Traditionally in finance risk/return trade-off was a key concept determining most of investment decisions. However, recently this risk/return formula was slightly modified by adding another property to it: the social impact or, in broader context, the type of positive social consequences which caused by a particular investment. Evolvement of social impact movement has resulted not only in the introduction of new corporate forms, such as social benefit corporation, but also in the financial sphere where a new form of investment instruments was created. Synthesis of financial innovations with purely charitable donations provided a new financial instrument, social impact bonds (SIB). Pursuant SIB arrangement non-for-profit organisation provides some services to a public, whereas such an activity is pre-funded by investors, who have been promised by government to be reimbursed if the project succeeded. Should non-for-profit organisation achieved specified KPIs, investors to be reimbursed, otherwise they may lose their entire investment. Thus SIB combines upside of traditional fixed income (bond) and downside of equity. The article also outlines other forms of social impact financial instruments and provides some specific policy recommendations aimed to promote social impact investments.

Keywords: non-for-profit organisation, impact investment, impact finance, social impact bonds, SIB, charitable bonds.

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