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24 Apr 2014

Private capital, public good

Re: Tracy Palandjian (MBA 1997)
Topics: Finance-CapitalEntrepreneurship-Social EntrepreneurshipSociety-Social Issues
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Tracy Palandjian (AB 1993, MBA 1997) is spearheading the development of social impact bonds (SIBs), a financial innovation designed to tackle some of the world’s most intractable social challenges. Alongside Sir Ronald Cohen (MBA 1969) and David Blood (MBA 1985), Palandjian cofounded Social Finance US in 2011, a nonprofit organization dedicated to mobilizing capital to drive social progress.

“The vision of expanding opportunity, by applying the rigor and discipline of markets to public goals, is what compelled me to launch Social Finance US,” explains Palandjian.

SIBs are designed to raise private capital to fund preventative social programs that address various challenges, such as recidivism, health disparities, and homelessness. If pre-specified program outcomes are achieved, government repays investors and provides an investment return from attributable fiscal savings. Government only pays for results, and investors benefit only if society benefits.

Successful SIB partnerships yield multiple winners: government gains accountability for taxpayer funds; high-performing nonprofits reap growth capital; investors realize social impact and financial returns.

“Social impact bonds give new meaning to the notion of shared value,” says Palandjian. “They provide a structure to unite an uncommon set of partners— government, investors, philanthropists, and nonprofits—in pursuit of a common goal.”

(Published April 2014)

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Tracy Palandjian
MBA 1997
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MBA 1997
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