Social Impact Bonds: A Response

Abstract

Reeve, Hrynuik, and Devine’s insightful research into social impact bonds (SIB) is very comprehensive and demonstrates the enigma such bonds pose to all investors, not just Christians. SIB investments are relatively new and are designed to fund social justice programs with a twist, focusing on early intervention and prevention via joint private-government solutions. For example, if SIBs could fund a project to reduce the probability of a person becoming homeless, then resources and taxpayer money could be diverted away from building homeless shelters and towards other critical societal needs (programs moving people to employment prior to homelessness occurring). The twist is that SIB investors assume the risk for holding that bond, earning returns only if key benchmarks are achieved (i.e., homelessness is reduced by a certain percentage), and questions still remain how those benchmarks are set.