The Social Impact Bond: investing in others

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The Social Impact Bond is a promising tool that puts private funds to work to help solve social problems. It represents a business boost for social projects and gives investors an opportunity to support social projects and turn a profit all at the same time. In effect, Social Impact Bonds are proof that sustainable enterprise can also be financially rewarding.

The return on Social Impact Bonds

A Social Impact Bond (SIB) gives government agencies more opportunities to address social issues. Rather than simply paying out benefits, these agencies can now forge close project-based partnerships with administrators, investors and, in some instances, intermediaries. These projects focus on long-term sustainability and financial results. That’s why clear agreements on the objectives are made right from the start.

Although they bear the financial risk, private investors can also be rewarded for doing so. At the end of the SIB process, an independent party, like Panteia or Deloitte, determines whether the goals have been met. If not, the investors are out of pocket. But if the project is successful, the state pays out with interest.

Social Impact Bonds versus state benefits

SIBs have a number of advantages over benefits.

Government agencies invest without incurring any financial risk
SIBs allow the state to tackle social issues without assuming financial risk. It pays out only once the project is finished, and only if it’s a success. SIBs allow the state to achieve a social goal while remaining budget-neutral. 

Focus on social results
Key to such collaborations between investors and the state are firm agreements from the outset about which social results payment will be contingent on and how those results will be assessed. Crucially, assessments are based on positive effects and tangible results, not on perceptions. At the same time, though, it’s important not to reduce sociopolitical issues to mere numbers. 

More scope for innovation
A contract with a municipality is less rigid in an SIB. The social entrepreneur or foundation carrying out the project is given greater freedom to decide how they wish to achieve the objectives set. If the project isn’t going to plan, there’s sufficient scope to make gradual course corrections, which improves the chances of success for innovation in the public sector.

What SIBs are currently active?

At the moment, seven SIBs are active in the Netherlands, five of which ABN AMRO has invested in. Three of these also aim to help young people into work.

  1. SIB Buzinezzclub Rotterdam
    The Netherlands’ first Social Impact Bond was created in Rotterdam on 19 December 2013, when the Start Foundation and ABN AMRO joined forces, both investing €680,000 in the Buzinezzclub. This organisation aims to help young people in Rotterdam who are on state benefit to find a job, enrol in training or start their own business. Participants work through an intensive process attending group training sessions and workshops, and doing work placement. They can also take advantage of an extensive network and receive personal coaching from professionals in the field. Plus they’re given additional guidance for a full year after their time at the Buzinezzclub. This approach allows participants to get off benefits faster than the average person. The state pays investors from the money saved as a result of the programme.
  2. SIB Buzinezzclub Utrecht
    Following the success in Rotterdam, the second Dutch Social Impact Bond was launched in Utrecht at the end of 2015 – again with the Buzinezzclub. This SIB helps young people secure a successful future, offering them support over a three-year period. Even if they happen to become unemployed again, they can still count on the Buzinezzclub. With its unique approach, this SIB creates stability and future prospects for young people who need them the most.
  3. The first nationwide SIB: Werk na detentie (Work after prison)
    The Dutch Ministry of Security and Justice, ABN AMRO, the Start Foundation and the Oranje Fonds are together investing over €1.2 million to help former inmates into work. As a result, participants are less likely to return to crime and will rely on benefits for a shorter period of time.
  4. SIB Buzinezzclub Eindhoven
    In June 2016, the very first Social Impact Bond in the city of Eindhoven was created. The Buzinezzclub and the Start Foundation are investing over €1.7 million to help local youth into work. As a result, some 100 young people in the city will be able to take part free of charge in the intensive Buzinezzclub programme each year until 2019.
  5. SIB Boas Werkt, Enschede
    The Dutch municipality of Enschede has a relatively high unemployment rate, while neighbouring municipalities just over the border with Germany are facing a labour shortage. Despite the close proximity, few in Enschede work in Germany. Social entrepreneur Boas Werkt and the German district association of craftspeople, the Kreishandwerkerschaft, want to change this. The total investment is €1.2 million. ABN AMRO and the Start Foundation are both contributing half the amount.

ABN AMRO provides consultancy services based on a proven track record

ABN AMRO introduced Europe’s very first Social Impact Bond back in 2013, and has launched and invested in a number of other SIBs over the last three years. The bank shares its newly acquired knowledge through blogs, publications and lectures.

ABN AMRO Public Sector Clients helps municipal authorities create SIBs. The bank also invests in SIBs via the ABN AMRO Social Impact Fund. Additionally, ABN AMRO puts interested parties in touch with procurement professionals, Dutch municipalities having previously participated in an SIB process, or UK colleagues with experience in SIB procurement.

We look forward to telling you more about SIBs

Are you a social entrepreneur or an investor, or do you work for the state? Do you see opportunities to make a social difference through social impact bonds? Why not drop us a line at


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