Glossary Term

Social Impact Bond

A performance-based investment mechanism bringing together government, service providers, and investors in a contractual relationship to provide the capital needed to achieve some desired social outcome. Investors provide funding, often through a coordinating intermediary, to a service provider such as a nonprofit organization. If the provider achieves certain outcomes goals and measurable results, then the government pays financial returns to the investors based on the cost-savings the government realizes because of this success.

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