofits from the hold of rigid
government contracts. This ability for adaptation,
together with the pay-for-success contract, leads
to the delivery of outcomes.

Yes. The use of real-time data course
adjustment could be increased, which
would have implications for outcome
achievement and efficiency.
8. IMPACT BONDS STIMULATE

COLLABORATION
Another common claim about the promise of impact bonds is their ability to stimulate collaboration
across stakeholders. Some of the commentary focuses on the potential to foster cooperation across
different types of players in the public and private
spheres, while others highlight the possibility for
impact bonds to break down silos and bring together players across different government agencies.75 Another type of collaboration is across
partisan lines where agreement on policy would
otherwise be difficult or impossible. When collaboration takes place across agencies or stakeholders and alignment of interests to attain certain outcomes, there is an exchange of information and
know-how that leads to increased efficiency and
creative solutions.
The extent to which performance management

and in particular external private sector performance management is taking place in existing
deals depends greatly on the type of SIB structure (managed, intermediated, or direct) and on
the types of actors involved in the dealprimarily
who played the role of performance management
if there was any at all. We see a wide variation in
the types of organizations that play this role, which
also affects both fidelity to the model and the degree to which adaptation actually occurs in practice in these deals. In some deals there was an
ideal combination of expertise in the intermediary
44
They [social impact bonds] also

provide the incentive for multiple
government agencies to work
together, capturing savings
across agencies to fund investor
repayment.
services are delivered and the way government

has been operating. Other examples of collaboration include investors engaging in activities that
support the service beneficiaries. This happened
in Canada, where, in a program aimed at keeping
mothers with their children, the credit union Conexus provided financial education to the mothers.
Social Finance U.S., 2012
A good example of collaboration across partisan

lines was in the SIB for quality preschool education
in Utah in the U.S. Ben McAdams, the mayor of Salt
Lake County, said in an interview that the initial supporters of the SIB structure [Democrats] were able
to gain backing from Republicans who were sold by
the fact that government would only have to use taxpayer funds to pay for the services if outcomes were
achieved. In the end, the legislation, sponsored by
Republicans, passed both the House and Senate
with overwhelming bipartisan support.
From our interviews it was clear that, across stakeholders, many were interested in the possibility of
collaboration that SIBs could bring. For the majority
of those surveyed, however, that wasnt the primary
reason for engaging. Among outcome funders, 25
percent chose collaboration as their primary motivation for involvement in a SIB, while only about 7 or
8 percent of intermediaries and investors, and not
a single service provider surveyed, found collaboration to be the most important reason for getting
involved in a SIB. When asked about challenges in
developing a SIB, collaboration and agreement on
the terms of the transaction were notably among
the biggest challenges faced.
Do impact bonds stimulate collaboration?

Yes. There are very good examples of this.
It has also proven to be a big challenge.
Yes. It will likely become easier to
collaborate as more experience is gained
in this area. However, new players may
face some of the same challenges.
Nevertheless, the general structure of the SIB

clearly generates the necessity to work together
to find areas of common ground and to come to
agreement (albeit difficult at times) on the contract
terms. A DIB can also generate collaboration, but
if the government is not the outcome funder, a DIB
will not necessarily promote collaboration between
the public and private sectors.
9. IMPACT BONDS BUILD A

CULTURE OF MONITORING
AND EVALUATION
Several actors mentioned the frequent communication that took place early on in the process
and the importance of building trust. One notable example where collaboration occurred across
agencies was in the SIB for unemployment in the
Netherlands. One of the stakeholders noted, Before having the SIB there was a very poor system of referral for young people on unemployment
benefits now we have a data collection system
across agencies which allows us to identify the
individuals who need services. The private sector can bring a new perspective to the way social
Although not discussed as often in the literature,

impact bonds are also said to have the potential
to bring about a culture of monitoring and evaluation
among both nongovernment service providers and
the government agencies involved in impact bond
transactions. This cultural change in theory would
be the result of a combination of the shift toward an
outcomes focus, performance management, and
the collaboration among multiple stakeholders. The
demand for better data and the desire to be able to
work across actors would force a change in the cur-
45
rent systems, which place little emphasis on monitoring and evaluation.
multiyear contracting, which differs from the business-as-usual single-year contracting by allowing
for more continuous and reliable services. This may
lead to better and more sustainable outcome for
the beneficiary population. Second, impact bonds
can lead to sustained impact in that they provide a
demonstration effect of the benefits of preventive
services which can foster longer-term government
commitment to this social challenge.76 Finally, impact can be sustained as a result of impact bonds
if they lead to a major shift in how governments
view performance management, achievement of
outcomes, and the development of monitoring and
evaluation systems as discussed in the previous
claims.
While still very early on in their development, we saw,

in our examination of the existing SIBs, a great deal
of potential for impact bonds to bring about a culture of monitoring and evaluation. In some cases this
change had already begun as the SIB itself forced
service providers and government agencies to collect and manage key data related to the outcomes of
their beneficiary populations. In fact, in some cases
stakeholders stated that the SIB had helped them to
solve longstanding problems of data collection in the
system. One service provider in particular noted that
the motivation for getting involved was to be able to
promote a system of monitoring and evaluation. For
other stakeholders this was characterized as a difficult and intimidating process. They cited the need for
financial and technical support to service providers,
capacity building in government, and ensuring privacy of beneficiaries.
The arguments for why SIBs can lead to sustained

impact are promisingfor long-term impact to
occur, there must be a shift in the focus of those
that finance and deliver services toward outcome
achievement. SIBs seem able to do this, at the
very least for the interventions that they finance.
The multiyear contracting in itself is one step in the
right direction to ensure more consistent care over
time. This also helps to protect the provision of social services from politically influenced ebbs and
flows of funding. However, for this to have deeper
systemic impact, monitoring and evaluation systems must also be put into place. It is too soon to
know if impact bonds will have this effect or if they
will be a passing fad and things will go back to
business as usual after deals are complete. The
development of multiple SIBs in some locations,
legislation, and political action to support the SIB
ecosystem and SIB funds is encouraging.
As with many of the claims about what a SIB can

achieve, this claim is highly dependent on the individual actors involved. It does seem that there must
be a champion for the cause who is willing to lead
the charge, but the SIB can serve as a catalyst for
deeper behavioral change within old institutions.
Do impact bonds build a culture of
monitoring and evaluation?
It is too soon to say whether this has
created a broad shift in systems across all
of the deals, but there is some movement
in this direction.
Yes. This is an area with a lot of potential
for growth.
Do impact bonds sustain impact?

It is too soon to say, but the fact that most
SIBs provide multi-year contracting does
contribute to the achievement of longerterm impact
10. IMPACT BONDS SUSTAIN

IMPACT

Yes.
Finally, impact bonds are said to lead to sustained impact. This can be interpreted in several ways. First, the impact bond itself can provide
46
5.1 Summary of the Analysis of the 10 Common Claims about Impact Bonds
CLAIM
HOW ACCURATE?
ROOM TO GROW?
Yes. This does not by definition mean,
1. Crowd-In
however, that this constitutes additional
Private Funding
capital (though it is possible that it could).
Yes.
2. Prioritize
Prevention
Yes. It would be prudent to focus more

on younger children to achieve larger
societal benefits.
Yes.
3. R
educe Risk for
Yes. But not all risks are mitigated.
Government
Risk is likely to be reduced as solid due

diligence is conducted before entering
deals.
4. S
hift Focus to
Outcomes
Yes.
Yes.
5. Achieve Scale
In absolute terms, no. In relative terms

(specific target populations), somewhat.
Possibly through impact bond funds.
6. Foster
Innovation in
Delivery
Mostly no, but to some extent yes, in

that services have been provided in new
combinations, to new populations, or in
new settings.
Maybe. There is greater scope for work

in conjunction with innovation platforms
to do the kinds of experimentation that
we have seen rather than greenfield
investments.
7. Drive
Performance
Management
Yes, though it is not clear that much

course adjustment is occurring.
Yes. The use of real-time data course

adjustment could be increased, which
would have implications for outcome
achievement and efficiency.
8. Stimulate
Collaboration
Yes. There are very good examples of this.

It has also proven to be a big challenge.
Yes. It will likely become easier to

collaborate as more experience is
gained in this area. However, new
players may face some of the same
challenges.
9. B
uild a Culture
of Monitoring
and Evaluation
It is too soon to say whether this has

created a broad shift in systems across all
of the deals, but there is some movement
in this direction.
Yes. This is an area with a lot of

potential for growth.
10. Sustain
Impact
It is too soon to say, but the fact that most

SIBs provide multiyear contracting does
contribute to the achievement of longerterm impact.
Yes.
47
6. CONCLUSIONS AND FUTURE OF

SIB/DIB MARKET
hile we have seen considerable progress

over the past decade in some indicators of
well-being, the gravity of the social challenges
the world continues to face today requires serious consideration of innovative ways to finance
and deliver services more efficiently and cost-effectively. Some key contributions in recent years
have forced those of us working on addressing
these challenges to think differently. First, there
has been greater emphasis on evidence as a basis for financing, which has led to a movement
to evaluate program impact in both the developed and the developing worlds. As part of that
movement, we have observed the consequences
of such evaluations for both cost-effectiveness
and sustainability of service provision.77 Second,
there has been a greater focus on value for money, leading to the use of performance-based financing and output-based aid programs in both
developed countries and by development finance
institutions globally. There has been recognition
that the private sector can complement the public sector in both financing and delivery of social
services. This has resulted in an explosion in the
participation of the private sector in financing and
driving outcomes through, for example, public-private partnership models. Third, increased appetite
for achieving double bottom line returns has led to
a growth in impact investing globally.
in the number of deals has occurred in the developed world. While we are still in the very early
stages of this market with much remaining to see
and learn, our examination of the 38 existing deals
provides grounds for cautious optimism.
Our main findings:
So far, SIBs have focused on a handful of sectors and problems with certain characteristics.
To start, they have focused on areas where the
government is already contracting out to nongovernmental agencies to deliver services such as
programs that provide job and life skills training.
Second, they have focused on areas where service inputs are fairly complex but outcomes are
simple to measure, such as homelessness, foster
care, and prison recidivism. Third, they have been
used in areas that are not traditionally core government services; for example, in job training for
prisoners rather than in law enforcement.
Impact bonds have the potential to contribute
to the improvement of social service delivery
though thus far the deals have been complex
and time- and expertise-intensive. Deal development has proven to be challenging due to the
steep learning curve of this new form of collaboration involving many different types of players and
the complexity of multiyear contracts and legal
constraints. The need to determine outcome metrics and conduct complex budget analytics and
calculate the costs and benefits of interventions
adds to the difficulties in putting a deal together.
Impact bonds bring together elements of these

various strains of thinking and policy action into
one instrument. Over the past five years, since the
first SIB was implemented, an exponential growth
48
There is an enormous variation in the deals

with respect to the structure, mechanics, and
stakeholder roles, which is one reason for optimism in that this demonstrates a great deal
of flexibility in how a deal can be structured.
Impact bonds have been designed as one of two
modelseither as an individual transaction focusing on a given intervention or as a fund aiming to
achieve a set of outcomes across potentially multiple service providers. Second, impact bonds have
followed one of three structures, which are dictated by who plays the important roles of managing
the deal, contracting, and performance management. This flexibility in role designation allows a
variety of entities to play different roles depending
upon their area of expertise and local conditions.
Finally, depending on whether a government wishes or is able to engage, impact bonds can take
the form of a SIB, where the government is the
outcome funder, or a DIB where a third party takes
on the role of outcome funder. While only one DIB
is contracted to date (though it was not contracted
before our study cutoff date), a number of others
are in development. This variation in the structure
may allow for the initial introduction of this financing model to systems that are not quite ready or
able to enter into contracts between government
and private partners in this manner.
Rigorous (experimental or quasi-experimental) evaluations of the interventions in SIB

deals were not always necessary for measuring impact and determining repayment. In our
examination of the 38 deals, 28 of the deals use
validated administrative data, six use historical
comparison data, and eight use quasi-experimental and experimental methodologies (four each).78
Many of the deals (primarily the impact bond funds
in the U.K.) have outputs rather than outcomes as
their payment triggers. The choice of evaluation
type was dictated in part by the intervention itself
and in part by the desire of the investors and outcome funders to have evidence as to the causality
of the outcomes.
Across the 38 SIBS we studied, four factors

came out as key to getting a deal together:
measurable outcomes; evidence of intervention impact; government support; and dedication and collaboration of the stakeholders.
However, across these factors there was some
variation in the importance of each one. In the
majority of the deals, there was administrative
data or a system set up for data collection related
to intervention impact. In every deal, either outcomes or outputs related to service delivery were
identified. In many there was evidence that particular service providers had the capacity to deliver
those services and achieve the outcomes in question. There was quite some variation, however, in
the robustness of that evidence, and this depended to some extent on the risk appetite of investors.
In our examination of 10 claims about the potential of impact bonds five years into their development, we find that many of these claims
do indeed hold true though they almost all deserve more nuanced analysis than the literature has provided to date. Five of the 10 claims
in particular capture what we identify as the
most promising potential for impact bonds.
The most important claim is that impact bonds
lead to a shift in focus to outcomes. We find that
the existing SIBs have truly transformed the conversation among participating government stakeholders about procurement of social services and
the transparency and accountability that go along
with that. In essence, instead of paying for services, government pays for outcomes. At the same
time, SIBs push service providers to deliver on
Government support was crucial in every deal as

it would have been impossible to execute without
that support. Finally, because these deals take a
great amount of time and effort to develop, the
stakeholders overwhelmingly highlighted the importance of all of the actors willingness to put in
the necessary time and effort. This included the
expertise and work of intermediaries in the process but with some variation by deal as there was
a different mix of individuals in each. It also required philanthropic support for the time and effort
spent on developing the deals.
49
develop a deal, and the willingness of outcome

funders to enter into these contracts, the continued
development of impact bonds will take substantial
effort on the part of many different parties. First,
support from philanthropy will continue to be crucial to the field; these contributions have played a
key role in the building of the impact bond ecosystem to date. For example, they can help by funding the collection of data and evidence necessary
to start the conversations about outcome-based
financing with outcome funders. Second, legislation and policy action on the part of government
will also be important in the future development of
the market. Third, technical assistance or advising
governments will be very important to help ensure
that the needs of beneficiary populations are taken into account and that the costs and benefits
make sense. This will be even more important as
new sectors are explored for deal development.
Finally, expertise will be crucial in the areas of financial modeling, contracting, and performance
management and in conducting due diligence of
nonprofits.
these outcomes. A second very important and related claim is that impact bonds drive performance
management. Bringing private sector mentality
into the provision of services (which often means
getting government bureaucracies out) can lead
to more efficient and effective delivery of social
services. This has been mainly seen through the
push toward outcome achievement and fidelity to
the service delivery model and less in terms of adaptation of service provision along the way. Third,
in the existing deals, this mechanism has held up
to the claim that it stimulates collaboration. Fourth,
if larger systematic change, such as development
of strong monitoring and evaluation systems, continues to happen with impact bond deals, that in
itself would be an enormous contribution toward
improving many peoples lives. Finally, impact
bonds can shift the focus of government away
from curative or remedial services and toward preventive services. This could have huge economic
implications for government and society.
The existing individual impact bond deals are
not achieving substantial scale in absolute
terms, but impact bond funds can achieve
greater scale. Of the 38 deals, 25 serve populations equal to or less than 1,000 individuals.
The Innovation Fund in the U.K., which brings together multiple investors to jointly support a set
of outcomes to be provided through many service
providers in 10 deals, serves more than 16,000
individuals. The other impact bond fund in the U.K.
is not as large in scaleit serves about 1,600 beneficiaries. Many of the deals had very specific target populations, so in relative terms the programs
were serving an important part of that target population in a given setting.
It is very likely that the impact bond model development process, structure, and application
will continue to be adapted in the future. Thus
far we have seen SIBs developed in fields with a
complex set of inputs but with simple outcomes. It
is likely that there will be more impact bonds developed in these same types of sectors but that future
impact bonds will come to include, for example, a
wider range of interventions in early childhood development (maternal and child health, parenting,
and child welfare), health (in particular preventive
care), housing, and water and sanitation. The types
of interventions within these sectors that are most
probable include services that cater to particularly
underserved or marginalized populations as well as
to ones that provide improvements in the margin to
existing services such as in quality improvements
when access is not an issue. Impact bonds could
also be used more experimentally where investors
are interested, for instance, in testing innovative
ideas for service provision or outcome funders
would like to test which interventions or service
Prospects are bright for the development of

more impact bonds (or some derivative of
them) worldwide, though this will take substantial effort on the part of many stakeholders. The challenges are likely to be much larger in developing country contexts. Given the
complexity of deal development, the evidence and
outcome identification necessary to even begin to
50
be easier to get off the ground and may provide

an important demonstration effect, though their
impact might not be as sustained as under a SIB.
This argument will be familiar to those who worry
about government ownership of aid programs.
providers deliver services most effectively. While

risky, these propositions could represent high future value for both investors and outcome funders.
Can impact bonds tackle some of the large-scale
social issues facing the world today, in particular
in developing country contexts? This seems unlikely given the outsize sums of private capital
that would be required to fund these services, the
availability and capacity of service providers to
provide at large scale, and the availability of funds
on the outcome funder side to make payments
to investors if outcomes are achieved. One way
to address some of these issues, as mentioned
above, is through the impact bond funds. In developing country contexts, such funds could be
supported by multiple large donor agencies, for
example, but the problem of capacity may remain.
At the same time, enormous scale may not be the
purpose of impact bonds. If smaller deals are able
to shift how governments and service providers
think about service provision and if outcomes become the main focus, this could have important
ripple effects on service delivery more broadly. For
this reason we feel that it is important that government be part of the conversation in the transactions. DIBs, with third-party outcome funders, may
As the impact bond market grows, we expect that

some of the challenges faced in the first five years
of deal development will be reduced. The main
challenge will be the complexity of the deal and
the time and costs of development. Already, stakeholders are beginning to think creatively about
how to go about this. As discussed above, this will
require the contribution of all involved, and it will
take some creative thinking and collective effort.
To move forward there must be increased transparency and knowledge sharing. The development of communities of practice, workshops, conferences, and easily accessible online content can
foster this movement. More research about how
this very nascent field develops will be critical to
capture lessons learned, contextualize them within the bigger picture of social sector financing and
service provision, and apply them to real-world
problems with the populations in need at the center of the discussion.
51
APPENDIX 1. RESEARCH METHODOLOGY AND

STUDY PARTICIPANTS
Investment, Action for Children
The research for this study consisted of three

components. The first component was a comprehensive review of the literature on impact bonds,
including reports, working papers, white papers,
articles, blog posts, and opinion editorials. A more
shallow review of the broader impact investing
literature was also conducted. The second component comprised a series of unstructured interviews with key players in the impact bond arena,
including academics, foundations, investors, and
intermediaries. The third consisted of structured
interviews that were conducted via a survey completed online (using the survey platform Qualtrics),
in person, or over the telephone that targeted one
representative of each of the key stakeholders
(investors, intermediaries, service providers, outcome funders) in each of the 38 social impact
bonds included in the study. In some cases, multiple individuals from the same organization were
consulted. The individuals who provided the information in these interviews and surveys have all
given written authorization for publication of their
responses. In addition, we held five private events
on impact bonds from which we gathered ideas
and viewpoints from a variety of stakeholders. All
of the contributors to the study and panelists from
the events who gave authorization for the inclusion of their name are listed below.
Chin Hoong Sin, Director, Office for Public

Management Ltd.
Nigel Jackson, Employment and Skills Manager, Nottingham City Council
Dave McCloskey, Senior Delivery Manager,

3SC
Kevin Munday, Investment Director, Impetus

Private Equity Foundation
Jane Newman, International Director, Social

Finance U.K.
Peter Nicholas, Director, Social Finance U.K
Pedro Sampaio, Investment Team, Impetus

Private Equity Foundation
Louise Savell, Director, Social Finance U.K.
Jan Tomlinson, Enterprise Director, Tomorrows People Trust
Anonymous, Numbers4Good
Anonymous, Numbers4Good
Anonymous, Social Finance U.K.
Anonymous, Social Finance U.K.
North America
U.K.
Sam Aigner-Treworgy, National Policy Manager for School Districts, Ounce of Prevention
Fund
Molly Baldwin, Founder and CEO, Roca Inc.
Brad Cauthen, The Osborne Association
Danielle Cerny, Social Innovation Finance

Manager, Massachusetts Executive Office for
Administration and Finance
Liz Armstrong, Chief Executive Officer U.K.,

Advanced Personnel Management
Vicki Brown, Social Investment Lead, U.K.

