Graduation Year

2025

Date of Submission

4-2025

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Government

Reader 1

Shanna Rose

Abstract

Social Impact Bonds (SIBs) are a form of outcomes-based financing that fund social programs by shifting financial risk from the government to private investors. While SIBs have gained international traction, their long-term viability in the United States depends on structural reforms. This thesis examines two completed U.S. SIB projects, Rikers Island in New York and the Just-in-Reach project in Los Angeles, through an analysis of their design, implementation, and outcomes. While both projects focus on criminal justice, they provide context about the scalability of SIBs across multiple social policy areas.The three primary constraints are high transaction costs, limited investor interest, and concerns about project cherry-picking. However, these challenges can be addressed by standardizing contracts and evaluation methods, tiered return structures, tax incentives, improved liquidity through secondary markets, and ensuring SIBs include requirements to serve high-risk populations. This paper explores evolving federal and state policies, including the Social Impact Partnerships to Pay for Results Act (SIPPRA), which provides federal funding for SIBs, and related legislation. It also examines how growing political backlash against ESG investing, which incorporates environmental, social, and governance factors into investment decisions, could impact the future of SIBs. Ultimately, this paper argues that SIBs could have beneficial outcomes for social programs but require targeted reforms to enhance their scalability and public value.

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