PLY: It’s DIBs in the emerging world alongside a couple of interesting articles from the monthly Spear’s related to the state of the UK SIB market…
The Next Wave Of Development Finance Innovation
Naki B. Mendoza – devex
Development impact bonds – An offshoot of social impact bonds, they are an emerging option to link commercial finance with development goals. They are results-based contracts in which an investor provides upfront capital and is paid back principal plus a return if certain targets or objective are met. These objectives are often sustainability targets or results linked to social programs and development initiatives.
Development impact bonds are not bonds in the traditional sense in which coupon or interest payments come at fixed intervals. Repayment is contingent on the achievement of specified social outcomes, with a possibility that an outcome may not be achieved altogether. Development impact bonds therefore more closely resemble an equity investment than a conventional debt instrument.
UBS and Rajasthan, India-based NGO Educate Girls are currently involved in the world’s first and only commercial-scale development impact bond. The Swiss banking giant is the principal investor, providing $238,000 over a three-year period that goes towards funding educational programs and boosting primary school enrollment rates in India. Under the arrangement, Educate Girls is the service provider
and operates a program that aims to enroll 3.4 million children in primary schools across 10,000 villages in India.
Basement Start-Up Big Society Capital Became The Envy Of The World For Social Investment
Spear’s
Stepping down after five years at Big Society Capital, CEO Nick O’Donohoe reflects on how he built a bank into a national powerhouse and global model which helps the UK’s neediest.
How The UK Is A World Leader In Philanthropy
Spear’s
London is also blazing a trail on the social investment scene. Social impact bonds (SIBs), launched in London in 2010 by Social Finance, are now in nine countries, used in more than 45 projects and worth hundreds of millions of dollars. They fund the provision by the charitable sector of public services; if, for example, recidivism is reduced by the charity, the government pays them a performance bonus.