The Omidyar Network has announced grants totaling $2.1 million to encourage the use of social impact bonds as a tool to finance sustainable solutions to social problems.
London-based Social Finance Ltd. and its U.S. sister organization, Boston-based Social Finance, Inc. will receive up to $800,000 and $1.3 million, respectively, over two years to expand the use of social impact bonds in the United States, Australia, Canada, Ireland, Israel, and Scotland, as well as in the international development sector.
Social impact bonds are a market-based solution for increasing the amount of private investment capital allocated to proven social programs, thereby reducing the need for costly emergency-response and safety-net services. The government repays investors only if and when the agreed-upon social outcomes have been achieved, as determined by an independent evaluator.
"During a time of increasing social need and diminishing government resources, it is critical for us to engage the capital markets in enabling social progress," said Tracy Palandjian, CEO of Social Finance, Inc. "Social Impact Bonds have the potential to open up new pools of private investment capital and promote collaboration among innovative states, effective nonprofit programs, and socially-motivated investors to drive social impact."