Social impact bonds : a viable solution to finance social projects? : case study : “aTTitude 3D : Educate, Teach and Integrate”

The aim of this dissertation is to analyze whether Social Impact Bonds are a viable instrument to finance the social project “aTTitude 3D – Educate, Teach and Integrate”. For this purpose, firstly, a literature review was carried out to obtain information regarding Social Impact Bonds, including background information, structure, and market analysis. Secondly, this information was used to conduct an analysis about the main strengths, opportunities, weaknesses, and threats (SOWT analysis) of Social Impact Bonds. The general assessment of this analysis suggested 3 major threats for the continuous development of Social Impact Bonds market: (1) Lack of existing capacity of service providers to scale up social services; (2) Government role, election cycles and change of willingness of government to support social project and/or SIB transaction; and (3) Short pool of investors due to financial risk. Finally, a Case Study was used to analyze the feasibility of a Social Impact Bond to finance a particular social project: “aTTitude 3D – Educate, Teach and Integrate” intervenes in the education area with the objective of reducing retention rates. For this purpose, a financial model was built representing the investment mechanism. The results of the model developed suggested that a Social Impact Bond is a viable instrument to fund and scale this specific project, according to the risk profile (i.e. return and impact) assumed in this thesis for the private investors. Despite this, as already noted from the SWOT analysis, the three major threats were analyzed regarding the sustainability and the practical implementation of a Social Impact Bond model for this specific Case Study