Government’s plan to test social impact bonds signals growing US interest from both public and non-profit sectors

The US government is exploring the use of social impact bonds as a means of encouraging greater efficiency in the delivery of social services. The idea, which is currently being tested in a pilot to reduce reoffending in Peterborough prison by Social Finance in the UK (see the interview with Sir Ronald Cohen on the Alliance website, 1 January 2011), essentially involves foundations and non-profits putting up initial funding for a project with government reimbursement, and the possibility of a ‘return’ if the project meets certain goals.

According to the New York Times, President Obama is to launch seven pilot schemes, which would issue a total of $100 million in bonds to support programmes in the areas of job training, education, juvenile justice and children’s disabilities. Officials in Massachusetts and New York City are reportedly looking at similar funding mechanisms without, however, so far committing themselves.

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