Investors get good returns if the project meets its target
[LONDON] Whether it's tackling reoffending or keeping troubled families together, cash-strapped Britain is turning to a new payment-by-results scheme to provide public services - and selling it to the world.
Three years after they were first conceived, interest in so-called social impact bonds is growing as a way to encourage private investors to take over services from governments battling the aftermath of the financial crisis.
The idea is simple. Philanthropic or business groups put up money for a social project with defined outcomes, such as helping homeless people off the streets, and if it succeeds, the state pays the bill and investors reap the rewards.
If it fails, the investors lose their money and the taxpayer is unaffected.