A Social Impact Bond (SIB) is a pay-for-results contract signed between a public administration and impact investors, used to finance innovative solutions to specific social problems. The mechanism permits overcoming barriers to experimentation in the public sector, as the administration only repays the capital contribution with financial returns if the intervetion generates the expected results, thus transferring the risk of failure to private investors.
- As of 2018, the model has expanded at the global level, with 108 bonds in 22 countries.
- SIB have been used to tackle challenges related to unemployment, health, homelessness, children at risk of exclusion, justice and drug addiction.
- The first SIB, launched by the Ministry of Justice of the United Kingdom in the city of Peterborough, reduced reoffending of short-sentenced offenders by 9%: a figure that exceeded the target of 7.5% initially set by the Ministry.
UpSocial, in partnership with Creas, Social Finance UK and Inuit, is promoting the implementation of this model in Spain. The City Council of Barcelona and the Government of Navarra are already studying the feasibility of issuing the first SIB.
In Barcelona, the options of implementing a SIB are being explored with the aim of maximising the social and labour opportunities of care leavers and lowering the probability of being excluded and depending on social welfare throughout their adult life.