"Pray" for Success: How to Take the Guesswork Out of Social Finance

Published Thursday, May 12, 2016 | by Jason Saul

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In the wake of the Riker's Island SIB failure, are private investors going to continue to be attracted to Social Impact Bond opportunities? Jason Saul argues that Riker's Island and other similarly structured SIBs are bound to scare investors off of future investments. He argues that the fundamental issue behind the way SIBs are structured is that the program measurement happens after the investment has been made and the program is completed, leaving investors without a quantifiable, understandable risk. Additionally, there is no accepted definition of the term "evidence-based," causing confusion as to whether an "evidence-based" program could indeed achieve its intended outcomes. Saul proposes three possible fixes: rating bonds, measuring up front, and rethinking the purpose of a SIB.