A glossary of terms associated with social impact bonds
| Term | Definition |
|---|---|
| Beneficiary | The person that needs or benefits from the services being provided |
| Commissioner | An individual or organisation prepared to pay if specific outcomes are achieved; historically, this is typically a government body, but it could be any type of funder |
| Delivery Model | The way in which the service is delivered: by whom and on what basis. For example, ‘outsourcing’ is one delivery model |
| Delivery Organisation | An organisation delivering a programme which aims to achieve positive social outcomes; typically, a charity or social enterprise (also known as “service provider”) |
| Investor | An individual or organisation providing up-front financing to the delivery organisation to cover operating costs; typically, a social investment firm, trust, foundation, bank, or government agency |
| Operating Margin | The amount of money left over once the cost of delivery is subtracted from the (contractual) income |
| Outcome | The measurable changes or benefits that happen as a result of an organisation’s or project’s services |
| Output | The products, services or facilities that a project or organisation provides through its activities |
| Payment by results | A system of commissioning where payments are contingent upon pre-defined and independently verified results or outcomes |
| Rate | Often used to refer to the amount of money agreed as payment for each outcome achieved. Outcome payers can publish ‘Rate Cards’ with pre-defined amounts |
| Return | The profit achieved on the investment |
| Social Impact Bond | A financing arrangement where an investor contributes up-front capital, and is paid back by a commissioner as the delivery of a charitable or social project achieves its outcomes |
| Special Purpose Vehicle | A Special Purpose Vehicle, or SPV, is in this case a legal entity (a company) created to hold the contract, receive investment and pay the service provider |