Social Impact Bonds

Abstract

The aim of the dissertation is to provide an analysis of the Social Impact Bond phenomenon, by highlighting the innovative nature of this instrument: it belongs to that line of finance with a social impact which joins the more traditional one. The analysis of SIBs is carried out by focusing on their objectives, their operating structure and their combination of financial returns and social impact. The paper starts with an analysis of the macro Impact Investing areas, namely the set of investments intended to generate a quantifiable impact at a social, environmental and financial level as well . This innovative type of finance has recently gained much popularity thanks to a reassessment of the role of finance in support of economic and social progress. The most outstanding feature of these investments is the intention of producing an effect in the social sphere, renouncing to high returns. A third dimension, social impact, is thus added to those of risk and return, which have traditionally determined investment decisions. The paper deals with the birth of the idea of a finance aimed at social service, it examines the forms of Impact Investing, that is its instruments and concentrates on what is defined as the Impact Investing market framework. There is a detailed scrutiny of offer and demand in order to arrive to a study of the third dimension. Being the Social Impact Bonds the central theme, a mapping of the projects already launched worldwide is provided and some case studies are presented. This is followed by an analysis of these instruments in Italy, by a study of the current regulations and of the third sector reform, which opens up the way to the possibility of adopting these instruments in the Italian context. The existing social finance instruments are also examined.