"SOCIAL IMPACT BONDS": IMPLICATIONS FOR GOVERNMENT AND NON-PROFIT ORGANIZATIONS

In recent years the weak economy has forced state and local governments to cut back on funding for existing programs and limited investments in new services. All levels of government routinely partner with not-for-profit organizations to provide social services and this cutbacks can have serious implications for service delivery and not-for-profit capacity. One very exciting response to these pressures is the development of a new financing model that raises private money to fund effective social services: the Social Impact Bond (SIB). This new method involve the formation of new partnerships and the re-alignment of roles for the first and third sectors. The purpose of this paper is to provide an overview of the challenges that developing and implementing Social Impact Bonds may produce both on the public administration (PA) and on not-for-profit service providers (NPOs). Social Impact Bonds ask governments and not-for-profit service providers to almost completely rethink the way they do business.