Buzzword 2011.1 - Social Impact Bond

It's June 30 - time to roll out some buzzwords.

Social Impact Bonds - (SIBs) these are a new type of financing for nonprofits that comes to us from the UK. These "bonds' involve guarantees for payments for services delivered effectively. There is one being test in the UK, the State of Massachusetts is experimenting with them, President Obama has endorsed them in his 2012 budget as "pay for success." The Nonprofit Finance Fund has a learning hub on SIBs and SocialFinanceUS is a new organization launched to help bring these to the social sector.

Keep an eye on these. We've reached a point in the development of the social economy that this kind of financial product innovation is going to take off. Especially as the relationships between state governments and charities becomes increasingly...difficult.

It's too soon to know how effective these bonds will be for drawing in more capital to the social economy. Regardless, I love this buzzword because the folks talking about them almost uniformly tell you about them and then say that "they're not really bonds." Perhaps there is a better name for them?

Tags: buzzword 2011.1, buzzword2011, #socialimpactbonds, #socialfinance