Benefits
Social impact bonds increase the pool of capital available for social interventions by
tapping into private finance, but that is not the only benefit they may bring. Proponents
of social impact bonds suggest that involving investors who are knowledgeable and
experienced in business brings new rigour and discipline to the supply of social services.
Private-sector financial organisations are also considered by some to be better at
identifying good risks than many third-sector organisations and private companies are
thought to be more innovative and responsive than
public-sector services. The focus on results is also
considered to help with alignment of objectives
between different partners in social interventions
including the service providers. Charities can become
more effective by using investment to scale up their
services, to develop new projects or to smooth out
uneven cash flow.