What are social impact bonds?

Social Impact Bonds (SIBs) are a type of financial instrument where private investors fund social programs, and the government repays them only if the project achieves agreed-upon outcomes. They are not actual bonds but performance-based contracts. For example, investors might fund a program to reduce school dropout rates. If dropout rates decrease successfully, the government pays back the investors with a return. If the goals aren't met, investors may lose money. SIBs encourage innovation in public services by tying funding to measurable results. In India, SIBs have been explored in areas like education, healthcare, and sanitation. The success of SIBs depends on clear metrics and reliable evaluation. They offer a win-win model: governments save money by paying only for success, and investors contribute to positive social change while potentially earning returns.