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Attracting investors for public health programmes with Social Impact Bonds

Elaine de Gruyter, Dennis Petrie (), Nicole Black and Philip Gharghori ()

Public Money & Management, 2020, vol. 40, issue 3, 225-236

Abstract: Social impact bonds (SIBs) have emerged as an innovative financing mechanism. This paper explores how health SIBs align with investors’ expectations and the conditions required to attract investors. At present, health SIBs are unlikely to provide sufficient financial returns given their financial risk to attract mainstream investors, so may be better suited to investors who are prepared to accept lower financial returns blended with particular health impact returns.If SIBs are to become a sustainable financing mechanism, investors’ concerns need addressing. This paper explores the conditions required for SIBs to attract capital to make planning and development worthwhile. Attracting a wide base of capital may not be feasible because many investors still seek at least market rate returns, which is unlikely for many SIBs. Commissioners could instead target selected investors who are prepared to accept lower financial returns at a higher risk blended with impact returns. This could include maximizing potential impact returns and reducing exposure to financial risk.

Date: 2020
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DOI: 10.1080/09540962.2020.1714312

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