The following definition that was created during my time at the Centre for Social Impact Bonds at the UK Cabinet Office in 2013.
A Social Impact Bond (SIB) is an arrangement with four necessary features:
- a contract between a commissioner and a legally separate entity ‘the delivery agency’
- a particular social outcome or outcomes which, if achieved by the delivery agency, will activate a payment or payments from the commissioner
- at least one investor that is a legally separate entity from the delivery agency and the commissioner
- some or all of the financial risk of non-delivery of outcomes sits with the investor