Department for Work and Pensions
Toby Eccles, Development Director, Social Finance U.K.
Cathy Clark, Director, Case i3 Initiative on Impact Investing, Duke University
Michelle Farrell-Bell, North West Regional Director, Teens and Toddlers
Jacques de Corby, Executive Vice President,

Marketing and Communications, Conexus
Credit Union
Peter Gilson, Investment Manager, Northstar

Ventures
Gerald Croan, Senior Fellow, Third Sector

Capital Partners
Paul Hargreaves, Operational Director, Social

52
Janis Dubno, Early Childhood and Education

Senior Policy Analyst, Voices for Utah Children
Lili Elkins, Chief Strategy Officer, Roca Inc.
Caitlin Reimers Brumme, Director, Social Finance U.S.
Clint Repski, Assistant Deputy Minister, Ministry of Education, Saskatchewan
Jamie Etkind, Analyst, Goldman Sachs
Timothy Rudd, Research Associate, MDRC
Andrew Feldman, Special Advisor for Evidence-Based Policy and Programs, U.S. Department of Education
Joe Schmidt, Director of Strategic Initiatives, IFF
Joe Finn, President and Executive Director,

Massachusetts Housing and Shelter Alliance
Jeff Schoenberg, Advisor, The J.B. and M.K.

Pritzker Family Foundation
Megan Golden, Senior Fellow, Institute for

Child Success
Liya Shuster, Senior Associate, Third Sector

Capital Partners
Brenda van Gorder, Director of Preschool Services, Granite School District
Joe Waters, Vice President, Institute for Child

Success
David Gorleku, Associate, Goldman Sachs
Susan Gottesfeld, Associate Executive Director, The Osborne Association
Rosemary Addis, Co-Founder and Chair, Impact Investing Australia
John Grossman, Co-President and General

Counsel, Third Sector Capital Partners
Madly Bodin, Business Partner, Social Investment, The Benevolent Society
Jeff Hayward, Chief of External Affairs, United Way of Massachusetts Bay and Merrimack
Valley
Sally Cowling, Manager, Research and Program Development, UnitingCare Burnside
Kippy Joseph, Associate Director, The Rockefeller Foundation
Nick Harrington, Associate, Impact Investing,

Social Ventures Australia
Ashish Karamchandani, Executive Director,

Monitor Deloitte India
Craig Parker, Executive Director, Head of

Structured and Asset Finance, Westpac Institutional Bank
Michelle Kirby, Alum of Casei3 Initiative on Impact Investing, Duke University
Elyse Sainty, Director, Impact Investing, Social Ventures Australia
Jeff Liebman, Malcolm Wiener Professor of

Public Policy, Harvard University
Emma Tomkinson, Delivering the Promise
Beth Mascitti-Miller, Chief Officer of Early

Childhood Education, Chicago Public Schools
Kirrin Winning, Manager, Office of Social Impact Investment, New South Wales Treasury
Ben McAdams, Mayor of Salt Lake County,

Utah
Continental Europe
Don Meikle, Acting Executive Director, EGADZ

Downtown Youth Center
Eric Buckens, Manager Social Impact Fund,

ABN AMRO
Ryan Moser, Managing Director, Eastern Region, Corporation for Supportive Housing
Pierre-Louis Christiane, Investment Analyst,

Kois Invest
Tracy Palandjian, Chief Executive Officer and

Co-Founder, Social Finance U.S.
Joana Cruz Ferreira, Analyst, Laboratrio Investimento Social
Andrea Philips, Vice President, Goldman

Sachs
Maurice Fransen, Senior Manager, Public

Sector, Deloitte
Mike Puma, President, Chesapeake Research

Associates, LLC
Ruben Koekoek , Innovation Manager, ABN

AMRO
Australia
53
Leo Van Loon, Director, Buzinezzclub
Antonio Miguel, Director, Laboratrio Investimento Social
Robin Horn, Director, Education, Childrens

Investment Fund Foundation
Niklas Ruf, Project Manager, Juvat
Ralph de Ruijter, Investment Manager, Start

Foundation
Zachary Levey, Senior Associate, Multilateral

Investment Fund, Inter-American Development Bank
Bjorn Vennema, Associate, ABN AMRO
Aunnie Patton, Innovative Finance Lead, Bertha Centre for Social Innovation and Entrepreneurship
Tjalling de Vries, Program Manager Social Impact Bonds, Municipality of Rotterdam
Liesbet Peeters, Founding Partner, D. Capital

Partners
Ferdinando Regalia, Social Protection and

Health Division Chief, Inter-American Development Bank
Faith Rose, Manager, Education Sector Team,

Childrens Investment Fund Foundation
Mirjam Schning, Global Head, Programs and

Partnerships, LEGO Foundation
John Simon, Founding Partner, Total Impact

Capital
Sara Taylor, Investment Executive, CDC

Group
Humphrey Wattanga, Senior Partner, Afcorp

Investments
Susan de Witt, Innovative Finance Programme Coordinator, Bertha Centre for Social
Innovation and Entrepreneurship
Other

Paul Atherton, Education Economist, U.K. Department for International Development
Michael Belinsky, Co-Founder, Instiglio
Caroline Bressan, Principal, D. Capital Partners
Gib Bulloch, Founder and Executive Director,

Accenture Development Partnerships
Phyllis Costanza, Chief Executive Officer,

UBS Optimus Foundation
Michael Eddy, Co-Founder and Partner, Instiglio
Drew von Glahn, Innovative Finance, World

Bank
Avnish Gungadurdoss, Co-Founder and Managing Partner, Instiglio
Arthur Wood, Founding Partner, Total Impact

Capital
Susannah Hares, International Director, Absolute Return to Kids
Maya Ziswiler, Program Director, Education,

UBS Optimus Foundation
Nonni Hlongwane, Principal, Omidyar Network
Anonymous: 17
54
APPENDIX 2. EXISTING SOCIAL IMPACT BOND SUMMARY SHEETS

Fact Sheet Key
SIB FUND NAME
Included for the 17 SIBs in two SIB Funds (Innovation Fund and Fair Chance
Fund)
SIB NAME
The name of the SIB used by the involved parties. Pay for Success is the
term used for SIBs in the U.S. and Social Benefit Bond is the term used in
Australia for a SIB.
LOCATION
City, State/Region, Nation (in the case of

the U.K.)
COUNTRY
Country
CONTRACT
DURATION
Duration of the
contract with the
outcome funder,
not necessarily
equivalent to the
duration of service
provision.
Sector symbol
(Social Welfare,
Criminal Justice,
Education, or
Employment)
START DATE (DATE

OF CONTRACT
SIGNING)
Date of principal contract signing (there

are many contracts)
SOCIAL ISSUE
Broad definition of the social issue the intervention addresses within the target population
TARGET
POPULATION
Number of beneficiaries and qualifications for the program. The beneficiaries may all participate over the entire
course of the program or participate for shorter periods staggered throughout the project duration.
INTERVENTION
A description of the intervention. For the 8 programs working with children in or at risk of entering state outof-home care, there are a few definitions worth noting. Out-of-home care applies to all care provided through
the state due to an unsafe family environment for the child or a parent voluntarily surrendering their child.
Residential care and foster care are two types of out-of-home care.
SERVICE PROVIDER
The Service Provider provides the

intervention.
INTERMEDIARY
(ROLES IN
PARENTHESES)
The Intermediary is any actor the deal

participants view as an Intermediary.
Generally this is any party that facilitates
TECHNICAL
activities between the other parties.
The roles played by this actor are
ASSISTANCE
specified in parentheses. In addition,
PROVIDER
a Special Purpose Vehicles (SPV) is
often established as a conduit for funds
between parties; these are noted here.
OUTCOME FUNDER
The Outcome Funder provides outcome

payments based on the metric below. The
Outcome Funder is also referred to as the
commissioner. The structure of outcome
funds vary across deals: in some cases
it is provided up front, in others it is in
escrow, and in others it is appropriated.
The Technical Assistance Provider is any
actor the deal participants view as a
Technical Assistance Provider. The type
of support is specified. Many of the other
parties also provide technical assistance
and this category often overlaps with the
intermediary category.
55
UPFRONT CAPITAL
COMMITMENT
(USDM)*
This is a sum of Non-Recoverable

Grants, Recoverable Grants and
Investment Guarantees, Senior
Investment and Subordinate Investment.
This number is not comparable across
deals as some deals recycle outcome
payments year to year to fund service
provision. The costs covered by this
investment and the draw-down
schedules also differ across deals.
NONRECOVERABLE
GRANTS
These are grants or commitments

provided by non-Outcome Funder actors
to fund the intervention, which the
grantor has no opportunity to recover
or recycle. The grants included are not
perfectly comparable across deals as the
interventions may benefit from different
forms of support from other government
programs or organizations. Pro bono legal,
intermediary and technical assistance
services have not been included here,
though they have been included as a form
of subordinate investment if fees were
deferred and the provider stands to earn
success payments.
Subordinate
Investors
Senior Investors
Recoverable Grants and

INVESTOR NAME
This category is added in 4 deals. Recoverable Grants include grants that stay
This category is
with the intermediary and are recycled
added in 7 deals.
into future programming. Investment
Investors with the highest priority for reInvestors with a lower
Guarantees include first loss guarantees
payment
repayment priority than
that are paid to investors in outcomes are
senior investors
not achieved and are recycled into future
programs if not used.
INVESTMENT
(USDM)*
Provided in millions of U.S. dollars. Local currency in parentheses.
MAXIMUM
POTENTIAL LOSS
(% OF PRINCIPAL)
Percentage of principal that investors stand to lose in a worst case scenario
OUTCOME METRIC
The outcome metric used to determine payments from the outcome funder.
OUTCOME
EVALUATION
METHOD
[EVALUATOR IN
BRACKETS]
The methods include Validated administrative data (no comparison used), Historical comparison, Quasi-experimental (matched control group), and Randomized Control Trial (RCT). Validated administrative data may be used
in any of the other three evaluations. Other parallel evaluations or process evaluations are noted here.
PAYMENT
SCHEDULE
The number and frequency of payments from the outcome funder to the intermediary, SPV, or service provider
and the number and frequency of payments to investors, if different.
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
This is a threshold in the metric that must be met for payments from the outcome funder to begin. This applies
to payments to the investor where specified. If a portion of the investors principal is protected, there is no
threshold for them to receive this payment.
PAYMENTS BEYOND This describes the determinants and values of payments from the outcome funder and payments to the investors beyond the threshold specified above.
THRESHOLD
MAXIMUM RETURN
Average annual return, Internal Rate of Return (IRR) or maximum payments from the outcome funder.
*Using exchange rate from month of contract signing

Columns are joined where information is the same
56
Active SIBs as of March 1, 2015
PROGRAM NAME
ONE Service
SECTOR
COUNTRY
YEAR OF
CONTRACT
SIGNING PAGE
Criminal Justice
United Kingdom
2010
58
Employment
United Kingdom
2012
60
ThinkForward
Employment
United Kingdom
2012
62
Employment
United Kingdom
2012
64
Advance Programme
Employment
United Kingdom
2012
66
Nottingham Futures
Employment
United Kingdom
2012
68
Living Balance
Employment
United Kingdom
2012
70
T&T Innovation
Employment
United Kingdom
2012
72
Employment
United Kingdom
2012
74
Energise Innovation
Employment
United Kingdom
2012
76
Prevista
Employment
United Kingdom
2012
78
Street Impact
Social Welfare
United Kingdom
2012
80
Thames Reach Ace
Social Welfare
United Kingdom
2012
82
Social Welfare
United Kingdom
2012
84
Social Welfare
United Kingdom
2013
86
Local Solutions
Social Welfare
United Kingdom
2014
88
Your Chance
Social Welfare
United Kingdom
2014
90
Home Group
Social Welfare
United Kingdom
2014
92
Fusion Housing
Social Welfare
United Kingdom
2014
94
Social Welfare
United Kingdom
2014
96
Social Welfare
United Kingdom
2014
98
Rewriting Futures
Social Welfare
United Kingdom
2014
100
Social Welfare
United Kingdom
2014
102
Social Welfare
United Kingdom
2014
104
Criminal Justice
United States
2013
106
Education
United States
2013
108
Criminal Justice
United States
2013
110
Criminal Justice
United States
2014
112

Education
United States
2014
114
Social Welfare
United States
2014
115
Social Welfare
United States
2014
117
Social Welfare
Australia
2013
119
Social Welfare
Australia
2013
121
Employment
The Netherlands
2013
123
Eleven Augsberg
Employment
Germany
2013
124
Duo for a Job
Employment
Belgium
2014
126
Social Welfare
Canada
2014
127
Education
Portugal
2015
128

Junior Code Academy
57
United Kingdom SIB Fact Sheets

SIB NAME
ONE Service
LOCATION
Peterborough, East of England, England
COUNTRY
United Kingdom
START DATE (date

of contract signing)
March 2010
CONTRACT
DURATION**
96 months
SOCIAL ISSUE
Prison recidivism
TARGET
POPULATION
3,000 short-term (sentences of less than 12 months) male prisoners aged 18 and older released from
Peterborough Prison.
INTERVENTION
A package of intensive support services (called ONE Service) including housing assistance, drug and alcohol
treatment, employment assistance, parenting assistance, and mental health support.
SERVICE PROVIDER
Services are organized by the specialpurpose entity ONE Service. Direct

service providers are St. Giles Trust,
Ormiston Children and Families Trust,
SOVA, YMCA, Through the Gate Training
CIC, Peterborough and Fenland Mind
(Mind)
OUTCOME FUNDER
U.K. Ministry of Justice and the Big

Lottery Fund
INTERMEDIARY
(roles in
parentheses)
Social Finance UK
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
7.61
NONRECOVERABLE
GRANTS
N/A
Senior Investors
INVESTOR NAME
Barrow Cadbury Charitable Trust, Esme Fairbairn Foundation, Friends Provident Foundation, the Henry Smith
Charity, the Johansson Family Foundation, the Lankelly Chase Foundation, the Monument Trust, Panahpur
Charitable Trust, the Paul Hamlyn Foundation and the Tudor Trust
INVESTMENT
(USDM)*
7.61 (5 million) (total investment raised)
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
Reduction in the re-offending rate compared to the average of a control group of matched offenders over the
12 months following release from the Peterborough Prison.
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
Quasi-experimental (matched control group)

[QinetiQ and the University of Leicester were selected by the Ministry of Justice to evaluate Cohort 1]
PAYMENT
SCHEDULE
There is a potential for payment from the outcome funder to the investors for each of the three cohorts. The
timing of each payment is based on the length of each cohort and the evaluation process.
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
Reduction in re-offending by 10% for any of the three cohorts of 1,000 ex-prisoners, or 7.5% across all 3,000.
PAYMENTS BEYOND
Payment is made per re-conviction event reduced, up to a cap.
THRESHOLD
58
MAXIMUM RETURN
Payments are capped at 8 million. This is equivalent to an annual IRR of approximately 13%.

**See section 3.7 of the study for a discussion of the reduction in duration of this SIB
59
SIB FUND NAME
Innovation Fund (Round 1)
SIB NAME
LOCATION
Greater Merseyside, North West England,

COUNTRY
England
START DATE (date

April 2012
SOCIAL ISSUE
Unemployment
TARGET
POPULATION
3,900 disadvantaged 14- to 19-year-olds across Greater Merseyside
INTERVENTION
Triodos New Horizons program: coaches deliver structured Mental Toughness courses and specialized
vocational support
SERVICE PROVIDER
Greater Merseyside Connexions

Partnership
OUTCOME FUNDER
U.K. Department for Work and Pensions

Innovation Fund
INTERMEDIARY
(roles in
parentheses)
Triodos Bank UK
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
Approximately 2.4
NONRECOVERABLE
GRANTS
N/A
CONTRACT
DURATION**
United Kingdom
36 months
Senior Investors
INVESTOR NAME
Bridges Ventures,** Big Society Capital, The Esmee Fairbairn Foundation, Charities Aid Foundation, Knowsley
Housing Trust, Helena Partnerships, Liverpool Mutual Homes and Wirral Partnership Homes
INVESTMENT
(USDM)*
Approximately 2.4 (Approximately 1.5 million)
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
See payments below
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
Validated administrative data

[The Department for Work and Pensions is checking the outcomes data for payments.]
The National Centre for Social Research and Insite Research and Consulting will conduct a qualitative
evaluation of the program at the end of the contract.
PAYMENT
SCHEDULE
Up to 42 monthly payments made by outcome funder. Repayments to investors as and when approved by
project leadership.
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
Achievement of the metrics below
60
The Department for Work and Pensions pays for one or more outcomes per participant (with a cap of 8,200
per participant) which can be linked to improved employability. Each type of outcome can be claimed only
once. Amounts shown in are the maximum payments established by commissioner, but bidders to the
Innovation Fund were invited to bid to deliver the project for less than these maximum payments. The level of
bid discount was factored into the bid scoring mechanism to decide which bidders were awarded contracts.
Improvements at school:
Improved behavior at school (800): measured by a letter from a teacher with reference to the standards
in Section 91 of the U.K. Education and Inspection Act 2006.
Stop persistent truancy (1,300): confirmed by the school when persistent truancy stopped to the point
where attendance levels have improved to that associated with the average student.
PAYMENTS BEYOND Qualifications:
Achievement of First National Qualifications Framework (NQF) Level 1 qualification (700): evidenced by
THRESHOLD
letter of school or copy of certificate.
Achievement of NQF Level 2 qualification (2,200): evidenced by letter of school or copy of certificate.
Achievement NQL Level 3 training/ vocational qualifications (3,300): as previous
Entry into education at NQF level 4 [University] (2,000): evidenced by letter from University.
Employment:
Entry into first employment including a training element (2,600): evidenced by letter from employer
confirming the young person had worked 16 hours or more per week for a minimum 13 continuous or
cumulative weeks.
Entry into sustained employment (1,000): as previous, but minimum 26 continuous or cumulative weeks.
Outcome payments are initially recycled to continue service delivery, before being repaid to investors.
MAXIMUM RETURN
Each type of outcome can only be claimed once, and the total value of outcome payments claimable for
support provided to an individual participant is limited to 8,200 for participants in Round 1 of the Innovation
Fund.
The maximum value of the contract (the maximum that the Department for Work and Pensions is willing to pay
in outcome payments) is 4.5 million.
The service provider may also receive a performance bonus, contingent on outcomes.

**Bridges Ventures Social Entrepreneurs Fund (participants not publicly available)
***The service delivery contract is for 36 months, the outcome payment contract is for 42 months
61
SIB FUND NAME
SIB NAME
ThinkForward
LOCATION
Tower Hamlets, Islington, and Hackney,

Greater London, England
COUNTRY
United Kingdom
START DATE (date

April 2012
CONTRACT
DURATION**
36 months
SOCIAL ISSUE
Unemployment
TARGET
POPULATION
1,050 vulnerable 14- to 18-years-olds identified by the 11 participating schools in East London as being the
20% most at risk of becoming not in education, employment or training (NEET).
INTERVENTION
ThinkForward program intervenes early to ensure that young people who are at risk of underperforming at
school get the support they need to make a successful transition from school to higher education or sustained
work. Think Forward placed ten coaches in ten schools, who coordinated a panel to identify at risk 14-yearolds (assessing referrals from the schools) and provide them with long-term, personalized support to build the
employability skills and confidence so they can overcome challenges in and out school.
OUTCOME FUNDER

Innovation Fund
INTERMEDIARY
(roles in
parentheses)
ThinkForward, a non-profit organization

created by Impetus-Private Equity
Foundation (Impetus-PEF) (structuring
the SIB, raising funds, performance
management, contract arrangements,
and relationship management of
investors, outcome funder, and service
provider)
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
1.4
NONRECOVERABLE
GRANTS
N/A
SERVICE PROVIDER Tomorrows People
Senior Investors
INVESTOR NAME
Big Society Capital and Impetus-PEF
INVESTMENT
(USDM)*
1.4 (0.45 million each investor)
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
See payments below
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]

PAYMENT
SCHEDULE
project leadership.
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
62
THRESHOLD
Entry into education at NQF level 4 [University] (2000): evidenced by letter from University.
Employment:
cumulative weeks.
MAXIMUM RETURN
Fund.

