There are four parties to a SIB – government, a not-for-profit (NFP) organisation, a bond issuer and investors.
The bond issuer raises capital from investors for programs delivered by the NFP. The program delivers improved social outcomes, generating future savings for government. These savings are used to pay investors a reward, in addition to repayment of the principal.
CSI concluded that the SIB concept is feasible in the NSW context, and that NSW has the necessary market conditions for this new funding approach to be piloted, although further work is needed.