Home > consumer loans > lower crime rates and higher investment returns: what’s the connection?

lower crime rates and higher investment returns: what’s the connection?

 Social Impact investing is the new buzzword in social enterprise circles in the UK today. Impact investing basically refers to the process of financing long-term social programs that tackle social problems, but that are supported by government and only on their success do investors make a financial return.  This is done through a social impact bond which is a financial instrument created by Social Finance (a London Private Equity Fund), this bond is sold to private investors and institutions and only pays out a return if the programs it has invested in (eg lower conviction rates for criminals, reducing homelessness and Teen pregnancies etc)  actually show improvement. In this way investors are actually able to get richer by doing good. 300million has already been poured into social investment in Britain and the social investment market is itself estimated to grow in  the next decade to over 500 billion dollars.  The idea is catching-on, Obama’s white house has put aside funds to fund trials of similar bonds for the next fiscal year.

This is very interesting space that combines the need for solving the world’s problems but with an underlying commercial incentive, in other words a totally win- win scenario, let’s watch what happens when the US catches on this very innovative idea……

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