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$5.3 Million 'Social Impact Bond' Fund For Latin America Launches
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$5.3 Million 'Social Impact Bond' Fund For Latin America Launches

Apr 13 2014, 2:26pm CDT | by

Social Impact Bonds are coming to Latin America and the Caribbean. Following the lead of the U.K. , the U.S., and other places, the Inter-American Development Bank (IADB), which provides development...

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15 weeks ago

$5.3 Million 'Social Impact Bond' Fund For Latin America Launches

Apr 13 2014, 2:26pm CDT | by

Social Impact Bonds are coming to Latin America and the Caribbean.

Following the lead of the U.K. , the U.S., and other places, the Inter-American Development Bank (IADB), which provides development financing for Latin America and the Caribbean, recently announced that its Multilateral Investment Fund (MIF) is testing out the new approach with a $5.3 million program.

The IADB provides loans, grants, and technical assistance to the region, while The MIF works with innovative, somewhat riskier projects.

Social Impact Bonds, which I’ve written about before, are a new way for socially minded private investors to work with governments and nongovernmental organizations or other service providers addressing deeply rooted problems among low-income or vulnerable populations. The particular issue that’s targeted depends on the society and culture involved. A recent one in Massachusetts, for example, aims at curbing recidivism among young inmates. Whatever the problem, the outcomes must be measurable.

They’re also known as Pay for Success, because, if the project reaches its goal as determined by a third-party evaluator, the government pays back donors with a small profit. If those objectives aren’t reached, there’s no return. So governments and taxpayers only pay up if a program is successful in addressing a particular problem.

I like this definition from the Center for American Progress:  Social Impact Bonds are “an arrangement between one or more government agencies and an external organization where the government specifies an outcome (or outcomes) and promises to pay the external organization a pre-agreed sum (or sums) if it is able to accomplish the outcome(s).”

According to Zachary Levey and George Neumann, associates with the MIF, the organization is the first development finance institution to support social impact bonds. The program, which is in its early stages, will include $2.3 million in grants to build a social impact bond ecosystem with all the players needed to be successful and $3 million in investment capital to help launch up to three pilots. The goal, says Levey, is to be the “anchor investor”, thereby giving the project the organization’s crucial blessing and making public and private sector participants more confident in the outcome.  The first investment might be made by early next year.

The organization still hasn’t pinpointed the countries or issues. But in any case, the areas need to have experience with public-private partnerships (PPPs) and a solid regulatory framework around PPPs, along with  well developed financial markets, capable service providers, and availability of historic data on social sector issues. Some early candidates include Brazil, Uruguay, Mexico, Colombia, and Chile.  

Social ills to target could include anything from preventive health to violence against women, depending on the country.  For more research  into the question, here‘s a white paper the MIF co-wrote with Instiglio, a nonprofit social impact bond intermediary based in Boston and Medellin, Colombia, called Social Impact Bonds in Education in Latin America and the Caribbean. 

Just to make things more confusing, there’s another financial mechanism called a Development Impact Bond, which is a spinoff of the Social Impact variety, but applied to the development and aid sector. Instead of the government being the payer, a donor agency, such as USAID, plays that role. The MIF’s approach is to focus on the Social Impact Bond model, though  it might consider a hybrid, in which a third party and government provide part of the outcome payment. It’s early days.

 
Update
10

7 weeks ago

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Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the ...
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Update
9

7 weeks ago

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KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken in ...
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Update
8

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KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by ...
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Update
7

7 weeks ago

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Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Se ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selat ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 m ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minist ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

8 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocati ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

8 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Scheme 2014 ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

8 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billio ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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