Leverage may sound worrying but I mean it most sincerely: a good article to start the week which discusses how private capital can leverage the reach of government for the benefit of society…
Also apologies, I am a little behind in replies after a couple of days of illness this week. Thank you for your patience and, as always, your feedback!
SIBs: Partnering With Government To Go Beyond Dollars
Tamara Copeland – Daily Wrag
If you’ve been following WRAG for awhile, you know our mantra about effective philanthropy: it goes “beyond dollars.” That is, philanthropy lives up to its potential for impact when it leverages all of its resources. One way that funders do this is by taking risks. Another is by forging innovative cross-sector partnerships. Social impact bonds are a vehicle through which funders are embracing both of these roles to go beyond dollars with their philanthropy.
For the uninitiated, a bit of a primer: “Social impact bonds” aren’t bonds at all. They’re contracts between government, service providers, an intermediary, and one or more investors – such as philanthropy. The premise is that, in instances where a social problem is both deeply entrenched and expensive to address, the government can save taxpayer dollars by having an investor finance a social service that is typically paid for by the government. If the service is effectively rendered and the problem is remediated, the investor receives a financial return and the government saves the funds that would have otherwise been spent on the service.