**The service delivery contract is for 36 months, the outcome payment contract is for 42 months

63
SIB FUND NAME
SIB NAME
LOCATION
Stratford, Canning Town, Royal Docks

and Cathall, Greater London, England
COUNTRY
United Kingdom
START DATE (date

April 2012
CONTRACT
DURATION***
36 months
SOCIAL ISSUE
Unemployment
TARGET
POPULATION
740 disadvantaged 14- to 19-year-olds in east London identified by a range of referral organizations (e.g.,
schools, JCP, YOTs, Newham leaving care team, East Thames Foyer projects) as not in education, employment
or training (NEET) or pre-NEET.
INTERVENTION
Links4Life program, which offers one-on-one mentoring in school work, mental health, substance abuse,
family issues, housing, and legal offenses. Each young person will have a key relationship with one of 6 full
time link workers, assigned to them on the basis of the most appropriate support identified. The link workers
will be experienced youth workers with an individual specialism (drug/substance abuse, mental health,
housing, family support, educational welfare and youth justice). Once a person is in EET, their link worker will
provide an aftercare service for up to one year and on-going support to help sustain their successful transition.
SERVICE PROVIDER Community Links
OUTCOME FUNDER

Innovation Fund
INTERMEDIARY
(roles in
parentheses)
Stratford Development Partnership
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
0.444
NONRECOVERABLE
GRANTS
N/A
INVESTOR NAME
Bridges Ventures**, Stratford Development Partnerships
INVESTMENT
(USDM)*
0.444 (0.37 million)
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
See payments below
Senior Investors
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]

PAYMENT
SCHEDULE
project leadership.
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
64
THRESHOLD
Employment:
cumulative weeks.
MAXIMUM RETURN
Fund.

65
SIB FUND NAME
SIB NAME
Advance Programme
LOCATION
Birmingham and Solihull, West Midlands,

COUNTRY
England
START DATE (date

April 2012
SOCIAL ISSUE
Unemployment
TARGET
POPULATION
2,897 beneficiaries ages 14 to 24 who are not in education, employment or training (NEET) or at risk of
becoming NEET
INTERVENTION
An integrated support program that aims to improve school attendance and performance, in order to promote
participation in apprenticeships and employment called the Advance Programme. Young people are referred
by schools, Connexions, Youth Offending Services and a range of other services. The young person will be
initially assessed to identify learning needs and establish goals. A project worker will then help develop an
action plan, which will be used to communicate and monitor progress with delivery staff.
CONTRACT
DURATION**
11 non-profit organizations as part of
SERVICE PROVIDER the Birmingham Employment, Skills and
United Kingdom
36 months
OUTCOME FUNDER

Innovation Fund
Training Network (BEST Network)
INTERMEDIARY
(roles in
parentheses)
Advanced Personnel Management (APM)

UK Ltd. (prime contractor of service
providers)
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
4.80
NONRECOVERABLE
GRANTS
N/A
INVESTOR NAME
APM UK Ltd
INVESTMENT
(USDM)*
4.80 (3 million)
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
See payments below
Senior Investors
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]

PAYMENT
SCHEDULE
project leadership.
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
66
THRESHOLD
Employment:
Entry into first employment including a training element (2600): evidenced by letter from employer
cumulative weeks.
MAXIMUM RETURN
Fund.

67
SIB FUND NAME
SIB NAME
Nottingham Futures
LOCATION
Nottingham, East Midlands, England
COUNTRY
United Kingdom
START DATE (date

April 2012
CONTRACT
DURATION**
36 months
SOCIAL ISSUE
Unemployment
TARGET
POPULATION
Over 3,000 16- to 24-year-old Nottingham residents who are either not in employment, education or training
(NEET) or whose status is not known
INTERVENTION
Jobs and skills advice, training, apprenticeships, and support for young people who need help preparing for
work or training.
Nottingham Futures (a nonprofit
owned by Nottingham City and County
Councils).
SERVICE PROVIDER The Employer Hub delivers a
OUTCOME FUNDER

Innovation Fund
coordinated, personalized training

and recruitment service and works in
partnership with Nottingham Futures.
INTERMEDIARY
(roles in
parentheses)
Nottingham City Council (making the

bid, managing the deal, performance
management of service providers)
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
Approximately 2.72
NONRECOVERABLE
GRANTS
N/A
Senior Investors
INVESTOR NAME
Nottingham City Council (The City Council is funding the service and receives payments)
INVESTMENT
(USDM)*
Approximately 2.72 (Approximately 1.7m)
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
See payments below
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]

PAYMENT
SCHEDULE
project leadership.
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
68
THRESHOLD
Employment:
cumulative weeks.
MAXIMUM RETURN
Fund.
in outcome payments) is GBP 2,854,000. The total amount paid out since 2012 is 2,445,750.

69
SIB FUND NAME
SIB NAME
Living Balance
LOCATION
Perth and Kinross, Mid Scotland and

Fife, Scotland
COUNTRY
United Kingdom
START DATE (date

April 2012
CONTRACT
DURATION**
36 months
SOCIAL ISSUE
Unemployment
TARGET
POPULATION
90 young disengaged school pupils ages 14 to 17, 60 pupils ages 16 to 17 who are currently not in education,
training or employment (NEET), and 150 young people ages 18 to 24 who are NEET.
INTERVENTION
Living Balance program: up to 6 months of intensive personal and social development for up to 25 hours a
week, including motivating and engaging projects that aim to lift aspiration and self-esteem
SERVICE PROVIDER YMCA Perth

Innovation Fund
OUTCOME FUNDER
INTERMEDIARY
(roles in
parentheses)
Indigo Project Solutions (preparing all

documentation for submission to make
the case for the award of contract from
Department for Works and Pensions
(DWP), raising the capital and managing
the investor relationship, providing
TECHNICAL
performance management support to
ASSISTANCE
the delivery partner, marketing the SIB
PROVIDER
including organizing regular awareness
raising events, responding to all DWP
queries and meeting with them regularly,
making all claims for outcomes
delivered to DWP, undertaking security
and data protection)
UPFRONT CAPITAL
COMMITMENT
(USDM)*
Not publicly available
N/A
NONRECOVERABLE
GRANTS
N/A
Senior Investors
INVESTOR NAME
12 businesses, individuals, a Church, and a funding body (investment raised by Indigo)
INVESTMENT
(USDM)*
Not public information
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
See payments below
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
PAYMENT
SCHEDULE

project leadership.
70
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER

THRESHOLD
Entry into education at NQF level 4 [University] (2000): evidenced by letter from University.
Employment:
cumulative weeks.
MAXIMUM RETURN
Fund.

71
SIB FUND NAME
SIB NAME
T&T Innovation
LOCATION
Greater Manchester, North West England,

COUNTRY
England
START DATE (date

November 2012
SOCIAL ISSUE
Unemployment
TARGET
POPULATION
A minimum of 1,152 disadvantaged 14- to 15-year-old adolescents across Manchester
INTERVENTION
Teens and Toddlers Innovation program, which partners a 14- to 15-year-old with a toddler in a local nursery
to encourage responsibility, empathy and self-confidence for an intensive 18 week period. This is followed by
ongoing monthly support sessions until young people take their GCSE exams.
CONTRACT
DURATION***
United Kingdom
36 months
SERVICE PROVIDER Teens and Toddlers
OUTCOME FUNDER

Innovation Fund
INTERMEDIARY
(roles in
parentheses)
Social Finance UK (including capital

raising, mobilization, and ongoing
contract and performance management)
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
1.28
NONRECOVERABLE
GRANTS
N/A
Senior Investors
INVESTOR NAME
Bridges Ventures**, Impetus - PEF, The Esmee Fairbairn Foundation, CAF Venturesome, The Barrow-Cadbury
Trust
INVESTMENT
(USDM)*
1.28 (0.8 million) (total investment raised)
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
See payments below
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]

PAYMENT
SCHEDULE
project leadership.
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
72
Improved attitude towards school (700): measured by a letter from the teacher
Improved behavior at school (1,300): measured by a letter from a teacher with reference to the
standards in Section 91 of the U.K. Education and Inspection Act 2006.
PAYMENTS BEYOND
Qualifications:
THRESHOLD
Entry Level Qualification (900)
Achievement of First National Qualifications Framework (NQF) Level 1 qualification (1,100): evidenced by
Employment:
cumulative weeks.
MAXIMUM RETURN
Fund.
The maximum value of the contract (the maximum that the Department for Works and Pensions is willing to
pay in outcome payments) is 3.3 million.

**Bridges Ventures Social Impact Bond Fund and Social Entrepreneurs Fund (contributors to both funds include Big Society Capital, the European Investment Fund, Deutche Bank Social Investments, J.P. Morgan Social Finance, Bridges Charitable Trust, The Princes Charities, Omidyar Network, Panahpur,
Esmee Fairbairn Foundation, Highwood Foundation, the U.K. Cabinet Office, Nesta, Trust for London, Greater Manchester Pension Fund, Merseyside Pension
Fund)
73
SIB FUND NAME
SIB NAME
LOCATION
Cardiff and Newport, South Wales, Wales
COUNTRY
United Kingdom
START DATE (date

November 2012
CONTRACT
DURATION**
36 months
SOCIAL ISSUE
Unemployment
TARGET
POPULATION
720 youth aged 14 to 16 who are on course to become NEET (not in education, employment or training) or
have the potential to earn higher educational qualifications with cognitive behavior and/or learning support.
INTERVENTION
3SC Capitalise program: a program of specialized individual cognitive behavior and additional learning support
(Cognitive Behavior will be provided by Include and additional support by Dyslexia Action).
SERVICE PROVIDER
Dyslexia Action and Include (a subsidiary

OUTCOME FUNDER
of Catch 22)
INTERMEDIARY
(roles in
parentheses)
3SC (working with the service providers

to develop the bid, raising capital,
performance management)
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
0.676
NONRECOVERABLE
GRANTS
N/A

Innovation Fund
Senior Investors
INVESTOR NAME
3SC and Big Society Capital
INVESTMENT
(USDM)*
0.676 (0.42 million approximately. Initial investment by 3SC was approximately 0.28 million and by Big
Society Capital was approximately 0.1 million. Big Society Capital has since purchased approximately 0.1
million of 3SCs share)

MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
See payments below
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]

PAYMENT
SCHEDULE
project leadership.
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
74
PAYMENTS BEYOND
Qualifications:
THRESHOLD
Employment:
cumulative weeks.
MAXIMUM RETURN
Fund.

75
SIB FUND NAME
SIB NAME
Energise Innovation
LOCATION
Thames Valley, South East England,

England
COUNTRY
United Kingdom
START DATE (date

November 2012
CONTRACT
DURATION**
36 months
SOCIAL ISSUE
Unemployment
TARGET
POPULATION
1,500-2000 14- to 15-year-olds who are disadvantaged or at-risk
INTERVENTION
Energise Innovation program - intensive Adviser-based support; a bespoke action plan is developed for each
young person based on their individual support needs. Advisers can choose from a menu of support options,
including one-on-one sessions, group work, residentials, activity days and mentoring.
SERVICE PROVIDER Adviza
OUTCOME FUNDER

Innovation Fund
INTERMEDIARY
(roles in
parentheses)
Social Finance UK (including capital

raising, mobilization, and ongoing
contract and performance management)
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
1.45
NONRECOVERABLE
GRANTS
N/A
Senior Investors
INVESTOR NAME
Big Society Capital, Barrow Cadbury Trust, Esmee Fairbairn Foundation, Bracknell Forest Homes, Berkshire
Community Foundation, Buckinghamshire County Council.
INVESTMENT
(USDM)*
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
See payments below
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]

PAYMENT
SCHEDULE
project leadership.
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
76
PAYMENTS BEYOND
Qualifications:
THRESHOLD
Employment:
cumulative weeks.
MAXIMUM RETURN
Fund.

77
SIB FUND NAME
SIB NAME
Prevista
LOCATION
West London, Greater London, England
COUNTRY
United Kingdom
START DATE (date

November 2012
CONTRACT
DURATION**
36 months
SOCIAL ISSUE
Unemployment
TARGET
POPULATION
Young people aged 14 to 16, who have been identified as being at risk of being not in education, employment
or training (NEET)
INTERVENTION
SERVICE PROVIDER
Catalyst Gateway, Fit for Sport, Twist,

Positive Arts, Arrival Education
OUTCOME FUNDER

Innovation Fund
INTERMEDIARY
(roles in
parentheses)
Prevista
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
NONRECOVERABLE
GRANTS
N/A
Senior Investors
INVESTOR NAME
INVESTMENT
(USDM)*
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
See payments below
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]

PAYMENT
SCHEDULE
project leadership.
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
78
PAYMENTS BEYOND
Qualifications:
THRESHOLD
Employment:
cumulative weeks.
MAXIMUM RETURN
Fund.

79
SIB NAME
Street Impact
LOCATION
London, Greater London, England
COUNTRY
United Kingdom
START DATE (date

November 2012
CONTRACT
DURATION**
36 months
SOCIAL ISSUE
Homelessness
TARGET
POPULATION
416 persistent rough sleepers (individuals sleeping without shelter) in London
INTERVENTION
A program that aims to get people off the streets and into stable accommodation, thereby increasing prospects
of employment or training and stabilizing health. Participants have individual intervention plans, personalized
budgets, and personal navigators responsible for connecting them with the most appropriate programs for their
circumstances. In comparison to existing services, the approach is much more flexible and provides a more
focused, longer-term relationship with a single advocate.
SERVICE PROVIDER St. Mungos Broadway

INTERMEDIARY
(roles in
parentheses)
UPFRONT CAPITAL
COMMITMENT
(USDM)*
Triodos Bank UK (advise on structure,

raise capital)
There is an SPV which holds the risk of
program underperformance.
1.43
OUTCOME FUNDER
U.K. Department for Communities and

Local Government, commissioned by the
Greater London Authority
TECHNICAL
ASSISTANCE
PROVIDER
N/A
NONRECOVERABLE
GRANTS
N/A
Senior Investors
INVESTOR NAME
CAF Venturesome, the Orp Foundation, and other individuals
St. Mungos Broadway
INVESTMENT
(USDM)*
1.05 (0.65 million)
0.38 (0.237 million)
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
Per person administrative data outcomes:

Move to accommodation/sustained over 12 months and 18 months
Move to another country of familial or local connections/sustained over 6 months
Volunteering/National Vocational Qualification (NVQ) level 2 qualification/part-time employment/full-time
employment for 13/26 weeks.
Comparison to set threshold by government (for the cohort as a whole):
Reduction in use of accident and emergency services
Reduction in rough sleeping (unsheltered sleeping)
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
Historical comparison and validated administrative data

[CHAIN, National Health Service Hospital Episode Statistics, other outcomes evidenced by providers and audited
by the Greater London Authority]
PAYMENT
SCHEDULE
Outcome payments from the outcome funder are claimed quarterly in arrears; equity investors (St Mungos
Broadway) are paid at completion whilst external investors (debt) are paid at program completion (before
equity), although there is the right for debt holders to early repayment in certain circumstances per the
investment agreements
80
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
Any positive change in metric
St. Mungos Broadway will be paid after

the senior investors loan is paid back.
The Department for Communities and Local Government pays for one or more outcomes per participant. Each
type of outcome can be claimed only once. Amounts shown in are the maximum payments established by
commissioner, but bidders were invited to bid to deliver the project for less than these maximum payments.
The level of bid discount was factored into the bid scoring mechanism to decide which bidders were awarded
contracts.
12 months accommodation (7,000)
Initial reconnection (move to another country) (800)
PAYMENTS BEYOND
6 months reconnection (6,100)
THRESHOLD
Achievement of NQF level 2 equivalent qualification (400)
Volunteering/self-employment 13 weeks (200), 26 weeks (600)
Part-time employment 13 weeks (500), 26 weeks (1,500)
Full-time employment 13 weeks (1,300), 26 weeks (4,000)
Payment per individual above given baseline not seen rough sleeping in given quarter (3,800 for first
four quarters and 2,400 thereafter)
Payment per accident and emergency service use avoided beyond baseline per year (100) Initial
accommodation (700)
MAXIMUM RETURN
The investment from the senior investors is a debt investment

with a set interest rate (not publicly available)
St. Mungos Broadway made an equity

investment and will be paid what is in the
SPV after the senior investors have been
repaid. Maximum payments from the
Department for Communities and Local
Government (total contract value) is 2.4
million.

**The service delivery contract is for 36 months
81
SIB NAME
Thames Reach Ace
LOCATION
London, Greater London, England
COUNTRY
United Kingdom
START DATE (date

November 2012
CONTRACT
DURATION**
36 months
SOCIAL ISSUE
Homelessness
TARGET
POPULATION
415 persistent rough sleepers (individuals sleeping without shelter) in London
INTERVENTION
A program that aims to get people off the streets and into stable accommodation, thereby increasing prospects
of employment or training and stabilizing health. Participants have individual intervention plans, personalized
budgets, and personal navigators responsible for connecting them with the most appropriate programs for their
circumstances. In comparison to existing services, the approach is much more flexible and provides a more
focused, longer-term relationship with a single advocate.
SERVICE PROVIDER Thames Reach
OUTCOME FUNDER

Local Government, commissioned by the
Greater London Authority
INTERMEDIARY
(roles in
parentheses)
Social Finance UK (advised Greater

London Authority on the feasibility and
design of the SIBs)
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
NONRECOVERABLE
GRANTS
N/A
Senior Investors
INVESTOR NAME
Big Issue Invest, Department of Health Social Enterprise

Investment Fund, and other individuals
Thames Reach
INVESTMENT
(USDM)*
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC

Move to accommodation/sustained over 12 months and 18 months
Move to another country of familial or local connections/sustained over 6 months
Volunteering/National Vocational Qualification (NVQ) level 2 qualification/part-time employment/full-time
employment for 13/26 weeks.
Reduction in use of accident and emergency services
Reduction in rough sleeping (unsheltered sleeping)
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
Historical comparison and validated administrative data

[CHAIN, National Health Service Hospital Episode Statistics, other outcomes evidenced by providers and audited
by the Greater London Authority]
PAYMENT
SCHEDULE
Outcome payments from the outcome funder are claimed quarterly in arrears; equity investors (Thames
Reach) are paid at completion whilst external investors (debt) are paid at program completion (before equity).
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
Thames Reach will be paid after senior

investors have been paid principal and
interest.
82
The Department for Communities and Local Government pays for one or more outcomes per participant. Each
type of outcome can be claimed only once. Amounts shown in are the maximum payments established by
commissioner, but bidders were invited to bid to deliver the project for less than these maximum payments.
The level of bid discount was factored into the bid scoring mechanism to decide which bidders were awarded
contracts.
Initial reconnection (move to another country) (800)
PAYMENTS BEYOND
6 months reconnection (6,100)
THRESHOLD
Achievement of NQF level 2 equivalent qualification (400)
Volunteering/self-employment 13 weeks (200), 26 weeks (600)
Part-time employment 13 weeks (500), 26 weeks (1,500)
Full-time employment 13 weeks (1,300), 26 weeks (4,000)
Payment per individual above given baseline not seen rough sleeping in given quarter (3,800 for first
four quarters and 2,400 thereafter)
Payment per accident and emergency service use avoided beyond baseline per year (100) Initial
accommodation (700)
MAXIMUM RETURN
Thames Reach made an equity

investment and will be paid what is in the
SPV after the senior investors have been
repaid. Maximum payments from the
Department for Communities and Local
Government (total contract value) is 2.4
million.

83
SIB NAME
LOCATION
Essex County, East of England, England
COUNTRY
United Kingdom
START DATE (date

November 2012
CONTRACT
DURATION***
96 months
SOCIAL ISSUE
Children at risk of requiring out-of-home care
TARGET
POPULATION
380 11- to 16-year-olds at the edge of out-of-home care or custody in Essex County and their families
INTERVENTION
Multi-Systemic Therapy (MST): evidence-based programmed that delivers family therapy in the home through
highly qualified therapists over three to five months with the aim of keeping families together and avoiding outof-home care.
SERVICE PROVIDER Action for Children
OUTCOME FUNDER
Essex County Council
INTERMEDIARY
(roles in
parentheses)
Social Finance UK (feasibility study,

supporting Action for Childrens bid for
the contract, capital raise, performance
management)
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
4.99
NONRECOVERABLE
GRANTS
N/A
Senior Investors
INVESTOR NAME
Bridges Ventures,** Big Society Capital, Barrow Cadbury Trust, Tudor Trust, Esmee Fairbaim Foundation, King
Baudouin Foundation, Charities Aid Foundation, Social Ventures Fund
INVESTMENT
(USDM)*
4.99 (3.1 million) (total invetment raised)
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
Average care days saved (versus a historical comparison group) over a 30-month period for each child.
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
Historical comparison
[The Essex Country Council will determine outcome payments based on data from the state care system.]
There is also an evaluation being carried out outside of the SIB contract by OPM (an independent consultancy)
evaluating the impact of funding through social investment rather than traditional means)
PAYMENT
SCHEDULE
The outcome funder will pay for outcomes quarterly, and payments are divided between the service provider
and investor as described below.
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
Positive change in metric
The outcome funder (commissioner) will pay for the outcomes through success payments only (amounts not
public). The contract for the transaction specifies the percentages of cost savings realized by the commissioner
which form each outcome payment. In SIB structures such as these, the commissioner often shares a higher
PAYMENTS BEYOND percentage of their cost savings realized in the early years, with this percentage dropping as the investor
approaches their capital repayment, such that if the project is very successful, the commissioner retains a
THRESHOLD
larger proportion of the savings achieved. This profile reduces the overall project cost, by reducing the overall
amount of capital which needs to be raised, and repaying this capital earlier whilst retaining the ability of the
commissioner to keep the majority of cost savings achieved in the later years.
84
MAXIMUM RETURN
Outcome payments are recycled into the running of the service. If the interventions deliver successful
outcomes, the investors might expect returns in the range of 8 to 12% per annum.

