Oregon officials are studying a new type of bond known as social impact bonds.
Oregon officials are studying a new type of bond known as social impact bonds.
“This is something that I’m absolutely convinced … can dramatically cut down long-term health care costs, collection costs and education costs, while we enhance the ability of government to deliver services,” said U.S. Rep. Earl Blumenauer, a Portland Democrat.
Social impact bonds work like this: an investment bank calculates how much a social problem, such as recidivism, costs a state. The bank issues a bond and raises money from investors. It uses the cash to address the problem. In this case, if recidivism drops, the state splits the savings with the bond investors. If the rate doesn’t drop, investors lose their money.
Read more at Sustainable Business Oregon.
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