A Social Impact Bond (SIB) uses private funds – from philanthropy or other investors — to pay for a social, educational, or health programs. Importantly, the government only repays investors, plus a return, if pre-specified results are achieved. A new report by Gordon Berlin, the president of the nonprofit social policy research firm MDRC (@MDRC_News), reflects on the experience of SIB (also called pay for success) projects to date, including the nation’s first SIB at Rikers Island jail in New York City for which MDRC was the intermediary. As the report notes, while SIBs are the social sector’s hottest “impact investing” strategy, they have generated a range of reactions, from excitement to angst.
In our interview, Gordon Berlin reflects on the Rikers Island SIB as well as broader lessons from SIB projects to date, including:
- What types of SIB projects are likely to work best
- The role of evaluation in SIB projects
- Why philanthropy could and should play a central role in SIBs