***Service delivery will last 60 months but the total contract duration is 96 months
85
SIB NAME
LOCATION
Country-wide (United Kingdom)
COUNTRY
United Kingdom
START DATE (date

September 2013
CONTRACT
DURATION
120 months
SOCIAL ISSUE
Barriers to adoption
TARGET
POPULATION
650 or more children in state care (Looked After Children), particularly those who have been waiting for an
adoptive family for over a year (likely ages 4 to 18)
INTERVENTION
Voluntary adoption agencies will actively seek families for harder to place children and offer training in
therapeutic parenting and 24-hour support during the first two years after adoption placement.
Local Authorities. Local Authorities
are invited to join the SIB contract at
any time. As of April 2015, 11 Local
Authorities were involved in the program.
SERVICE PROVIDER
Any number of service providers could

join the SIB contract, the first were
Action for Children; Adoption Matters
NW; After Adoption; Caritas Care; Family
Futures and PACT
OUTCOME FUNDER
INTERMEDIARY
(roles in
parentheses)
IAAM Scheme (contractor of service

providers)
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
3.10
NONRECOVERABLE
GRANTS
N/A
The Cabinet Offices Social Outcomes

Fund will contribute 10,000 in outcomes
payment, for the first 100 children
registered under the SIB, in order to
reduce investor and provider risk
Senior Investors
INVESTOR NAME
Bridges Ventures**, Big Society Capital
INVESTMENT
(USDM)*
3.10 (2 million)
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
There are four milestones that payments are based upon:

1. Child enters program (registration)
2. Child placed with family
3. 1st anniversary of a placement
4. 2nd anniversary of placement
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]

[The outcomes are determined by the judiciary system.]
There is a separate, concurrent longitudinal study on other outcomes for the children, but it is not a part of the
SIB contract.
PAYMENT
SCHEDULE
The outcome funder pays investors as outcomes occur
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
N/A
86
1.
Child enters program (registration): 8,000
4.
2nd anniversary of placement: 15,800
PAYMENTS BEYOND 2. Child placed with family: 23,000

3. 1st anniversary of a placement: 6,800
THRESHOLD
MAXIMUM RETURN
The investors have made an equity investment and there is a high degree of capital recycling in this program,
therefore the returns to investors could vary enormously.

**Bridges Ventures Social Impact Bond Fund and Social Entrepreneurs Fund (contributors to both funds include Big Society Capital, the European Investment
Fund, Deutche Bank Social Investments, J.P. Morgan Social Finance, Bridges Charitable Trust, The Princes Charities, Omidyar Network, Panahpur, Esmee
Fairbairn Foundation, Highwood Foundation, the U.K. Cabinet Office, Nesta, Trust for London, Greater Manchester Pension Fund, Merseyside Pension Fund)

87
SIB FUND NAME
Fair Chance Fund
SIB NAME
Local Solutions
LOCATION
Liverpool and Knowsley, North West

England, England
COUNTRY
United Kingdom
START DATE (date

December 2014
CONTRACT
DURATION**
36 months
SOCIAL ISSUE
Youth homelessness
TARGET
POPULATION
In order to be eligible for the program, individuals must meet all of the following criteria:
Age 18 to 24 (21 to 24 if the individual spent time in state out-of-home care while under age 18)
Not in education, employment or training (NEET)
Homeless as defined in homelessness legislation, but not in homeless priority need. Young people who
are deemed intentionally homeless may also be supported at the discretion of the Local Authority.
A priority for Local Authority support but unable to be accommodated in a supported housing scheme
Approximately 130 young people are expected to participate in the program.
INTERVENTION
The intervention is based around intensive one-on-one support provided by support workers, helping clients
to progress in accommodation, education/training and employment/volunteering. The project will also be
delivered in close collaboration with a local educational college.
SERVICE PROVIDER Local Solutions
OUTCOME FUNDER

Local Government and the Cabinet Office
INTERMEDIARY
(roles in
parentheses)
Social Finance UK (supported Local

Solutions to develop its bid for the
project, and raised capital for the
program)
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
0.86
NONRECOVERABLE
GRANTS
N/A
Senior Investors
INVESTOR NAME
INVESTMENT
(USDM)*
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
See payments below
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
Validated administrative data [The Department for Communities and Local Government will validate data
submitted by the service providers]
PAYMENT
SCHEDULE
Quarterly payments made by the outcome funder. Repayments to investors as and when approved by project
leadership.
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
88
Department for Communities and Local Government pays for one or more outcomes per participant (with a
cap of 17,000 per participant). Each type of outcome can be claimed only once. Amounts shown in are the
maximum payment established by commissioner, but bidders to the Fair Chance Fund were invited to bid to
deliver the project for less than these maximum payments. The level of bid discount was factored into the bid
scoring mechanism to decide which bidders were awarded contracts.
Assessment fees:
Initial assessment fee: (500)
Second assessment fee: (500)
Third assessment fee: (200)
Accommodation:
Move into accommodation: (500)
PAYMENTS BEYOND Accommodation sustained for 3 months: (1,500), 6 months: (1,500), 12 months: (1,500), 18 months:
(1,500)
THRESHOLD
Education / Training:
Entry into education / training: (500)
First entry level qualification: (1,500)
Achievement of National Qualifications Framework (NQF) Level 1 qualification: (2,500)
Achievement of first NQF Level 2 qualification: (3,500)
Employment / volunteering:
6 Weeks volunteering: (500), 13 weeks: (500), 20 weeks: (250), 26 weeks: (250)
Entry into employment: (500)
13 Weeks part-time employment: (3,000), 26 weeks: (2,000)
13 Weeks full-time employment: (4,500), 26 weeks: (3,500)
MAXIMUM RETURN
support provided to an individual participant is limited to 17,000. There is also a cap on total outcome
payments from the Department for Communities and Local Government for each project.


89
SIB FUND NAME
Fair Chance Fund
SIB NAME
Your Chance
LOCATION
Manchester, Oldham and Rochdale,

North West England and Greenwich,
Greater London, England
COUNTRY
United Kingdom
START DATE (date

December 2014
CONTRACT
DURATION**
36 months
SOCIAL ISSUE
Youth homelessness
TARGET
POPULATION
INTERVENTION
The intervention is based around intensive one-on-one support provided by support workers, helping clients to
progress in accommodation, education/training and employment/volunteering.
OUTCOME FUNDER

INTERMEDIARY
(roles in
parentheses)
Social Finance UK (supported Depaul

UIK to develop its bid for the project,
and raised capital for the program and
supported Depaul UK to mobilize service
delivery. Social Finance UK now plays an
ongoing advisory role in the project)
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
0.97
NONRECOVERABLE
GRANTS
N/A
SERVICE PROVIDER Depaul UK
Senior Investors
INVESTOR NAME
INVESTMENT
(USDM)*
0.97 (0.62 million)
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
See payments below
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
PAYMENT
SCHEDULE
leadership.
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
90
maximum payments established by commissioner, but bidders to the Fair Chance Fund were invited to bid to
Assessment fees:
Accommodation:
(1,500)
THRESHOLD
Education / training:
MAXIMUM RETURN


91
SIB FUND NAME
Fair Chance Fund
SIB NAME
Home Group
LOCATION
Newcastle, Northumberland, South

Tyneside, North Tyneside, Gateshead,
Durham and Sunderland, North East
England, England
COUNTRY
United Kingdom
START DATE (date

December 2014
CONTRACT
DURATION**
36 months
SOCIAL ISSUE
Youth homelessness
TARGET
POPULATION
INTERVENTION
Providing accommodation, education, volunteering and employment
SERVICE PROVIDER Home Group
OUTCOME FUNDER

INTERMEDIARY
(roles in
parentheses)
Numbers4Good (advising the service

provider to prepare bid, structuring the
deal, raising funds)
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
0.779
NONRECOVERABLE
GRANTS
N/A
Senior Investors
INVESTOR NAME
Northstar Ventures
INVESTMENT
(USDM)*
0.779 (0.498 million)
MAXIMUM
POTENTIAL LOSS
(% of principal)
90%
OUTCOME METRIC
See payments below
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
PAYMENT
SCHEDULE
leadership.
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
92
Assessment fees:
Accommodation:
(1,500)
THRESHOLD
MAXIMUM RETURN
payments from the Department for Communities and Local Government for each contract. The investment is an
equity investment, so the returns could range widely.


93
SIB FUND NAME
Fair Chance Fund
SIB NAME
Fusion Housing
LOCATION
Kirklees, Calderdale and Wakefield,

Yorkshire and the Humber, England
COUNTRY
United Kingdom
START DATE (date

December 2014
CONTRACT
DURATION***
36 months
SOCIAL ISSUE
Youth homelessness
TARGET
POPULATION
INTERVENTION
Multi-disciplinary support teams at each Local Authority providing a range of services tailored to the individuals
needs, including support to maintain tenancy, education training or training for employment.
SERVICE PROVIDER Fusion Housing
OUTCOME FUNDER

INTERMEDIARY
(roles in
parentheses)
Numbers4Good (advising the service

provider to prepare bid, structuring
the deal, raising funds, performance
management)
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
1.47
NONRECOVERABLE
GRANTS
N/A
Senior Investors
INVESTOR NAME
Bridges Ventures** and the Key Fund
INVESTMENT
(USDM)*
1.47 (940,000)
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
See payments below
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
PAYMENT
SCHEDULE
leadership.
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
94
maximum payments established by commissioner, but bidders to the Fair Chance Fund were invited to bid to
Assessment fees:
Accommodation:
(1,500)
THRESHOLD
Education / training:
MAXIMUM RETURN
payments from the Department for Communities and Local Government for each contract. The investment is an
equity investment, so returns could range widely.


**Bridges Ventures Social Impact Bond Fund and Social Entrepreneurs Fund (contributors to both funds include Big Society Capital, the European Investment Fund, Deutche Bank Social Investments, J.P. Morgan Social Finance, Bridges Charitable Trust, The Princes Charities, Omidyar Network, Panahpur,
Esmee Fairbairn Foundation, Highwood Foundation, the U.K. Cabinet Office, Nesta, Trust for London, Greater Manchester Pension Fund, Merseyside Pension
Fund)
***The service delivery contract is for 36 months
95
SIB FUND NAME
Fair Chance Fund
SIB NAME
LOCATION
Leicestershire and Derbyshire, East

Midlands, England
COUNTRY
United Kingdom
START DATE (date

December 2014
CONTRACT
DURATION**
36 months
SOCIAL ISSUE
Youth homelessness
TARGET
POPULATION
INTERVENTION
The intervention is based around intensive one-on-one support provided by support workers, helping clients
to progress in accommodation, education/training and employment/volunteering. The project will also be
delivered in close collaboration with a local educational college.
SERVICE PROVIDER
P3 (People Potential Possibilities), The Y

in Leicester, YMCA Derbyshire
OUTCOME FUNDER

INTERMEDIARY
(roles in
parentheses)
Triodos Bank UK (Raised capital and

structured deal, will provide 6 months of
project management to the SPV)
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
0.938
NONRECOVERABLE
GRANTS
N/A
Senior Investors
INVESTOR NAME
Key Fund, Big Issue Invest and retail investors
P3, The Y in Leicester, YMCA Derbyshire
INVESTMENT
(USDM)*
0.750 (480,000) (This comprises 330,000 from Key Fund and

Big Issue Invest and 150,000 from retail investors, benefitting
from Social Investment Tax Relief (SITR). The SITR investment
takes the form of a loan/debt instrument ranking behind the
Key Fund and Big Issue Invest loan but ahead of the P3/The Y in
Leicester/YMCA Derbyshire equity.)
0.188 (0.12 million)
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
See payments below
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
PAYMENT
SCHEDULE
Outcome payments are claimed quarterly in arrears. External

investors (debt) are repaid at program completion, although
there is the right for debt holders to early repayment in certain
circumstances per the investment agreements.
Equity investors are repaid at completion

(after senior/debt investors)
96
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER

will be paid after the senior investors
loan is repaid.
Assessment fees:
Accommodation:
(1,500)
THRESHOLD
MAXIMUM RETURN
Each type of outcome can only be claimed once, and the total
value of outcome payments claimable for support provided to an
individual participant is limited to 17,000. There is also a cap on
total outcome payments from the Department for Communities and
Local Government of 2.95m, though not all of this is going to the
investors due to fund recycling in the program.
with a set interest rate (not publicly available). Key Fund and Big
Issue Invest may also receive a small variable profit-share kicker
payable at the end of the program dependent on performance. The
SITR investors are not eligible for this payment.

made an equity investment and will be
paid what is in the SPV after the senior
investors have been repaid, so returns
could vary widely.

97
SIB FUND NAME
Fair Chance Fund
SIB NAME
LOCATION
Gloucestershire, South West England,

England
COUNTRY
United Kingdom
START DATE (date

December 2014
CONTRACT
DURATION**
36 months
SOCIAL ISSUE
Youth homelessness
TARGET
POPULATION
INTERVENTION
The service providers help place the young people with external housing providers and connect them with
employment and education services.
P3 and CCP (People Potential
SERVICE PROVIDER Possibilities and County Community
OUTCOME FUNDER

Projects)
INTERMEDIARY
(roles in
parentheses)
Triodos Bank UK (Raised capital and

structured deal, will provide 6 months of
project management to the SPV)
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
0.484
NONRECOVERABLE
GRANTS
N/A
Senior Investors
INVESTOR NAME
CAF Venturesome and retail investors
P3 and CCP
INVESTMENT
(USDM)*
0.390 (0.25 million) (This comprises 0.205 million from CAF

and 0.045 million from retail investors (benefitting from Social
Investment Tax Relief (SITR)). The SITR investment takes the form
of a loan/debt instrument ranking behind the CAF loan but ahead
of the P3 and CCP equity.)
0.094 (0.060 million)
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
See payments below
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
PAYMENT
SCHEDULE
Outcome payments are claimed quarterly in arrears. External

investors (debt) are repaid at program completion, although
there is the right for debt holders to early repayment in certain
circumstances per the investment agreements.
Equity investors are repaid at completion

(after senior/debt investors)
98
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
P3 and CCP will be paid after the senior

investors loan is repaid.
Assessment fees:
Accommodation:
(1,500)
THRESHOLD
MAXIMUM RETURN
Each type of outcome can only be claimed once, and the total
value of outcome payments claimable for support provided to an
individual participant is limited to 17,000. There is also a cap on
total outcome payments from the Department for Communities
and Local Government of 1.45m, though not all of this is going to
the investors due to fund recycling in the program.
with a set interest rate (not publicly available). CAF may also
receive a small variable profit-share kicker payable at the end
of the program dependent on performance. The SITR investors are
not eligible for this payment.
P3 and CCP made an equity investment

and will be paid what is in the SPV after
the senior investors have been repaid, so
returns could vary widely.

99
SIB FUND NAME
Fair Chance Fund
SIB NAME
Rewriting Futures
LOCATION
Birmingham, Coventry, Solihull, Walsall,

and Wyre Forest, West Midlands,
England
COUNTRY
United Kingdom
START DATE (date

December 2014
CONTRACT
DURATION**
36 months
SOCIAL ISSUE
Youth homelessness
TARGET
POPULATION
INTERVENTION
The intervention is based around intensive one-on-one support provided by support workers, helping clients to
progress in accommodation, education/training and employment/volunteering.
OUTCOME FUNDER

INTERMEDIARY
(roles in
parentheses)
Social Finance UK (supported St Basils

to develop its bid for the project, and
raised capital for the program and
supported St Basils to mobilize service
delivery. Social Finance UK now plays an
ongoing advisory role in the project.)
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
1.61
NONRECOVERABLE
GRANTS
N/A
SERVICE PROVIDER St Basils
Senior Investors
INVESTOR NAME
INVESTMENT
(USDM)*
1.61 (1.03m GBP) (total investment raised)
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
See payments below
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
PAYMENT
SCHEDULE
Quarterly payments made by they outcome funder. Repayments to investors as and when approved by project
leadership.
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
100
Assessment fees:
Accommodation:
(1,500)
THRESHOLD
MAXIMUM RETURN


101
SIB NAME
LOCATION
Manchester, North West England,

England
COUNTRY
United Kingdom
START DATE (date

June 2014
CONTRACT
DURATION
60 months
SOCIAL ISSUE
Barriers to family reunification or long-term foster care placement
TARGET
POPULATION
95 or more young people ages 11 to 14 who are either in the governments residential care and determined to
be high need, or in foster placements and at risk of entering government residential care
INTERVENTION
Multi-Dimensional Treatment Foster Care Adolescents (MTFC-A) program, which provides support for young
people with severe behavioral and emotional issues. Children are placed in foster care for 6 to 12 months
where the receive intensive therapy. At the end of the program, children are either reunited with their families
or placed in long-term foster care placements. This is a tested program that was originally developed in the
U.S.
SERVICE PROVIDER Action for Children
OUTCOME FUNDER
Manchester City Council (additional

funding from the Cabinet Offices Social
Outcomes Fund)
INTERMEDIARY
(roles in
parentheses)
Manchester City Council
TECHNICAL
ASSISTANCE
PROVIDER
The developers of the Multi-Dimensional

Treatment Foster Care program have
provided technical support related to the
program
UPFRONT CAPITAL
COMMITMENT
(USDM)*
2.01
NONRECOVERABLE
GRANTS
N/A
Senior Investors
INVESTOR NAME
Bridges Ventures**
INVESTMENT
(USDM)*
2.01 (1.2 million)
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
1.
2.
3.
Participant engagement in MTFC program

Number of weeks participant stays out of residential placement
Participant achievement of all well-being outcomes (including school attendance and reductions in antisocial behavior)
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
Historical comparison (comparison to data on 11- to 14-year-olds in residential care in 2007 to 2008)
[Manchester City Council and Action for Children compare program data to the historical baseline.]

PAYMENT
SCHEDULE
The outcome funder will pay for outcomes quarterly, and payments are divided between the service provider
and investor as described below.
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
Positive change in the metrics
102
The outcome funder (commissioner) will pay for the outcomes outlined below. The contract for the transaction
specifies the percentages of each outcome payment that go to the service provider and the investors. In
SIB structures such as these, the service provider often receives a higher percentage of the attachment fee,
relative to the success payments. This is because the service provider often prefers to take on volume or
operational efficiency risk, rather than the ultimate outcomes risk, which is often taken primarily by the social
investor.
PAYMENTS BEYOND
1. Attachment fee: participant engagement in MTFC program (no longer in residential care): up to 1,800
THRESHOLD
per week during the first year of the program
2. Success payment: Number of weeks participant stays out of residential placement: up to 350 per week
for 2.5 years post-graduation
3. Success payment: Participant achievement of all well-being outcomes (including school attendance and
reductions in anti-social behavior): 9,500 on an annual basis post-completion of the program (partial
payment at graduation + 1 year after graduation)
MAXIMUM RETURN
Maximum outcome payment of 148,000 per individual. The investors have made an equity investment and
there is capital recycling in this program, therefore the returns to investors could vary enormously.


