NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, May 9, 2014

At a recent program of Georgetown Law School and Independent Sector on the for-profit social enterprise dynamic in the U.S., the gap between the hype and the reality of social impact bonds was evident. A presenter from Social Finance acknowledged that for all of the years of hype, there are only four Social Impact Bond projects actually operating in the U.S. There may be more in the works, but the breathless endorsement of the concept in the U.S. relies on an exceptionally thin repertoire of SIB experience—of which not one has reached even an interim payment point.

That contrasts somewhat with the constant drumbeat of promotional articles, white papers, and reports on the upside of social impact bonds, which have been endorsed by a number of states and by the Obama administration (as “pay for success,” since, strictly speaking, social impact bonds aren’t really bonds at all).