Definition of Social Impact Bond (SIB)

Financial Terms Beginning with S

What is a Social Impact Bond

A social impact bond (SIB) is a contract with a public sector entity or governing authority where any payments made to an investor is contingent on better social outcomes in certain areas. The payment is the result of passing on part of the savings achieved.

A social impact bond is not like a traditional bond since repayment and the return on investment (ROI) are contingent upon the achievement of desired social outcomes.

Investing in social impact bonds has risen in recent years as a way for investors to give back to the community, as well as a way for companies to expand their social responsibility.

Glossary of Terms and Phrases

A financial dictionary or glossary is an essential tool to better understand the meaning of a specialized term or phrase. It would obviously make life much easier if everyone spoke the same language and used the same financial terms and phrases but that is not realistic.

We learn new languages to communicate with each other, transact business globally and to appreciate other cultures. Global finance is a specialized language that if understood and mastered, it will provide benefits that help to decrease risk and improve investment returns. Financial literacy is the foundation of developing good investment strategies and sound decision making.

Related Investment Terms

Green Bund

Impact Investing

Socially Responsible Investing

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