103
SIB NAME
LOCATION
Birmingham, West Midlands, England
COUNTRY
United Kingdom
START DATE (date

August 2014
CONTRACT
DURATION
48 months
SOCIAL ISSUE
Barriers to adoption
TARGET
POPULATION
Approximately 115 looked after young people ages 11 to 15 who are in residential units (Birmingham City
Council has approximately 1,800 looked after young people and 180 of them are in residential care)
INTERVENTION
Core Assets Residential Migration model - structured intensive foster placement approach specifically designed
for young people transitioning from residential care to a family placement. This delivery model builds on Core
Assets successful and proven Team Parenting approach by supporting a skilled and experienced foster carer
with a wrap-around team of professionals

SERVICE PROVIDER
Outcomes for Children (a social

enterprise within Core Assets Group)
OUTCOME FUNDER
Birmingham City Council (additional

funding from the Cabinet Office Social
Outcomes Fund and Big Lottery Funds
Commissioning Better Outcomes Fund)
INTERMEDIARY
(roles in
parentheses)
N/A
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
1.69
NONRECOVERABLE
GRANTS
N/A
Senior Investors
INVESTOR NAME
Bridges Ventures**
INVESTMENT
(USDM)*
1.69 (1 million)
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
1.
2.
Successful placement in the Residential Migration Program - for Milestone Payments

Successful completion of 52 weeks in the Residential Migration Program - for Graduate Payment
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
Validated administrative data (residential care status)

[The Birmingham City Council will use data from the judiciary system on placement of children.]
PAYMENT
SCHEDULE
Payments from the outcome funder are made weekly for Milestone Payments and at the end of 52 weeks of
placement for Graduate Payments. These payments are divided between the service provider and investor (see
below).
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
Occurrence of either outcome
The REES Centre at the University of Oxford will conduct a parallel evaluation aiming to capture and evaluate
what contributes to successful placements (defined as 52 weeks stability) and what contributes to failure (e.g.
disrupted placement, return to residential care, etc.).
104
The outcome funder (commissioner) will pay for the outcomes outlined below. The contract for the transaction
specifies the percentages of each outcome payment that go to the service provider and the investors. In
SIB structures such as these, the service provider often receives a higher percentage of the attachment fee,
relative to the success payments. This is because the service provider often prefers to take on volume or
PAYMENTS BEYOND operational efficiency risk, rather than the ultimate outcomes risk, which is often taken primarily by the social
investor.
THRESHOLD
1. Attachment fee/Milestone Payments: weekly payments after successful placement in the Residential
Migration Program (amount not publicly available)
2. Success payment/Graduate Payment: Payment at the end of 52 weeks for successful completion of 52
weeks in the Residential Migration Program (amount not publicly available
MAXIMUM RETURN
Total cap for payments not publicly available

105
United States SIB Fact Sheets

SIB NAME
LOCATION
New York City, New York
COUNTRY
United States
START DATE (date

September 2012
CONTRACT
DURATION
Not publicly
available
SOCIAL ISSUE
Prison recidivism
TARGET
POPULATION
Approximately 10,000 detained and sentenced adolescents in the custody of the Department of Correction at
Rikers Island Prison
INTERVENTION
Adolescent Behavioral Learning Experience (ABLE): Cognitive Behavioral Therapy services provided during the
regular school day on Rikers and as a one-hour class approximately every week and during school breaks
SERVICE PROVIDER
Osborne Association and Friends of

Island Academy
OUTCOME FUNDER
New York City Department of Correction
INTERMEDIARY
(roles in
parentheses)
MDRC (formerly the Manpower

Demonstration Research Corporation)
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
16.8
NONRECOVERABLE
GRANTS
N/A

Senior Investors
INVESTOR NAME
Goldman Sachs Urban Investment Group
Bloomberg Philanthropies
investment guarantee
INVESTMENT
(USDM)*
9.6
7.2
MAXIMUM
POTENTIAL LOSS
(% of principal)
25%
N/A
OUTCOME METRIC
Decrease in readmission rate (number of days incarcerated following

release from Rikers)
N/A
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]

[Vera Institute of Justice]
N/A
PAYMENT
SCHEDULE
N/A
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
Reduction in readmission rate by 8.5% or more.
N/A
106
Stepped relationship between payments and re-incarceration as

demonstrated in the following table:
PAYMENTS BEYOND
THRESHOLD
Reduction in
Re-incarcenation Rate
City Payment to MDRC

($)
>20.0%
$11,712,000
>16.0%
$10,944,000
>13.0%
$10,368,000
>12.5%
$10,272,000
>12.0%
$10,176,000
>11.0%
$10,080,000
>10.0%
(breakeven)
$ 9,600,000
>8.5%
$ 4,800,000
N/A
Project partners have the opportunity to terminate the deal early after
three years.
MAXIMUM RETURN
N/A
107
SIB NAME
Utah High Quality Preschool Program*
LOCATION
State of Utah (Salt Lake City and

surrounding areas)
COUNTRY
United States
START DATE (date

August 2013
CONTRACT
DURATION
60 months
SOCIAL ISSUE
Limited access to Early Childhood Education
TARGET
POPULATION
Up to 3,500 low income 3- and 4-year-olds across up to five cohorts of around 600 per year. The first cohort
included 600 children in the 2013-2014 school year and the second cohort will include 750 children in the
2014-2015 school year.
INTERVENTION
Utah High Quality Preschool Program, a high impact and targeted curriculum to increase school readiness and
academic performance among 3- and 4-year-olds
SERVICE PROVIDER
Granite School District, Park City School

District, Guadalupe School, YMCA of
Northern Utah, Childrens Express, and
Litl Scholars.
OUTCOME FUNDER
State of Utah
INTERMEDIARY
(roles in
parentheses)
United Way of Salt Lake (oversees the

implementation of the project, contracts
with and manages payments to and
reports from the providers)
TECHNICAL
ASSISTANCE
PROVIDER
Voices for Utah Children (financial

structuring, research and analytic support)
Granite School District (training and
professional development for service
providers)
UPFRONT CAPITAL
COMMITMENT
(USDM)*
7.0
NONRECOVERABLE
GRANTS
N/A
Senior Investors
INVESTOR NAME
Goldman Sachs Urban Investment Group
J.B. Pritzker (individual)
INVESTMENT
(USDM)*
4.6
2.4
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
Years of special education (remedial education) avoided Kindergarten through 6th grade for students likely
to use special education services (as defined by testing at least two standard deviations below mean on the
Peabody Picture Vocabulary test (PPVT) before entering the Pre-Kindergarten program). These students form
the payment cohort.
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
Validated administrative data (special education use by those likely to use special education given historical data)
[Utah State University]
PAYMENT
SCHEDULE
Seven annual payments from the outcome funder to the investors for each cohort
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
Any child in the payment cohort not using special education
Subordinate investors are eligible for

repayment once senior investors are
repaid.
108
Cohort I: $2,470 per child in the payment cohort (defined above) for every year, Kindergarten through 6th
grade, that the child does not use special education, up to when payments are equal to $4.6 million plus 5%
annual interest. After this, $1,040 per child per year.
PAYMENTS BEYOND
Cohort II: $2,565 per child in the payment cohort (defined above) for every year, Kindergarten through 6th
THRESHOLD
grade, that the child does not use special education, up to a cap.
Payments for future cohorts will be determined as funding is appropriated by government.
MAXIMUM RETURN
The maximum return across cohorts I and II combined is capped at 7.26%
*This fact sheet provides information on the second SIB contract for preschool in Utah. In the first contract, the Salt Lake County and other private funders were
the outcome funders. The second contract was signed after the Utah State Legislature passed House Bill 96, appropriating funding for outcome payments.

109
SIB NAME
LOCATION
Rochester and New York City, New York
COUNTRY
United States
START DATE (date

September 2013
CONTRACT
DURATION
66 months
SOCIAL ISSUE
Prison recidivism
TARGET
POPULATION
2,000 formerly incarcerated individuals in Rochester and New York City aged 18 and older, who are at high
risk of reoffending, soon after they are released from prison. The program will be divided into two phases, the
second starting two years after the first.
INTERVENTION
CEOs program model helps people coming home from prison enter the workforce. Specifically, CEO provides
life skill education, short-term paid transitional employment, full-time job placement and post-placement
services
SERVICE PROVIDER
Center for Employment Opportunities

(CEO)
OUTCOME FUNDER
Phase I: United States Department of

Labor
Phase II: New York State Department of
Labor
INTERMEDIARY
(roles in
parentheses)
Social Finance US
TECHNICAL
ASSISTANCE
PROVIDER
Harvard Kennedy School Social Impact

Bond Technical Assistance Lab; Legal
services for the contract provided by
Jones Day
UPFRONT CAPITAL
COMMITMENT
(USDM)*
14.82
NONRECOVERABLE
GRANTS
N/A

Senior Investors
INVESTOR NAME
44 impact investors via a private placement offering; Bank of

America Merrill Lynch served as the placement agent
Rockefeller Foundation (First loss

Guarantee)
INVESTMENT
(USDM)*
13.50
1.32
MAXIMUM
POTENTIAL LOSS
(% of principal)
12.18 (90%)
N/A
1.
OUTCOME METRIC
2.
3.
Employment: Percentage point difference between treatment

and control group members with positive earnings in the
fourth quarter following release from prison.
Recidivism: difference between treatment and control group
N/A
in average number of days incarcerated per person during
the observation period.
Transitional Jobs: number of treatment group members who
start a CEO Transitional job during the observation period.

OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
Randomized Control Trial (RCT) (random assignment of referrals to

CEO) (metrics 1 and 2) and Validated administrative data (metric 3)
[New York State Department of Corrections and Community
Supervision Research and New York State Department of Labor
Research (Independently validated by Chesapeake Research
Associates)]
N/A
PAYMENT
SCHEDULE
Payments at year 4 and year 5.5 from outcome funders to investors
N/A
110
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
1.
2.
1.
PAYMENTS BEYOND
2.
THRESHOLD
3.
MAXIMUM RETURN
For employment payments: 5 percentage point increase in

employment
and 3. For recidivism and transitional job payments: 36.8
day reduction in recidivism
N/A
Employment: Phase I- $6,000 per person; Phase II-$6,360

per person
Recidivism: Phase I- $85 per day; Phase II- $90.1 per day
Transitional jobs: Phase I- $3,120 per person; Phase II$3,307 per person
N/A
Investors can receive up to $21.54m for payments, which is

equivalent to approximately 12.5% annual implied IRR.
N/A
111
SIB NAME
LOCATION
Commonwealth of Massachusetts
(Chelsea, Boston and Springfield areas)
COUNTRY
United States
START DATE (date

January 2014
CONTRACT
DURATION
84 months
SOCIAL ISSUE
Prison recidivism
TARGET
POPULATION
929 at-risk young men aged 17 to 24 who are in the probation system, in the juvenile justice systems, are
leaving the custody of the Suffolk, Essex, Hampden, and Middlesex Houses of Correction, or are leaving the
custody of Massachusetts Department of Correction.
INTERVENTION
Two years per participant of active education, life skills and job training, and two years of rigorous follow-up
SERVICE PROVIDER Roca Inc.
OUTCOME FUNDER
Commonwealth of Massachusetts (Social

Innovation Financing Trust Fund) and the
United States Department of Labor
INTERMEDIARY
(roles in
parentheses)
Third Sector Capital Partners
TECHNICAL
ASSISTANCE
PROVIDER
Harvard Kennedy School Social

Impact Bond Technical Assistance Lab
(assistance to government)
UPFRONT CAPITAL
COMMITMENT
(USDM)*
16.1
NONRECOVERABLE
GRANTS
N/A
Senior Investors

Kresge Foundation and Living Cities

(In addition, Roca Inc. and Third
Anonymous Foundation, New Profit,
Sector Capital could be considered
and The Boston Foundation
subordinate investors as they have
deferred their fees and stand to earn
success fees)
INVESTOR NAME
Goldman Sachs Social Impact

Fund
INVESTMENT
(USDM)*
8.0
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
1.
2.
3.
2.66 (from Kresge Foundation and

Living Cities)
5.45
Decreases in incarceration (treatment vs control groups)

Increases in job readiness (number of quarters that a Roca participant engages with a Roca youth worker
nine or more times)
Increases in employment (number of quarters that a Roca participant is employed as compared to similar
young men who are not in the program)
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
Randomized Control Trial (RCT) (metric 1) and Validated administrative data (metrics 2 and 3)
[Urban Institute]
PAYMENT
SCHEDULE
Payments from outcome funders to investors in years 2 to 7
Potential for grant recycle at the end

of the program
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
1. 5.2% reduction in incarceration

2. and 3. Any positive increase in job readiness and employment.

Potential for grant recycle at the end

of the program if outcome payments
exceed repayment to senior and
subordinate investors
112
1.
PAYMENTS BEYOND
2.
THRESHOLD
3.
Decreases in incarceration: a continuous relationship

between decreases in incarceration and payments
(see example levels in chart of total success payments)
Increases in job readiness: $1,000 per participant
per quarter
Increases in employment: $750 per participant per
quarter
Decrease in Days of
Incaceration
Incarceration-Based
Success Payments
Subordinate lenders will receive

up to 2% annually + $500,000 in
success fees
MAXIMUM RETURN
Senior lender will receive 5%

Roca Inc. will receive up to
annually plus approximately $1m approximately $750,000 in
in success fees
additional success fees in addition
to their deferred service fees of
$3.26 million. Third Sector will
receive deferred service fees.
55.0%
$26 million
40.0%
$21 million
25.0%
$10 million
10.0%
$2 million
5.0%
$0
Any remaining PFS payments after

senior and subordinate investors,
which could be up to $4.9 million
depending on the level of impact
achieved, will be used to recycle
philanthropic funding.
113
SIB NAME
LOCATION
Chicago, Illinois
COUNTRY
United States
START DATE (date

October 2014
CONTRACT
DURATION
48 months
SOCIAL ISSUE
Limited access to Early Childhood Education
TARGET
POPULATION
2,600 low-income 4-year-olds in eight sites. The first cohort for the 2014-2015 school year includes 374 slots.
INTERVENTION
Child-Parent Center (CPC) program that works with parents and children to improve educational outcomes
through a half-day of pre-Kindergarten class.
SERVICE PROVIDER Chicago Public Schools
OUTCOME FUNDER
City of Chicago Office of the Mayor and

Chicago Public Schools
INTERMEDIARY
(roles in
parentheses)
IFF (formerly Illinois Facilities Fund)
TECHNICAL
ASSISTANCE
PROVIDER
Metropolitan Family Services (assistance

with service model) and Harvard SIB Lab
UPFRONT CAPITAL
COMMITMENT
(USDM)*
16.9
NONRECOVERABLE
GRANTS
Finnegan Family Foundation covered the

evaluation costs
Senior Investors
INVESTOR NAME
Goldman Sachs Social Impact Fund and Northern Trust Corp.
J.B. and M.K. Pritzker Family Foundation
INVESTMENT
(USDM)*
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
1.
2.
3.
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]

[Not publicly available]
PAYMENT
SCHEDULE
1. Payments for decreases in special education: annual payments Kindergarten through 12th Grade, from
Chicago Public Schools to investors
2. and 3. Payments for Kindergarten and 3rd grade outcomes: once over the four-year project, from the City of
Chicago to investors
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER

1.
PAYMENTS BEYOND 2.
THRESHOLD
3.
MAXIMUM RETURN
Decrease in need for special education (remedial education) services Kindergarten through 12th Grade
Increase in Kindergarten readiness as measured using a standard assessment tool
Increase in 3rd grade reading scores
Subordinate investors are eligible for

repayment once senior investors are
repaid.
Payments for decreases in special education are $9,100 annually compounding at a rate of 1.0% for each
student that avoids special education after attending the CPC Program, paid by Chicago Public Schools
Payments for increases in Kindergarten readiness are $2,900 for each student that is prepared for Kindergarten after attending the CPC Program, paid by the City of Chicago
Payments for increases in 3rd grade reading scores are $750 for each student that scores above the
national average on the nationally administered 3rd grade reading test, paid by City of Chicago
Maximum 6% average annual return across all funders
114
SIB NAME
LOCATION
Cuyahoga County, Ohio
COUNTRY
United States
START DATE (date of

contract signing)
December 2014
CONTRACT
DURATION
60 months
SOCIAL ISSUE
Family homelessness and child welfare
TARGET
POPULATION
The intervention will reach 135 families who were recently homeless and their children (approximately
270 children). Children are between the ages of 0 and 18, though historical data suggests that 60% will
be between the ages of 0 and 5. Because the projects impact is being evaluated by a randomized control
trial, an addition 135 families will form the control group. There are three cohorts of 90 families, split into a
treatment subset of 45 families and a control subset of 45 families.
INTERVENTION
FrontLines Critical Time Intervention, which will help mothers find appropriate housing, apply for government
benefits and employment opportunities and learn other life skills with the aim of reuniting children and
mothers and reducing childrens length of stay in out-of-home care.
SERVICE PROVIDER
FrontLine Service (and three housing

providers: Cuyahoga Metropolitan
Housing Authority, Emerald
Development & Economic Network,
Famicos Foundation)
INTERMEDIARY
(roles in parentheses)
UPFRONT CAPITAL
COMMITMENT
(USDM)*

(transaction coordinator and advisor to
the SPV)
Enterprise Community Partners Inc.
(Project Manager, owner of the SPV--a
single member LLC, conduit of financial
information between the parties)
4.00
Senior Investors
OUTCOME FUNDER
Cuyahoga County
TECHNICAL
ASSISTANCE
PROVIDER

(government advisor)
NONRECOVERABLE
GRANTS
N/A

Sisters of Charity Foundation of
Cleveland
0.150
INVESTOR NAME
The Reinvestment Fund
The George Gund Foundation,

Nonprofit Finance Fund, The
Cleveland Foundation, Sisters of
Charity Foundation of Cleveland
INVESTMENT
(USDM)*
1.575
2.275
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
Reduction in out-of-home placement days over the five years of the program versus control group
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
Randomized Control Trial (RCT)

[Case Western Reserve University]
PAYMENT SCHEDULE There will be one payment from the outcome funder to investors at the end (Quarter 21) of the project.
115
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
Reduction of out-of-home days

(versus control group)
PAYMENTS BEYOND
THRESHOLD
$75 per reduced out-of-home placement day
MAXIMUM RETURN
5% annual base interest
Subordinate investors are paid if

senior investors have been paid
principal and interest
2% annual base interest + equal

participation in 1m of success fees
Grants are recovered if both senior

and subordinate investors have
been paid principal and interest
Recovery of grants (0% return on

investment)
116
SIB NAME
LOCATION
Commonwealth of Massachusetts
(state-wide)
COUNTRY
United States
START DATE (date

December 2014
CONTRACT
DURATION
72 months
SOCIAL ISSUE
Homelessness
TARGET
POPULATION
Up to 800 chronically homeless adults
INTERVENTION
The intervention will provide up to 550 units of supportive housing to participants. The supportive housing is
affordable for low-income individuals and provides residents with case management services and other community
support. The program is modelled on the Home & Healthy for Good program, which is run by the Massachusetts
Housing and Shelter Alliance (MHSA) and operating within approximately 20 housing/shelter organizations across
Massachusetts. The intervention will expand this model within existing locations and introduce it in new locations .
MHSA is the lead partner that
coordinates providers.
SERVICE PROVIDER Community support is provided by the
states Medicaid program MassHealth.

MassHealth Coordinating Entities (MCEs)
fund Medicaid programs at the shelters.
INTERMEDIARY
(roles in
parentheses)
The Massachusetts Alliance for

Supportive Housing, LLC (MASH) is
the special purpose subsidiary of
MHSA created to serve as the legal
intermediary body for this SIB. United
Way of Massachusetts Bay and
Merrimack Valley (United Way), MHSA,
and the Corporation for Supportive
Housing (CSH) sit on its board.
OUTCOME FUNDER
TECHNICAL
ASSISTANCE
PROVIDER
MHSA led program development,

oversight and service coordination.
Commonwealth of Massachusetts (Social

Innovation Financing Trust Fund)
Harvard Kennedy School SIB Lab

(assistance for state government during
deal development)
MHSA, United Way, and CSH all provide
technical assistance as described in the
intermediary section.
United Way raised the capital and serves

as financial manager.
CSH provides technical assistance for
the initiative on national best practices.
UPFRONT CAPITAL
COMMITMENT
(USDM)*
24.5
$1 million: Grants from UnitedWay and Santander Bank
Service providers have been given access to housing and health services for the program participants, estimated to have the following values:
NONRECOVERABLE
GRANTS
$14 million: The Commonwealth of Massachusettss Department of Housing and Community Developments
(DHCD) is investing shelter resources and housing vouchers for 145 units of supportive housing, worth a total
of $14 million.
$7 million: The MassHealth program committed $7 million for healthcare of program participants.
Service providers may also use other resources at their disposal to support participants, which may include
resources from the federal Department for Housing and Urban Development (HUD)
Senior Investors
INVESTOR NAME
Santander Bank, CSH and United Way
117
INVESTMENT
(USDM)*
2.5
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
Participant stays in permanent supported housing or other permanent housing for at least one year
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]

[Root Cause validates service provider data]
The Massachusetts government will evaluate the impact of the program on use of its other services, but this is
not part of the contract.
PAYMENT
SCHEDULE
First payment at the end of the first year, quarterly payments thereafter from the outcome funder to investors
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
Any participants housed for at least one year.
$3,000 per year per participant housed for at least one year. The payment will be prorated by day after the first
PAYMENTS BEYOND year each participant stays in housing.
THRESHOLD
This corresponds to a loss of principal if less than 80% of the participants stay the year, a 3.33% return if 85%
stay the year, and a 5.33% return if all the tenants stay the year.
MAXIMUM RETURN
5.33% average annualized return. The payments from the Massachusetts Social Innovation Financing Trust
Fund are capped at $6 million.
118
Australia SIB Fact Sheets

SIB NAME
Newpin Social Benefit Bond (SBB)
LOCATION
State of New South Wales
COUNTRY
Australia
START DATE (date

June 2013
CONTRACT
DURATION
87 months
SOCIAL ISSUE
Unhealthy family environments for children
TARGET
POPULATION
Over 700 families (over 1,400 children) divided as follows:

350 families with at least one child age 5 or under who has been in government out of home care for at least 3
months
175 families with at least one child age 5 or under who has been assessed as at risk of serious harm
175 families with at least one child age 5 or under who has been assessed as needing support
There will be annual cohorts of families, where each cohort includes a mix of families across the three
categories above.

