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Social Impact Bond Launches in U.S. Backed By Goldman Sachs, Mike Bloomberg Billionaires See Profit in Prisons, But It's a Good Thing This Time

The money men at Goldman Sachs join NYC's Billionaire-in-Chief to use creative finance for good. The Social Impact Bond has come to America!


Goldman Sachs is making an unusual loan: $9.6 million to help young men stay out of New York City jail. And they could earn millions on the deal. But it's taxpayers more than shareholders who should be pleased with the plan.

New York City Mayor Michael Bloomberg proudly announced a new kind of City spending yesterday. "As the first city in the nation to launch a Social Impact Bond, we are taking our efforts to new levels and we are eager to see the outcome of this groundbreaking initiative,” he said in a statement. As Bloomberg and Goldman go, expect other banks and mayors to follow.

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Pay for Success: How a New Kind of Bond Could Save Taxpayer Money and Improve Social Services

The White House has big plans for a new idea to funnel private money into social work.


Two federal agencies will steer tax money for social programs through a new for-profit investing tool tested in the United Kingdom and Australia, according to a report co-authored by the White House and the Nonprofit Finance Fund.

Rather than providing social services directly, the bonds will allow the government to task a firm in the private sector to solve a public challenge, paying the company only if it achieves certain success metrics. Using pay-for-success bonds could save taxpayer money, earn a profit for impact investors, and incentivize innovation to solve chronic social challenges. In the United States, this is all theoretical at this point, but 2012 may be the year that changes.

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Meet The White House's Resident Social Entrepreneur

Jonathan Greenblatt has big plans for the White House Office of Social Innovation and Community Service. First up: Listening.


As new hybrids of philanthropy and business exercise growing economic power, the White House’s top adviser on do-goodery wants to increase the government’s support for social enterprise.

In the bright first months after his inauguration, President Barack Obama launched the White House Office of Social Innovation and Civic Engagement, a bureaucratic grab-bag with responsibilities for community service, investing in successful and innovative community initiatives, and “new models of partnership.”

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