Social Impact Bond - SIB
 |
Definition of 'Social Impact Bond - SIB'A contract with the public sector or governing authority, whereby it pays for better social outcomes in certain areas and passes on part of the savings achieved to investors. A social impact bond (SIB) is not a bond, per se, since repayment and return on investment are contingent upon the achievement of desired social outcomes; if the objectives are not achieved, investors receive neither a return nor repayment of principal. SIBs derive their name from the fact that their investors are typically those who are interested in not just the financial return on their investment, but also in its social impact. |
 |
Investopedia explains 'Social Impact Bond - SIB'In 2011, Peterborough Prison in the United Kingdom issued one of the first social impact bonds anywhere in the world. The bond raised 5 million pounds from 17 social investors to fund a pilot project with the objective of reducing re-offending rates of short-term prisoners. The relapse or re-conviction rates of prisoners released from Peterborough will be compared with the relapse rates of a control group of prisoners over six years. If Peterborough's re-conviction rates are at least 7.5% below the rates of the control group, investors receive an increasing return that is directly proportional to the difference in relapse rates between the two groups and is capped at 13% annually over an eight-year period. |
Related Definitions
Articles Of Interest
-
Change The World One Investment At A Time
Socially responsible investing allows you to express your political views in an unlikely way. -
Go Green With Socially Responsible Investing
Find out how morals and ethics can bring you a surprising return. -
Socially (Ir)responsible Mutual Funds
Not concerned about being an ethical investor? Maybe "sinful stocks" have a place in your portfolio. -
Socially Responsible Mutual Funds
It is possible to avoid unethical investments and still profit from mutual funds. Find out how! -
Socially Responsible Stocks: Do Good Deeds Punish Profits?
Socially responsible investing doesn't mean accepting lower returns. Find out why squeaky-clean stocks shine as investments. -
Green Investors Get Heard
Find out how to make your portfolio and the companies in it greener. -
Socially Responsible Investing Vs. Sin Stocks
Can your principles make you richer or poorer? Find out if it pays pick your portfolio based on ethics. -
The Basics Of The T-Bill
The U.S. government has two primary methods of raising capital. One is by taxing individuals, businesses, trusts and estates; and the other is by issuing fixed-income securities that are backed ... -
Introduction To Commercial Paper
Commercial paper is a short-term instrument that can be a viable alternative for retail fixed-income investors looking for a better rate of return on their money. -
Why Your Pension Plan Has Sovereign Debt In It
One type of security pensions tend to invest in is sovereign debt, or debt issued by a government.
Free Annual Reports