INTERVENTION
A long-term, intensive support program to improve parenting so that children can safely live at home. Families
attend therapy, parenting courses and parent/child relationship building at centers two to four times a week for
approximately 18 months.

OUTCOME FUNDER
State of New South Wales Department of

Family and Community Services (FACS)
INTERMEDIARY
(roles in
parentheses)
Social Ventures Australia (assisting with

modelling and analysis of structure,
marketing bond and securing investors,
manage trust between investors and
UnitingCare Burnside, sit on formal
Working Group with government and
UnitingCare Burnside)
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
6.73
NONRECOVERABLE
GRANTS
N/A
SERVICE PROVIDER UnitingCare Burnside**
Senior Investors
INVESTOR NAME
Funds were raised through the SBB. Social Ventures Australia engaged to market the SBB. The 59 investors
include UnitingCare Burnside, high net worth individuals, family foundations and superannuation funds.
INVESTMENT
(USDM)*
6.73 (AU$ 7 million)
MAXIMUM
POTENTIAL LOSS
(% of principal)
25% of principal if the SBB is terminated in years 1 to 4; 50% of principal in years 5 to 7
OUTCOME METRIC
Outcome Payments made by the Outcome Funder to the Service Provider are based upon the number of
participating children who are successfully restored to the care of their family (restoration is determined by the
judiciary system), net of the counterfactual.
Financing payments (principal and interest) made by the Service Provider to Investors are based on
the cumulative restoration rate: the proportion of children attending a Newpin Mothers Centre who are
successfully restored to the care of their family.
119
Historical comparison/Quasi-experiemental and Validated administrative data (from FACS system)

[Deloitte]
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
For the purpose of determining Outcome Payments made by the Outcome Funder to the Service Provider, the
counterfactual number of restorations in the first 3 years is 25% of the number of children completing the
program (based on historical experience). Thereafter the counterfactual restoration rate will be determined by
the outcomes of a matched control group.
For the purpose of determining Financing payments from the Service Provider to the Investors, FACS data is
used to determine the restoration rate.
In addition, a formal evaluation (outside the SIB contract) of the overall program will assess qualitative
outcomes and other metrics (e.g. impacts on the lives of the parents in areas of health, justice, employment).
PAYMENT
SCHEDULE
7 yearly interest payments from the outcome funder to investors and 50% to 100% of principal repaid at
maturity (at the end of the 7 years)
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
Outcome based payments from the Outcome Funder to the Service Provider are based upon the net (of
counterfactual) number of restorations, and thus have a threshold equivalent to the counterfactual.
Interest payments to investors commence above a threshold Restoration Rate of 55% (although a minimum
interest rate applies in the first 3 years and 50 to 75% of principal is protected).
Interest payments annually based on cumulative restoration rate achieved:

Restoration rate <55% - Interest rate 0% (subject to minimum 5% in first 3 years)
Restoration rate 55% - Interest rate 3% (subject to minimum 5% in first 3 years)
Restoration rate 60%-Interest rate 7.5%
PAYMENTS BEYOND Restoration rate 65% - Interest rate 12%
Restoration rate 70%- Interest rate 15%
THRESHOLD
Principal repaid on maturity - between 50% and 100% depending on restoration rate (100% if restoration rate
>55%)
Investors have the opportunity to terminate the deal early from the end of year 3 if the restoration rate is below
45%.
MAXIMUM RETURN
Maximum annual return of 15%

**UnitingCare Burnside played a significant role in the development of this SIB, including work on the development of the financial model and SBB structure.

120
SIB NAME
Benevolent Society Social Benefit Bond (SBB)
LOCATION
State of New South Wales
COUNTRY
Australia
START DATE (date

October 2013
CONTRACT
DURATION
60 months
SOCIAL ISSUE
TARGET
POPULATION
Up to 400 families who are expecting a child or have at least one child under six years of age (approximately
636 children), and who have been reported to Department of Family and Community Services as being at risk
of significant harm. There will be four annual cohorts, which will be used to calculate payments.
INTERVENTION
Intensive family support program of 9 to 12 months duration designed to keep children with their families
(where safe) and to avoid their entry into out-of-home care.
SERVICE PROVIDER The Benevolent Society
INTERMEDIARY
(roles in
parentheses)
Westpac Institutional Bank (helped

structure the deal, raise the investment,
manage the deal and help the service
provider develop a more mathematical
understanding of success)
Commonwealth Bank of Australia
(helped structure the deal and raise the
investment)
OUTCOME FUNDER
State of New South Wales Treasury and

New South Wales Department of Family
and Community Services
TECHNICAL
ASSISTANCE
PROVIDER
N/A
NONRECOVERABLE
GRANTS
N/A
A Special Purpose Vehicle was the legal

intermediate body for funding
UPFRONT CAPITAL
COMMITMENT
(USDM)*
9.32
Senior Investors
INVESTOR NAME
44 total investors in the Senior (Class P) and Subordinate

(Class E) investment groups. Many investors have invested in
both tranches.
Senior Investors include Benevolent Society, Westpac Foundation,
and the Commonwealth Bank of Australia. The Westpac
Institutional Bank and Commonwealth Bank of Australia raised
funds from their investors, including high net worth individuals,
self-managed super funds, trusts, small foundations, and
institutions
Subordinate Investors include the

Benevolent Society, Westpac Foundation,
the Commonwealth Bank of Australia
INVESTMENT
(USDM)*
6.99 (AU$ 7.5 million)
2.33 (AU$ 2.5 million)
MAXIMUM
POTENTIAL LOSS
(% of principal)
0%
100%
121
The weighted average of three measures are used to calculate the Performance Percentage, which
determines payments to investors. All data is from the Department of Family and Community Services (FACS).
1.
Improvement Percentage calculated as the weighted average of three indicators for the youngest
child in each family (variable weight based on the number and type of referrals, starting at 77% for the
first year)
Number of entries into out-of-home care (weight of 66%)
Number of Child Protection Helpline reports (FACS call-in line for suspected risk of significant harm
to children) (weight of 17%)
Number of safety and risk assessments (weight of 17%)
2.
Unmatched Children Percentagewhere children referred by FACS cannot be matched with a

comparable Control Child, these children are applied a deemed success of 15% (variable weight based on
the number and type of referrals, starting at 2% for the first year)
3.
Guaranteed Referrals Shortfall Percentage where FACS is unable to fill vacancies notified by The
Benevolent Society within the agreed period of time up to a guaranteed minimum, they attract a deemed
success of 40% (variable weight based on the number and type of referrals, starting at 21% for the first year)
OUTCOME METRIC
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
Quasi-experimental (matched comparison group)

[Deloitte will certify Benevolent Societys calculation of the Performance Percentage, which is the metric for
investor payments]
ARTD Consultants will conduct a parallel quantitative and qualitative evaluation of the program impact, the
correlation between the SBB metrics and other resilience outcomes, and the implementation process. This
evaluation is not linked to investor payments.
PAYMENT
SCHEDULE
Interim results are calculated annually for investor reference. Payments from the outcome funder to the
investor is based on the final results calculated after 4 years and 9 months and paid at the maturity of the bond
(at the end of the five years)
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
No threshold for principal repayment, >5% change in the

performance metric needed for interest
Performance Improvement 0% to 5% - Interest 0%

PAYMENTS BEYOND Performance Improvement 25% to 35% - Interest 8%
THRESHOLD
Performance Improvement >40% - Interest 10%
Year one results indicate Class P investors will earn 5% in the
payment
MAXIMUM RETURN
Principal and returns paid after senior

lender has been repaid principal and
interest.
Improve 0% to 5% - Interest 0%
Improve 5% to 15% - Interest 8%
Improve 15% to 20%- Interest 10.5%
Improve 20% to 25%-Interest 15%
Improve >40% - Interest 30%
Year one results indicate Class E investors
will earn 8% in the payment
The bonds are readily saleable at any time.
The bonds are readily saleable at any

time.
10% average annual return

**UnitingCare Burnside played a significant role in the development of this SIB, including work on the development of the financial model and SBB structure.
122
The Netherlands SIB Fact Sheets

SIB NAME
LOCATION
Rotterdam, South Holland
COUNTRY
The Netherlands
START DATE (date

December 2013
CONTRACT
DURATION
50 months
SOCIAL ISSUE
Unemployment
TARGET
POPULATION
160 unemployed young people ages 17 to 27 who receive municipal unemployment welfare
INTERVENTION
The intervention will consist of workshops, personal coaching, internships and access to a network of
entrepreneurs and professionals for young people so that they can start their own companies, find paid
employment or enroll in a training program.

SERVICE PROVIDER Buzinezzclub
OUTCOME FUNDER
INTERMEDIARY
(roles in
parentheses)
In the proces of building the SIB

construction, there was no intermediary
TECHNICAL
involved. During the SIB, Deloitte is
measuring the results as an objective
ASSISTANCE
evaluator. The flows of funds run through PROVIDER
a shell foundation, called SIB Rotterdam
Foundation.
UPFRONT CAPITAL
COMMITMENT
(USDM)*
0.924
NONRECOVERABLE
GRANTS
Municipality of Rotterdam
N/A
N/A
Senior Investors
INVESTOR NAME
ABN AMRO and the Start Foundation
INVESTMENT
(USDM)*
0.924 (0.68 million)
MAXIMUM
POTENTIAL LOSS
(% of principal)
66%
OUTCOME METRIC
Days of unemployment welfare for youth
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
Historical comparison. Oracle devoloped a comparison model.

[Deloitte]
PAYMENT
SCHEDULE
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
Positive impact on months of unemployment welfare for youth
PAYMENTS BEYOND
Yield is variable and based on savings to the government. No further information is public.
THRESHOLD
MAXIMUM RETURN
Maximum annual return of 12%
123
SIB NAME
Eleven Augsburg
LOCATION
Augsburg, Bavaria
COUNTRY
Germany
START DATE (date

September 2013
CONTRACT
DURATION
28 months
SOCIAL ISSUE
Unemployment
TARGET
POPULATION
Unemployed people less than 25 years old in the Augsburg region who are not currently attending school, have
not completed compulsory education, do not have ongoing or successfully completed apprenticeship, do not
have a current occupation, and have not had contact with the employment agency or participated in agency
programs for at least two years (approximately 100 participants in the program)
INTERVENTION
Participants receive intensive support and guidance to find apprenticeships or gainful employment and
continued support during the placement in that position.
SERVICE PROVIDER
Apeiros e.V., Ausbildungsmanagement

Augsburg (Education Management
Augsburg), Kinder-, Jugend- und
Familienhilfe Hochzoll (Child and Youth
Services Hochzoll), Joblinge gAG
Mnchen
OUTCOME FUNDER
Bavarian State Ministry of Labour and

Social Affairs, Family and Integration
INTERMEDIARY
(roles in
parentheses)
Juvat gemeinntzige GmbH, a

non-profit subsidiary of Benckiser
Foundation Future (negotiating the
contractual agreement with the
public sector, obtaining upfront
financing from independent financiers,
commissioning and providing support
to the organizations responsible for
implementation of the project, and
coordinating the independent evaluation
of the projects success)
TECHNICAL
ASSISTANCE
PROVIDER
N/A
UPFRONT CAPITAL
COMMITMENT
(USDM)*
NONRECOVERABLE
GRANTS
N/A
INVESTOR NAME
BHF-BANK Foundation, BonVenture gGmbH (a non-profit subsidiary of BonVenture social venture capital fund),
BMW Foundation Herbert Quandt , Eberhard von Kuenheim Foundation of BMW AG
INVESTMENT
(USDM)*
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
Number of members of the target group placed into work or apprenticeship for more than 9 months
Senior Investors
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
PAYMENT
SCHEDULE
Validated administrative data (e.g. on employment)

[Law firm Dr. Mohren & Partner]
There is an additional qualitative process evaluation taking place, run by the Faculty of Economic and Social
Sciences at the University of Hamburg
Single repayment of principal plus interest from outcome funders to investors in case of positive success
evaluation at the end of the project (estimated 03/2016)
124
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
20 target group individuals in work or apprenticeship for over 9 months.
PAYMENTS BEYOND Payment of principal plus 3% interest is made at the end of the project if 20 or more of the target group
individuals are in work or apprenticeship for over 9 months.
THRESHOLD
MAXIMUM RETURN
3% overall return at the end of the project
125
SIB NAME
Duo for a Job
LOCATION
Brussels-Capital Region
COUNTRY
Belgium
START DATE (date

January 2014
CONTRACT
DURATION
24 months
SOCIAL ISSUE
Unemployment
TARGET
POPULATION
180 18- to 30-year-old migrants who are neither EU, US nor Canadian nationals, are legally residing in
Brussels, and are registered at Actiris (the Brussels-Capital Region Employment Agency), thus permitted to
work in Belgium
INTERVENTION
Participants will be matched with local retirees who worked in the field of the participants employment
interest, who will give them advice for 6 months and put them in touch with suitable employers. The program
will provide individualized and tailored follow-up of participants job-searching activities.
SERVICE PROVIDER Duo for a Job
OUTCOME FUNDER
Actiris (Brussels-Capital Region

Employment Office)
INTERMEDIARY
(roles in
parentheses)
Kois Invest
TECHNICAL
ASSISTANCE
PROVIDER
Kois Invest
UPFRONT CAPITAL
COMMITMENT
(USDM)*
0.323
NONRECOVERABLE
GRANTS
Pro bono legal services and external

foundation grant for technical assistance
from Kois Invest
Senior Investors
INVESTOR NAME
Kois Invest gathered individual investors
INVESTMENT
(USDM)*
0.323 (0.234 million)
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
The one-year reemployment rate, defined as having accumulated more than 90 days of employment or
obtained a permanent employment contract in the year following the program
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
Quasi-experimental (matched comparison group)

[Brussels Observatory of Employment (verified by an independent validator)]
PAYMENT
SCHEDULE
Payments from the outcome funder to the investors will take place once at the end of the two year deal
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
A higher reemployment rate among treatment than control

If improvement in reemployment rate (in comparison to control group) is between 0% and 10%, payment
PAYMENTS BEYOND
gradually increases from 0% to 100% of investment principal.
THRESHOLD
If improvement is beyond 10%, investors earn incrementally higher interest, up to 6%.
MAXIMUM RETURN
Up to 6% return at the end of the project.
126
SIB NAME
LOCATION
Saskatoon, Saskatchewan
COUNTRY
Canada
START DATE (date

May 2104
CONTRACT
DURATION
60 months
SOCIAL ISSUE
TARGET
POPULATION
Single mothers of a total of 22 children ages 0 to 12 who are at risk of requiring services from Child and Family
Services (part of the Ministry of Social Services).
INTERVENTION
Mothers and children will live in the provided Sweet Dreams House. The house provides classes and
workshops aiming to improve parenting and increase the chances of mothers gaining employment.
SERVICE PROVIDER
Saskatoon Downtown Youth Center

(known as EGADZ)
INTERMEDIARY
(roles in
parentheses)
UPFRONT CAPITAL
COMMITMENT
(USDM)*
Saskatchewan Executive Council

(designed SIB outcome measures and
contract, raised investor capital)
Saskatchewan Ministry of Social
Services (holds direct contracts with
investors and the service provider)
1.401
OUTCOME FUNDER
Province of Saskatchewan Ministry of

Social Services
TECHNICAL
ASSISTANCE
PROVIDER
N/A
NONRECOVERABLE
GRANTS
Additional grants worth $0.488 million

(CA$ 535,000) to Sweet Dreams outside
the contract from Government of Canadas
Homelessness Partnering Strategy, the City
of Saskatoon, and other private donors
Senior Investors
INVESTOR NAME
Conexus Credit Union, Wally and Colleen Mah
INVESTMENT
(USDM)*
0.913 (CA$ 1 million)
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
OUTCOME METRIC
Percentage of children that are residing with their mothers six months after leaving the Sweet Dreams Project
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]

[Deloitte]
(Deloitte will review the childs participation in Child and Family Services and will evaluate the added savings of
the program)
PAYMENT
SCHEDULE
One payment at the end of the project from the outcome funder to the investors
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
17 of 22 children with their mothers six months after leaving the project
Repayment is on a sliding scale from 17 to 22 of the total 22 children with their mothers.
PAYMENTS BEYOND
17 children with mothers: Investors paid 75% of principal + 5% interest
THRESHOLD
22 children with mothers: Investors paid 100% of principal + 5% interest
MAXIMUM RETURN
127
SIB NAME
Junior Code Academy
LOCATION
Lisbon
COUNTRY
Portugal
START DATE (date

January 2015
CONTRACT
DURATION
20 months
SOCIAL ISSUE
Primary school grade repetition and drop-out
TARGET
POPULATION
65 3rd and 4th year students (8 to 9 years old) in three different schools, two of which are in traditionally
disadvantaged areas.
INTERVENTION
Junior Code Academy is a 30-week computer programming intervention integrated in the school curriculum
over three consecutive school terms (second term of 3rd grade, third term of 3rd grade and first term of 4th
grade). Students will learn to use Scratch, a computer program developed by the Massachusetts Institute of
Technology where students write code to control a physical robot. This particular school program was set
up with the support of University of Aveiro in Portugal. These classes are delivered by two external trainers
(recruited and trained by Junior Code Academy), with the supervision of the classroom teacher. The Code
academy curriculum integrates other relevant subjects of the national curriculum into the Code Academy
classes through activities such as animation of readings.
SERVICE PROVIDER
Code Academy (a recently created

for-profit social enterprise)
OUTCOME FUNDER
Municipality of Lisbon (local level public

sector entity, which is accountable for
managing the primary education system
in Lisbon)
INTERMEDIARY
(roles in
parentheses)
Social Investment Lab (social problem

analysis, assisting in identifying the
outcome metrics and evaluation
method, developing the financial
model and structuring the SIB, capital
raise, assisting in the service provider
management and operational due
diligence, capital raising)
TECHNICAL
ASSISTANCE
PROVIDER
University of Aveiro, Portugal
$0.034 million: Calouste Gulbenkian

Foundation has given a grant of 28,000
for robots and equipment.
UPFRONT CAPITAL
COMMITMENT
(USDM)*
0.148
NONRECOVERABLE
GRANTS
Though not included in this category

bythis studys definition, it is worth noting
that the Social Investment Lab and the
Nova School of Business offered their
intermediary and evaluation services pro
bono, valued at a cost combined 25,000,
split roughly evenly between both entities
Senior Investors
INVESTOR NAME
Calouste Gulbenkian Foundation
INVESTMENT
(USDM)*
0.114 (0.094 million)
MAXIMUM
POTENTIAL LOSS
(% of principal)
100%
1.
OUTCOME METRIC
2.
Logical thinking and problem solving skills- difference in score between control and treatment groups on
a Raven Matrices type of test (weighting 90%)
National exams in Portuguese and Mathematics, compulsory for all 4th grade students, two terms after
the intervention is finisheddifference in score between control and treatment groups (weighting 10%).
128
OUTCOME
EVALUATION
METHOD
[Evaluator in
brackets]
Randomized Control Trial (RCT)

