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Business Innovator: Instiglio, United States

April 22, 2013

Public spending on social programs often involves high levels of government expenditure with little emphasis on impact and outcomes. Enter Instiglio, a Boston-based nonprofit social enterprise that hopes to bring the social impact bond (SIB) model—also known as a pay-for-success contract—to emerging economies such as India and Colombia.

The concept turns the old development model on its head. With SIBs, governments contract with third parties to finance projects that have few funding opportunities but a large social impact. Unlike normal contracts, the government commits to pay for...

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