One buyer scoops the entire issue for Richmond, California’s first SIB, an interesting residential twist to the model:
Mechanics Bank Purchases Richmond’s First Social Impact Bonds
PRWEB
Mechanics Bank has signed the agreement to purchase the full $3 million issue of Social Impact Bonds (SIBs) that Richmond Community Foundation (RCF) will use to acquire, rehabilitate and sell blighted homes throughout the city of Richmond. It’s the first time SIBs have been used for this purpose.
“Mechanics Bank jumped at the opportunity to participate in this innovative program,” says Ken Russell, the bank’s CEO. “Not only is it in keeping with our long history of innovations in finance, but it also is in keeping with our community banking mission. With our deep ties to the Richmond community spanning more than a century, we welcome the chance to give back to a city that helped us get established.”
“We appreciate Mechanics Bank’s willingness to step up and partner with the Richmond Community Foundation,” says Richmond Mayor Tom Butt. “This is the right solution for dealing with long term blighted homes in Richmond. Banks often stand by and abandon their own blighted homes in our community. Mechanics Bank is doing something different with this innovative effort.”
Social impact bonds blend private investments and charity to effect social change. Investors provide low-interest loans to non-profits to fund programs designed to address social issues. If the programs succeed and earn a profit as a result, the profits are both recycled to fund continuing work and used to repay the investors. Investor profits usually are capped, and are not guaranteed by taxpayers. They are paid solely from the revenues generated from the sale of the rehabilitated properties.