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- Rather than rely on handouts by cash-strapped governments, private investors step in to provide money through a financing tool known as a social impact bond.
The investors – most of them philanthropic organizations and entrepreneurs – provide upfront capital to deliver social services and only get a return if the program achieves predefined results.
The approach, also known as "pay for success," is motivated by a simple set of questions: How can public services ensure they are accomplishing what they set out to achieve and can prove they are effective to prompt more investment?