From Potential to Action: Bringing Social Impact Bonds to the US

Early and often-cited report on US SIB development by McKinsey: There is considerable buzz in the United States about whether a new “pay for success” model of financing social solutions currently being piloted across the Atlantic could work on American soil. It’s called a social impact bond (SIB), and the first—in fact, the only so far—was launched in September 2010 by an organization called Social Finance UK. Play Video Video SIBs are structured to get proven solutions to scale with no risk to public budgets—governments pay for the solutions only if they work. But despite this risk shifting, a SIB’s structure involves several actors—each charging a fee or return. As a result, this tool is a more expensive way to scale programs than if government simply contracted directly with a service provider. These additional costs will be worth it in many cases, but SIBs won’t be suited to every situation.