Despite billions of dollars and millions of people trying to address social challenges, very little headway has been made due to resource constraints. ‘Social Finance‘ is a recent finance innovation model, co-founded by CEO Tracy Palandjian, with the objective of directing investment toward social interventions that are aimed at preventing problems from emerging, rather than addressing problems after they’ve emerged.
The way it works is through Social Impact Bonds (SIBs). The partners in an SIB — whether it’s government, private investors or social service providers — join forces to generate social and economic value with each social financing project tailored to the very specific and individual strengths of participants.
One example Tracy cites where SIB’s could have significant impact: “Nurse-Family Partnership (NFP) are only able to serve 4% of the 850,000 low-income, first-time mothers across the country every year. Even though NFP and other high-performing providers have outstanding track records of delivering these interventions, existing government and philanthropic resources are inadequate to fund their expansion to meet societal demand.”
At this early stage there are multiple SIB projects in the pipeline across the country and experts estimate the US market could approach $300 million over the next two years.