U.K. Government Expands Test of ‘Social-Impact Bonds’

The British government is starting a new round of pilot programs testing the use of “social-impact bonds” to raise private money for new efforts to fight crime and poverty, the BBC and Third Sector Online write.

Britain has pioneered the use of social-impact bonds, which seek to reduce government spending on new social programs by enlisting philanthropists, charities, and other private interests to invest in them and potentially earn a return if the programs meet predetermined results. The Obama administration and some state governments are also exploring the concept.

U.K. officials are hoping to raise some $65-million for programs to work with low-income families in two London districts and the Birmingham and Leicestershire regions of England.

“Social-impact bonds could open serious resources to tackle social problems in new and innovative ways,” said Nick Hurd, Britain’s civil society minister.