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