[Nova School of Business and Economics]
PAYMENT
SCHEDULE
There are two payments from outcome funders to investors: payments for logical thinking and problem solving
skill improvements will be paid after one year and payments for performance on national exams will be paid at
the end of the 20 months.
THRESHOLD FOR
PAYMENTS FROM
THE OUTCOME
FUNDER
Positive change in one of the metrics
Logical thinking
Outcomes achieved
PAYMENTS BEYOND
THRESHOLD
MAXIMUM RETURN
School performance
Outcomes payment
Outcomes achieved
Outcomes payment
0%
0%
1%
9.900.00
1%
1.100.00
2%
19.800.00
2%
2.200.00
3%
29.700.00
3%
3.300.00
4%
39.600.00
4%
4.400.00
5%
49.500.00
5%
5.500.00
6%
59.400.00
6%
6.600.00
7%
69.300.00
7%
7.700.00
8%
79.200.00
8%
8.800.00
9%
89.100.00
9%
9.900.00
10%
99.000.00
10%
11.000.00
The IRR of the investment is approximately 2% (excluding the grants)
129
APPENDIX 3. LEGISLATION AND POLICY ACTION TO

SUPPORT THE IMPACT BOND ECOSYSTEM
Legislation Supporting SIBs
LOCATION
NAME OF
LEGISLATION
DETAILS
TYPE OF
SUPPORT
STATUS
SIB-Specific Legislation at the National Level

US
S 1089;
Social Impact
Partnership Act
Introduced by Senators Orrin Hatch (R-Utah) and Michael Bennet (D-Col.), this
would authorize the appropriation of $300 million for state and local social
impact bonds over 10 years and is a companion to HR 1336.
Authorization;
Financing
Introduced in Senate in April

2015
US
HR 1336
Introduced by Representatives Todd Young (R-Ind.) and John Delaney (DMd.), this bill would authorize $300 million through a one-time mandatory
appropriation for states and/or local governments that launch pay-forperformance initiatives. This bill would also establish a federal interagency
council on social impact partnerships to oversee the initiative and issuerelated regulations. This bill would also authorize the Office of Management
and Budget to spend up to $2 million each year for federal technical
assistance in the development or support of social impact partnerships and
$10 million to cover up to half of the cost of state/local feasibility studies.
The bill reserves up to $45 million (15 percent of all funds) for evaluations. In
addition, the bill would permit bank investments in social impact partnerships
to be considered as part of a banks requirement under the Community
Reinvestment Act (CRA) to help meet the credit needs in its community.
Authorization;
Financing
Introduced in House in March

2015
US
HR 5
Delaney amended the Elementary and Secondary Education Act to improve

teacher training and retention programs by allowing state and local
governments to use pay-for-success (PFS) initiatives to improve outcomes
and save money.
Authorization
Successfully amended
in 2015; bill remains in
Committee of the Whole House
on the State of the Union
130
LOCATION
NAME OF
LEGISLATION
US
HR 4885
Introduced by Young in June 2014, the Social Impact Bond Act would amend
Title XX (Block Grants to States for Social Services and Elder Justice) of the
Social Security Act to add a new Part C (Social Impact Bonds). This bill would
require the secretary of the treasury to seek proposals from states or local
governments for social impact bond projects that produce measurable, clearly
defined outcomes that result in social benefit, such as employment for the
unemployed, high school graduation, and reduction of teen and unplanned
pregnancies as well as reduction of incidences of child abuse and neglect.
The bill would require applications to include a feasibility study, funded under
this act, which contains specified information. The bill makes appropriations
for 10 years to carry out this act. The bill also would require independent evaluation of a state or local government social impact bond project and would
establish a federal interagency council on social impact bonds. In addition,
the bill would amend the Community Reinvestment Act of 1977 to require the
appropriate federal financial supervisory agency to consider, in assessing and
taking into account the record of a financial institution in meeting the credit
needs of its entire community, its investments in social impact bond projects.
Authorization;
Financing
Referred to Committee on
Ways and Means and House
Financial Services Committee in June 2014
US
Workforce
Innovation and
Opportunity Act
The reauthorization of the Workforce Innovation and Opportunity Act included

a provision allowing local workforce investment boards to redirectup to 10
percent of their federal dollars to PFS contracts.
Authorization
Signed into law in 2014
DETAILS
TYPE OF
SUPPORT
STATUS
SIB-specific legislation at the state level

US South
Carolina
Pay for Success This bill supports the introduction of a trust fund for performance
Performance
accountability for the purpose of funding PFS contracts to improve outcomes
Accountability Act and lower costs for government services.
Financing
Referred to South Carolina

State Senate Finance
Committee in 2013
Signed into law in September
2014
US California
AB 1837
This bill enacts, until January 1, 2020, the Social Innovation Financing
Program. The bill authorizes the Board of State and Community Corrections,
upon appropriation of funds by the Legislature for deposit in the Recidivism
Reduction Fund, to award grants of $500,000 to $2 million to three counties
for the purpose of entering into a PFS or social innovation financing contract.
The bill limits the total amount of the grants awarded to $5 million.
Financing
US
Connecticut
SB 105
The bill would allow the Office of Policy and Management secretary to
authorize any agency to enter into an outcome-based performance contract
with a social innovation investment enterprise for the purpose of any type of
preventive social program.
Authorization;
Financing
Tabled for the calendar in

2014
LOCATION
US Hawaii
NAME OF
LEGISLATION
DETAILS
House Concurrent This bill requested the Department of Budget and Finance conduct a study on
Resolution No. the feasibility of using SIBs to fund early learning programs and services. The
119
study was completed in December 2013.
TYPE OF
SUPPORT
Scoping
STATUS
Passed in House and Senate
in 2013
US Maryland
HB 517
This bill was introduced in the Maryland House of Delegates toenable the
state to issue an RFP for SIBs in an effort to improve public education in
grades pre-K to 12.
US Nebraska
LR 279
Introduced by Rep. Brad Ashford (D-Neb.) in May 2013, this bill calls for an
interim study on how SIBs might benefit juveniles and adults re-entering
the community after involvement with the juvenile justice or criminal justice
system.
Scoping
US New
Jersey
A-2771 New
Jersey Social
Innovation Act
This bill would have created an initial PFS pilot focusing on the provision of
nonprofit health care services to encourage private investment in preventive
and early intervention health care. The bill also would have established a
study commission to assess the effectiveness of the program.
Pilot
US Oklahoma
SB 1278
This bill established a PFS revolving fund to provide payment to social service
providers for the delivery of predefined criminal justice outcomes.
Financing
US Rhode
Island
S 2196
This bill was introducedin January 2014 to establish a five-year SIB pilot
program and study commission within the Rhode Island Department of
Administration.
Pilot; Scoping
US Texas
SB 1788
This bill would set up a committee to advise on the use of SIBs to finance
child abuse prevention programs.
Scoping
Referred to Health and

Human Services Committee
in 2013
US Utah
HB 96 - School
Readiness
Initiative
Authorization;
Financing
Signed into law in April 2014
US Vermont
H 625
The School Readiness Initiative created the School Readiness Board, which
provides grants to certain early childhood education programs and allows
entry into certain contracts with private entities to provide funding for early
childhood education programs for at-risk students.
This legislation would establish a committee to study SIBs and recommend to
the General Assembly opportunities for their use in Vermont.
Authorization
Scoping
Withdrawn in 2013
Referred to Judiciary
Committee in 2013
Pocket-vetoed by governor
in 2014
Signed into law in April 2014

Introduced and held on
Senate desk in 2014
Referred to the Committee

on Government Operations
in 2012
LOCATION
NAME OF
LEGISLATION
DETAILS
TYPE OF
SUPPORT
STATUS
US
Washington
HB 2337
This bill would establish the Washington Social Investment Steering

Committee, which would develop an implementation plan for at least one pilot
that uses social impact bonds or other public-private financing for social or
health care services. It would require that the Office of Financial Management
issue a request for proposals to implement the pilot or pilots by July 1, 2015,
and that the pilot or pilots be implemented by January 1, 2016.
Authorization;
Scoping
Introduced in 2014 but

did not move beyond the
Appropriations Committee
US
Massachusetts
H 4219
This bill established the Social Innovation Financing Trust Fund, which
authorized the secretary of administration and finance to enter into PFS
contracts, with up to $50 million in success payments backed by the state.
Authorization;
Financing
US
Pennsylvania
HB 1053; Pay
for Success
Authorization
and Performance
Accountability Act
This bill would establish a PFS pilot program to expand access to high-quality
early childhood education services by encouraging private investment in early
childhood education. It would authorize counties to enter into PFS contracts
for early childhood education services. The bill would also establish a PFS
trust fund as a special fund in the state treasury.
Authorization;
Financing
Referred to House Finance

Committee in 2015
US Colorado
HB 15-1317;
Pay for Success
Contract Act
The Pay for Success Contracts Act would authorize the Office of State Planning and Budgeting (OPSB) to enter into state PFS contracts with one or more
lead contractors for the provision of social services that would reduce the
need for the state to provide other social services in the future. The bill would
also allow local governments to be additional parties to a PFS contract if the
OPSB and the local governing body approve. In addition, the bill would create
a PFS contracts fund in the state treasury consisting of money transferred
or appropriated by the General Assembly from direct or indirect reductions
in state spending resulting from the provision of social services under a PFS
contract or from any other source; any money received by the state from a
local government that has joined a contract as an additional party for the purpose of making payments to a lead contractor; and fund investment earnings.
Authorization;
Financing
Assigned to House Business

Affairs and Labor Committee
in 2015
US Colorado
SB 14-185
The bill would authorize the OSPB to enter into state PFS contracts with
one or more lead contractors for the provision of early childhood education
services that would reduce the need for the state to provide subsequent education support and other social services. The bill also allows school districts
to be parties to a PFS contract with the approval of the OSPB and the lead
contractor as well as the board of education of the district. In addition, the bill
would create a PFS contracts fund of up to $25 million in the state treasury.
Authorization;
Financing
Passed in Senate in 2014;

postponed indefinitely by
House Committee on Education in 2014
LOCATION
NAME OF
LEGISLATION
DETAILS
TYPE OF
SUPPORT
STATUS
Non-SIB-Specific Legislation Supporting SIBs at the National Level

US
Community Reinvestment Act
The Community Reinvestment Act requires depository institutions to help

meet the credit needs of the communities in which they operate, including
low- and moderate-income neighborhoods, with banking regulators evaluating banks performance in meeting these goals. CRA banks often work
through community development financial institutions, community development corporations, and other intermediaries. These intermediaries can play
an important role in the development of the PFS financing market. Transactions that would qualify for CRA credit will most likely involve the provision
of community services to low- and moderate-income individuals in the form
of community facilities, such as youth programs, homeless centers, soup
kitchens, health care facilities, battered womens centers, and alcohol and
drug recovery centers.
Incentives for
Financing
US
Tax Reform Act
This act coined the program-related investment, or PRI, which is any

investment by a foundation that meets three tests: its primary purpose is to
further the tax-exempt purposes of the foundation; the production of income
or property is not a significant purpose; and it is not used to lobby or support
lobbying. PRIs are expected to be repaid, and the tax code counts the entire
amount of a PRI as a qualifying distribution in the year in which it is made
(essentially the same treatment afforded grants). Because grants can usually
be made only to nonprofit organizations, a for-profit entity that conducts
business that advances an exempt purpose, such as building affordable
housing, could receive a PRI. Also, when nonprofits are involved in projects
that require substantial financial resources, they are frequently able to raise
greater sums through loans than otherwise available as grants. PRIs are most
frequently loans, but they also include loan guarantees, linked deposits, and
equity investments.
Incentives for
Financing
LOCATION
NAME OF
LEGISLATION
DETAILS
US
Riegle Community Development

and Regulatory
Improvement Act
of 1994
UK
Social Investment This measure makes available tax reliefs for qualifying individuals who make
Tax Relief
qualifying investments in qualifying social enterprises. Income tax relief will
be available as a percentage of the amount invested, and capital gains tax
on chargeable gains can be deferred in certain circumstances in which the
person liable to tax invests money in a social enterprise.
The Community Development Financial Institutions (CDFI) Fund was established by the Riegle Community Development and Regulatory Improvement
Act of 1994, whose purpose is to invest in CDFIs and to build their capacity
to serve low-income people and communities that lack access to affordable
financial products and services. The CDFI Fund provides two types of monetary awards to CDFIs: financial assistance and technical assistance. CDFIs
may use the funds to pursue a variety of goals, including promoting economic
development, developing affordable housing and promoting homeownership,
and providing community development financial services, such as basic banking services, financial literacy programs, and alternatives to predatory lending.
CDFIs can be leveraged for developing the PFS marketin its inaugural
funding round for social impact bond intermediaries, the Social Innovation
Fund, which is housed at the Corporation for National and Community Service,
granted more than 45 percent of its resources to certified CDFIs.
TYPE OF
SUPPORT
STATUS
Incentives for
Financing
Went into effect in 1994
Incentives for
Financing
Went into effect in April 2014
Government Actions Supporting SIBs
LOCATION
NAME OF
LEGISLATION
DETAILS
TYPE OF
SUPPORT
National Level
US (grants to 37
states and DC)
Social Innovation
Fund
The Social Innovation Fund (SIF), a White House initiative and program of the Corporation for National
and Community Service, combines public and private resources to grow the impact of innovative,
community-based solutions that have compelling evidence of improving the lives of people in low-income communities throughout the United States. The SIF invests in three priority areaseconomic
opportunity, healthy futures, and youth developmentby making grants of $1 million to $10 million
annually for up to five years to experienced grant-making intermediaries. The intermediaries then
match the federal funds dollar-for-dollar and hold open competitions to identify high-performing nonprofit organizations working in low-income communities that have innovative solutions with evidence
of compelling results. Once selected, these nonprofits must also match the funds they receive and
participate in rigorous evaluations of the impact of their programs. In addition to funding, significant
technical assistance is given to Social Innovation Fund grantees to support implementation of their
innovative programs.
Financing; Pilot;
Technical Assistance
US
SIB Lab at Harvard

Kennedy School
Local and state governments have partnered with the Social Impact Bond Technical Assistance Lab
(SIB Lab) at Harvard Kennedy School to receive technical assistance to help develop PFS projects. The
technical assistance supports recipients in designing, implementing, and evaluating policy initiatives
in areas ranging from early childhood education to prison recidivism and economic self-sufficiency to
green infrastructure. During the past three years, the SIB Lab has helped Massachusetts, New York
state, and Chicago launch PFS contracts using social impact bonds. Current SIB Lab partners include
Colorado, Connecticut, Denver, Illinois, Massachusetts, Michigan, New York, and South Carolina. The
winners of the 2014 SIB Lab competition for technical assistance are Arkansas, DC Water (District of
Columbia), Nevada, Pennsylvania, and San Francisco.
Pilot; Technical
Assistance
US
Second Chance Act Second Chance Act programs, administered through the Justice Departments Office of Justice Proimplementation by grams, are designed to help communities develop and implement comprehensive strategies to address
Justice Department the challenges faced by adults and youth when they return to their communities after incarceration.
In 2012, the offices Bureau of Justice Assistance announced that it would support jurisdictions that
proposed to plan or implement a PFS model into their re-entry initiative. The agency is making two
PFS awards: an implementation award to Cuyahoga County, Ohio, and a planning award to Lowell,
Massachusetts, and is funding the Urban Institutes efforts to develop a blueprint for municipal, state
and federal governments to use to pay for evidence-based anti-crime programs.
Financing
NAME OF
LEGISLATION
DETAILS
US
White House Office

of Science and
Technology Policy
In January 2014, the White House Office of Science and Technology Policy released a request for
information (RFI) to understand how pull mechanisms, which encompass PFS financing, can advance
learning technology.
US
White House
US
US Department of
Treasury
In October 2013, the US Department of Treasury and an interagency PFS working group released an
RFI, Strategies to Accelerate the Testing and Adoption of Pay for Success (PFS) Financing Model.The
RFI asked respondents to identify the best use of the authority on state, local and tribal performance-based funding mechanisms. It also requested information about the current PFS marketplace,
the potential impact of a PFS incentive fund, and possible advantages to taxpayers.
RFI
US
US Department of
Labor
The Department of Labor awarded nearly $24 million in PFS grants in September 2013 to New York
and Massachusetts to support SIBs that increase employment and reduce recidivism among formerly
incarcerated individuals as part of the Workforce Innovation Fund.
Financing; Pilot
Canada
Economic Action
Plan 2012
The government of Canada is exploring the potential of social impact bonds.
UK
Centre for Social

Impact Bonds
The Centre for Social Impact Bonds in the Cabinet Office supports the development of social impact
bonds. Its objectives are related to:
Building a repository of expert information and guidance on how to develop SIBs
Making available practical tools so that SIBs can be developed easily and cost-effectively
Providing funding for a portion of outcome payments for new SIBs
Showcasing how SIBs are transforming public service delivery and building an evidence base of
what works
Stimulating and sharing the latest thinking, research and media coverage on SIBs
Incubating
On September 3, 2013, the Governors Office and the Denver Office of Strategic Partnerships released
an RFI regarding social impact bonds and PFS contracts. Both offices are seeking information from
providers, intermediaries, and investors on this new way of financing social programs.
RFI
LOCATION
The presidents FY16 budget allows for $364 million for PFS efforts. Of that, $300 million would be
allocated for an incentive fund at the Department of Treasury to help empower state, local, and tribal
governments to adopt PFS initiatives (this was proposed in FY13 and FY14), and up to $64 million
would be allocated to support PFS initiatives across four programs in the Department of Education,
Department of Justice, and the Corporation for National and Community Service.
TYPE OF
SUPPORT
RFI
Financing
Scoping
Province/State Level
US Colorado
LOCATION
US Connecticut
NAME OF
LEGISLATION
DETAILS
The Department of Children and Families released an RFI in 2013 and an RFP in 2014 for evaluating
the feasibility of PFS contracts and social impact bonds to improve outcomes of children and families
involved in the child welfare system who are also affected by substance abuse.
TYPE OF
SUPPORT
RFI; RFP
US Illinois
Governor Pat Quinn announced in 2014 that the state would implement its first SIB for at-risk youth
who are involved in both the child welfare and juvenile justice systems in Illinois. The first contract
awarded will go to One Hope United, in partnership with the Conscience Community Network. This was
preceded by the release of an RFP.
RFP
US District of
Columbia
In 2013, the District of Columbia Mayors Office of Budget and Finance released an RFP for a feasibility
study to assist the District in determining the most appropriate content area to initiate a SIB or PFS
project.
RFP
US South
Carolina
In September 2013, the South Carolina Department of Health and Human Services published an RFI
concerning its Social Impact Bond Program. The agency was seeking information regarding the design
and development of a social impact bond program focused on controlling costs and improving health
and other outcomes of mothers and newborns in the states Medicaid program.
RFI
US Oregon
The governors 2013-2015 budget proposal included $800,000 for the Early Learning Division to cover
startup costs for a Pilot Prevention Health and Wellness Demonstration Project for Social Impact
Financing.
Financing
US Nevada
In early 2014, Nevada released an RFI to identify early childhood education programs, organizations,
or initiatives in southern Nevada that utilize an early childhood education strategy or structure that has
demonstrated, or can demonstrate, the potential to result in quantifiable cost savings to a public or
governmental entity.
RFI
US Michigan
On September 9, 2013, Michigans Department of Technology, Management & Budget and its
Procurement Division released an RFI to explore PFS models. The state identified criminal justice and
human services as focus areas but is not limiting opportunities to those areas.
RFI
US
Massachusetts
In 2014, Massachusetts released a Request for Response (RFR) related to adult basic education and
English for speakers of other languages.
RFR
US New York
In September 2013, New York state provided supplementary funding in addition to a $12 million grant
from the U.S. Department of Labor for a social impact bond to increase employment and reduce
recidivism among 2,000 individuals who had been incarcerated.
Financing
LOCATION
NAME OF
LEGISLATION
Australia New
South Wales
Social Impact
Investment Policy
DETAILS
TYPE OF
SUPPORT
This policy outlines 10 key actions that the government will take to support the growth of social impact
investments. These key actions are around delivering more social impact investment transactions,
growing the market and removing barriers, and building the capacity of market participants. To support
these efforts, the government of New South Wales developed an Office of Social Impact Investment
and a Social Impact Investment Expert Advisory Group.
Technical
Assistance;
Commitment
US Philadelphia,
Pennsylvania,
In July 2014, the city of Philadelphia released an RFP for a feasibility study to explore PFS programs to
reduce recidivism and support at-risk youth.
RFP
US Pima County,
Arizona
In 2014, Pima County authorized the receipt of two grants to explore PFS contracts.
US Santa Clara
County, California
In 2013, Santa Clara County released an RFP for a mental health PFS project.
RFP
US Santa
Barbara County,
California
In 2013, Santa Barbara County released an RFI for a recidivism project.
RFI
US Cuyahoga
County, Ohio
Cuyahoga County issued a RFR on October 29, 2012 for a PFS pilot for human services programs that
produce cashable savings for the county.
RFR
US Salt Lake
County, Utah
In June 2013, the Salt Lake County Council voted to allocate $300,000 to help pay for PFS outcomes.
Financing
City/County Level
Scoping; Technical
Assistance
REFERENCES
Anderson, J and A. Phillips. 2015. What we
learned from the Nations First Impact Bond.
Huff Post Impact Whats Working (blog), July
2 (huffingtonpost.com/james-anderson/whatwe-learned-from-the-_1_b_7710272.html
[July 6, 2015]). Barclay, L., and T. Symons.
2013. A Technical Guide to Developing Social Impact Bonds. Social Finance U.K.
es/young-delaney-reintroduce-bipartisan-social-impact-financing-bill1/ [May 11, 2015]).

Corporation for National and Community Service.
2015. State of the Pay for Success Field:
Opportunities, Trends and Recommendations. Corporation for National and Community Service.
Bloomgarden, D., M. Eddy, and Z. Levey. 2014.

Social Impact Bonds and Education in Latin
America. GEMS Education Solutions.
Demel, A. 2013. Second Thoughts on Social Impact Bonds. NYU Journal of Law and Business 9.
Burand, D. 2013. Globalizing Social Finance:

How Social Impact Bonds and Social Impact
Performance Guarantees Can Scale Development. NYU Journal of Law and Business9.
Dickens, W., and C. Baschangel. 2009. The Fiscal Effects of Investing in High-Quality Preschool. Center on Children and Families
Brief #42. The Brookings Institution.
Eames, S., and V. Terranova, 2014. A Review
of Social Impact Bonds: Financing Social
Service Programs through Public-Private
Partnerships. Austin/Travis County Reentry
Roundtable. February (www.reentryroundtable.net/wp-content/uploads/2011/05/A-Review-of-Social-Impact-Bonds-Final.pdf).
Callanan, L., et al. 2012. From Potential to Action:

Bringing Social Impact Bonds to the U.S.
McKinsey and Company.
CDC. 2014. Impact of Malaria. Centers for Disease Control and Prevention, March 26
(www.cdc.gov/malaria/malaria_worldwide/
impact.html [April 8, 2015]).
Filmer, D., and L. Pritchett. 1999. The Impact

of Public Spending on Health: Does Money
Matter?Social Science & Medicine49 (10):
1309-23.
Center for Global Development and Social Finance. 2013. Investing in Social Outcomes:
Development Impact Bonds. Center for
Global Development and Social Finance.
Gallup, J. and J. Sachs, The Economic Burden of

Malaria. In The Intolerable Burden of Malaria: A New Look at the Numbers: Supplement
to Volume 64(1) of the American Journal of
Tropical Medicine and Hygiene. Breman,
J.G., Egan A, Keusch GT, eds. Northbrook
(IL):American Society of Tropical Medicine
and Hygiene; 2001 Jan.
Centre for Social Impact Bonds. 2013. Department for Work and Pensions Innovation
Fund, U.K. Cabinet Office, (data.gov.uk/sib_
knowledge_box/department-work-and-pensions-innovation-fund).
Chandy, Laurence, Akio Hosono, Homi J. Kharas, and Johannes F. Linn. 2013. Getting to
Scale: How to Bring Development Solutions
to Millions of Poor People. The Brookings Institution.
Gertler, P., J. Heckman, R. Pinto, A. Zanolini, C.

Vermeersch, S. Walker, S. Chang, and S.
Grantham-McGregor. 2014. Labor Market
Returns to an Early Childhood Stimulation
Intervention in Jamaica. Science 344 (998),
May.
Congressman Todd Young, 2015. Young, Delaney

reintroduce bipartisan Social Impact financing bill. (toddyoung.house.gov/press-releas-
140
Godeke, S., and L. Resner. 2012. Building a

Healthy & Sustainable Social Impact Bond
Market: The Investor Landscape. Godeke
Consulting.
Hall, D. n.d. LGA and Social Finance support for

social impact bonds. Cabinet Office. Centre
for Social Impact Bonds (blogs.cabinetoffice.
gov.uk/socialimpactbonds/ [May 11, 2015])
Godeke, S. 2013. Community Reinvestment Act

Banks as Pioneer Investors in Pay for Success Financing. Community Development
Investment Review 9(1), April, ed. Ian Galloway.
Harvard University. 2015. State and Local Governments Receive Assistance to Launch Pay
for Success Projects Across the Country.
Harvard University Kennedy School of Government, March 12 (www.hks.harvard.edu/
news-events/news/press-releases/sib-labwinners-2015 [March 23, 2015]).
Goodall, E. 2014. Choosing Social Impact Bonds:

A Practitioners Guide. Bridges Impact +.
Hughes, J., and J. Scherer. 2014. Foundations for

Social Impact Bonds. Social Finance U.S.
Golden, M. 2014. Pay for Success Financing for

Early Childhood Programs: A Path Forward.
Institute for Child Success.
Instiglio, Thomson Reuters Foundation, and Baker & McKenzie. 2014.A Legal Roadmap for
Social Impact Bonds in Developing Countries. Thomson Reuters Foundation.
Government of Canada. 2015. Social Finance.

Government of Canada, Human Resources
and Skills Development Canada (www.esdc.
gc.ca/eng/consultations/social_finance//index.shtml [April 8, 2015]).
Jones, N., H. Jones, L. Steer, and A. Datta, 2009.

Improving impact evaluation production and
use, Working Paper 300, Overseas Development Institute.
Government of New South Wales. 2015. Social

Impact Investment Policy. Government of
New South Wales, February (www.dpc.nsw.
gov.au/__data/assets/pdf_file/0011/168338/
Social_Impact_Investment_Policy_WEB.pdf
[March 24, 2015]).
Leventhal, R. 2013. Effecting Progress: Using

Social Impact Bonds to Finance Social Services. NYU Journal of Law and Business 9.
Liebman, J. 2011. Social Impact Bonds. Center for
American Progress, February.
Government of the UK. 2014. Innovation Fund:

Key Facts. Her Majestys Government
(www.gov.uk/government/uploads/system/
uploads/attachment_data/file/212328/hmg_
g8_factsheet.pdf [April 8, 2015]).
Liebman, J. and A. Sellman. 2013. Social Impact

Bonds: A Guide for State and Local Governments. Harvard Kennedy School Social Impact Bond Technical Assistance Lab.
Government of the UK. 2013. Social Investment

Tax Relief. Her Majestys Revenue and Customs (www.gov.uk/government/uploads/system/uploads/attachment_data/file/279864/
SITR_Pack.pdf [March 23, 2015]).
Liersch, M. 2015. Millennials and Money. Bank

of America Merrill Lynch.
Malaria No More. 2015. The Challenge.(www.
malarianomore.org/pages/the-challenge
[May 11, 2015]).
Gustafsson-Wright, E., M. Golden, and S. Aigner-Treworgy. 2015. Identifying Education Outcomes for Social Impact Bonds for
Early Childhood. The Brookings Institution (blog), February 13 (www.brookings.
edu/blogs/education-plus-development/
posts/2015/02/13-education-outcomes-social-impact-bonds-early-childhood-gustafsson-wright-golden-aigner-treworgy [April 8,
2015]).
Mulgan, G., N. Reeder, M. Aylott, and L. Bosher.

2011. Social Impact Investment: The Challenge and Opportunity of Social Impact
Bonds. The Young Foundation.
New Zealand Ministry of Health. 2015. Social
BondsNew Zealand Pilot. New Zealand
141
Ministry of Health (www.health.govt.nz/ourwork/preventative-health-wellness/socialbonds-new-zealand-pilot [March 30, 2015]).
Social Finance U.S. 2012. A New Tool for Scaling

Impact: How Social Impact Bonds Can Mobilize Private Capital to Advance Social Good.
Social Finance U.S.
Nonprofit Finance Fund. 2012. Risk Trade-off

Continuum for Different Structural Approaches to Pay-for-Success Financing. Nonprofit
Finance Fund.
Social Finance U.K. 2014a. Peterborough Social

Impact Bond Reduces Reoffending by 8.4%;
Investors on Course for Payment in 2016.
Social Finance U.K. (www.socialfinance.
org.uk/wp-content/uploads/2014/08/Peterborough-First-Cohort-Results.pdf [May 10,
2015]).
Nonprofit Finance Fund. 2015. Bennet, Hatch Introduce Social Impact Partnership Bill. (payforsuccess.org/resources/bennet-hatch-introduce-social-impact-partnership-bill [May
11, 2015]).
Social Finance U.K. 2014b. Social Finance Statement 24 April 2014, Social Finance U.K.
(www.socialfinance.org.uk/wp-content/uploads/2014/05/Social-Finance-statement-24April-2014.pdf [May 10, 2015]).
Olson, A. 2014. The Complex Anatomy of Social

Impact Bonds. Presentation, SOCAP Conference Panel. San Francisco, California,
September 12.
Thomas, M., and N. Burnett. 2013. Exclusion from

Education: The Economic Cost of Out of
School Children in 20 Countries. Results for
Development Institute and Educate a Child.
Pfister, M. 2009. Taxation for Investment and Development: An Overview of Policy Challenges in Africa. OECD.
Ragin Jr., L. (2014). Impact investing: Adding crucial value. In MDGs and Beyond. Development Prospects Group, The World Bank (13)
(January).
Thurlow, R. 2015. States Tap Bonds for Welfare

Programs. The Australian: Business Review
(www.theaustralian.com.au/business/wallstreet-journal/states-tap-bonds-for-welfareprograms/story-fnay3ubk-1227290211271
[April 7, 2015]).
Reynolds, A., J. Temple, S. Ou, I. Arteaga, and B.

White. 2011. School-Based Early Childhood
Education and Age-28 Well-Being: Effects by
Timing, Dosage, and Subgroups. Science
333 (6040) (July 15): 360-64.
Tomkinson, E. 2014a. The Peterborough Social Impact Bond (SIB) Conspiracy. Emma
Tomkinson (blog), October 27 (emmatomkinson.com/2014/10/27/the-peterborough-social-impact-bond-sib-conspiracy/ [May 10,
2015]).
Saltuk, Y. 2014. Spotlight on the Market: the Impact Investor Survey. J.P. Morgan and the
Global Impact Investing Network.
Tomkinson, E. 2014b. Seoul Social Impact Bond

(SIB). Emma Tomkinson (blog), August 14
(emmatomkinson.com/category/social-impact-bonds/ [April 8, 2015]).
Schmidt, E. 2012. Pay Business to Keep People

Out of Prison, Harvard Business Review
(January-February): 64.
So, I. and A. Jagelewski. 2013. Social Impact
Bond Technical Guide for Service Providers.
MaRS Centre for Impact Investing.
Tomkinson, E. 2015. Procurement Processes

for Social Impact Bonds. Emma Tomkinson (blog), January 14 (emmatomkinson.
com/category/social-impact-bonds/procurement-social-impact-bonds [April 8, 2015]).
Social Finance U.S.. n.d. The United States: State

and Local Activity: A Snapshot. Social Finance
U.S (www.socialfinanceus.org/social-impactfinancing/social-impact-bonds/history-sib-market/united-states [April 8, 2015]).
UNESCO Institute for Statistics and Global Monitoring Report. 2011. Out of School Children:
New Data Reveal Persistent Challenges. Issue Brief no. 12 UNESCO Institute for Statis-
142
tics, June (www.uis.unesco.org/FactSheets/

Documents/FS12_2011_OOSC_EN.pdf [accessed April 8, 2015]).
Utah State Legislature. 2014. HB 96 School Readiness Initiative from 2014 General Session.
Utah State Legislature. (le.utah.gov/~2014/
bills/static/HB0096.html [March 25, 2015]).
UNESCO. 2012. At Least 250 Million Children

of Primary School Age Are Failing to Learn
the Basics. Technical report prepared for the
Education for All Global Monitoring Report
2012. UNESCO.
The White House. 2015. Improving Outcomes

through Pay for Success. White House
(www.whitehouse.gov/sites/default/files/
omb/budget/fy2016/assets/fact_sheets/improving-outcomes-through-pay-for-success.
pdf [March 23, 2015]).
UNESCO. 2015. Pricing the right to education:

the cost of reaching new targets by 2030,
Education for All Global Monitoring Report,
Policy Paper 18.
World Bank. 2003. World Development Report

2004: Making Services Work for Poor People. World Bank.
United States Department of Justice. 2012. Justice Department Announces $58 Million to
Improve Reentry Outcomes. United States
Department of Justice, October 1 (www.justice.gov/opa/pr/justice-department-announces-58-million-improve-reentry-outcomes
[March 23, 2015]).
World Health Organization. 2013. World Malaria

Report 2013. World Health Organization.
143
ENDNOTES
1. UNESCO Institute for Statistics and Global
Monitoring Report (2011).
2. UNESCO (2012).
3. Thomas & Burnett (2013).
4. WHO (2013).
5. CDC (2014).
6. Gallup & Sachs (2001).
7. Pfister (2009).
8. Filmer & Pritchett (1999).
9. World Bank (2003).
10. For clarity, impact bonds, despite the name,
are not bonds in the traditional definition of
a bond.
11. Burand (2013); Center for Global Development and Social Finance (2013);
Bloomgarden, Eddy, & Levey (2014).
12. Conversion rate as of June 1, 2015.
13. This includes only investors with assets under
management of $10 million or above.
14. Saltuk (2014).
15. Liersch (2015).
16. The term social impact bond has also been
used for issuance of traditional, fixed-yield
bonds to raise capital for social programs.
This differs from the definition of social impact bond used in this study, in that this
study defines social impact bonds to be arrangements where payments to investors are
dependent on and positively correlated with
positive outcomes.
17. Center for Global Development and Social Finance (2013).
18. Gustafsson-Wright, Golden, & Aigner-Treworgy (2015).
19. Instiglio, Thomson Reuters Foundation, and
Baker & McKenzie (2014); Burand (2013).
20. Instiglio, Overview, Personal communication (2013).
21. Tomkinson (2015).
22. Government of the UK (2014).
23. Goodall (2014).
24. A special purpose vehicle (SPV) is a legally
independent body established for a specific
exchange of assets or liabilities. SPVs are often limited liability companies (LLCs).
25. There are no for-profit business service providers to date; however, there are examples
of all of the other types of entities including
a for-profit social enterprise service provider
26. Special purpose vehicle/limited liability company

27. Conversion rate as of June 1, 2015.
28. Not including the six impact bonds announced in mid-March 2015.
29. Note that this pie chart could be divided up
differently. We use the outcomes of focus as
the differentiating factor.
30. For an excellent portrayal of costs included in
the deal, see Goodall (2014).
31. The contract for the NYC ABLE Project for Incarcerated Youth is not publicly available.
32. Social Finance U.K. (2014b).
33. Tomkinson (2014a).
34. In the Massachusetts Juvenile Justice SIB, both
senior and subordinate investors have the opportunity to earn success fees, while in the SIB
in Ohio only the subordinate investors do.
35. Referring to the 8-12% expected annual interest for the Essex Family Therapy SIB
36. Social Finance U.K. (2014a).
37. Thurlow (2015).
38. Anderson, J. & A. Phillips (2015).
39. Conversion rate as of June 1, 2015
40. Tomkinson (2014b).
41. New Zealand Ministry of Health (2015).
42. Bertha Centre for Social Innovation, University of Cape Town, South Africa, personal communication, 2015.
43. Simon Bell, Sector Manager, World Bank, interview, April 2015.
44. Goodall (2014); Bloomgarden, Eddy, & Levey
(2014); Godeke & Resner (2012); Hughes &
Scherer (2014); Callanan et al. (2012); Mulgan, Reeder, Aylott, & Bosher (2011); Barclay & Symons (2013); Social Finance U.S.
(2012); Center for Global Development & Social Finance (2013); Liebman (2011).
45. Social Finance U.S. (2012); Mulgan, Reeder,
Aylott, & Bosher (2011); Barclay & Symons
(2013); Godeke & Resner (2012).
46. Goodall (2014); Social Finance U.S. (2012);
Mulgan, Reeder, Aylott, & Bosher (2011);
Godeke & Resner (2012).
47. Hughes & Scherer (2014); Mulgan, Reeder,
Aylott, & Bosher (2011).
48. Olson (2014).
49. See, for example, Chandy, Hosono, Kharas,
& Linn (2013).
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
61.
62.
63.
Conversion rate as of June 1, 2015

Conversion rate as of June 1, 2015
Hall (n.d.)
Corporation for National and Community Service (2015).
Nonprofit Finance Fund (2015); Congressman Todd Young (2015).
Harvard University (2015).
United States Department of Justice (2012);
Corporation for National and Community Service (2015).
Government of New South Wales (2015).
Government of Canada (2015).
Government of the UK (2013).
Interview with Liya Schuster, Third Sector
Capital. May 14, 2015.
Schmidt (2012).
See Center for Global Development and Social Finance (2013), which introduces to the
field the concept of the development impact
bond.
Burand (2013); Hughes & Scherer (2014).
64. Social Finance U.S. (2012); Godeke (2013);

Ragin (2014).
65. Social Finance U.S. (2012); Godeke (2013).
66. Dickens & Baschnagel (2009)
67. Gertler, Heckman, Pinto, Zanolini, Vermeersch, Walker, Chang, & Grantham-McGregor (2014)
68. Eames & Terranova (2014).
69. Anderson, J. & A. Phillips (2015).
70. Social Finance U.S. (2012).
71. Malaria No More (2015).
72. UNESCO (2015).
73. Chandy, Hosono, Kharas, & Linn (2013).
74. Interview with subject who requested anonymity, January 2015.
75. Social Finance U.S. (2012).
76. Burand (2013).
77. See discussion of Mexicos Progresa/Oportunidades on page 27 of Jones (2009).
78. Four SIBs use two methods, one SIB uses
three methods and two SIBs have not made
their evaluation method publicly available.
145
1775 Massachusetts Ave., NW

Washington, D.C. 20036
brookings.edu

Impact Bondsweb

Uploaded by

Copyright:

Available Formats

Impact Bondsweb

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Impact Bondsweb

Uploaded by

Copyright:

Available Formats

The Potential and Limitations

Intractable Social Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2. Impact Bond 101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3. A Landscape of Existing Social Impact Bond Transactions . . . . . . . . . . . . . . . . . . . . .

4. What Does It Take to Get the Deal Together? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5. 10 Common Claims about Impact Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

The authors would like to thank numerous people

The Brookings Institution is a private non-profit

Advisory Panel Members

deaths.4 Direct costs of malaria related to illness,

overnments, nonprofit, nongovernmental, and

1.2 Inadequate Resources and Delivery Failure

In the case of education, for example, momentum

provide quality services, and insufficient demand

decades. However, impact bonds differ in several

1.4 Contribution of This Study

1.3 A New Approach to Address Social

This study provides:

An analysis of the stakeholder motivations,

A comprehensive inventory of all active

A critical examination of 10 positive claims

An analysis of the future potential of impact

2. IMPACT BOND 101

mpact investing, a way of investing that seeks

foundation is the outcome funder as opposed to

2.1 Impact Bond Feasibility Criteria

reason, the simpler the outcomes to measure, the

Evidence of success in achieving outcomes: Evidence of success in achieving outcomes should

Reasonable time horizon to achieve outcomes:

Figure 1. Impact Bond Feasibility Criteria

have contract protections and are incentivized to

2.2 Basic Impact Bond Structure and

Figure 2. Impact Bond Mechanics

6. Pay for Success

2.3 Variations on the Impact Bond Structure

Table 1 provides a more varied description of the

Table 1. Impact Bond Actors and Roles

EXAMPLES OF POTENTIAL TYPES

Nonprofit or nongovernmental organization,

Provide data related to service provision and

Provide capital to service providers upfront or Individual, trust, foundation, (impact)

Possible: Raise capital, structure deal, establish

Nonprofit (financial structuring entity

Pay for outcomes

Government agency, foundation,

Assess outcomes of program

Independent evaluation firm, research

Validate rigor of evaluation to assess

Independent evaluation firm, research

Advise on structure of deal, represent various

Advise outcome funders (governments)

Nonprofit or nongovernmental organization,

Source: Authors research.

rigor of the outcome evaluation. The bolded text in

(SPV)24 is created as a conduit for funds in the deal

Today, there are two general models in which

Table 2 provides a full description of the actors

Table 2. Types of Impact Bond Structures and Actor Roles

ACTOR RESPONSIBLE BY TYPE OF IMPACT BOND STRUCTURE