And that hasn't changed in the last 12 years. This situation occurs because social entrepreneurs who want to raise funds for private programs have virtually no access to capital markets and little flexibility to experiment at various stages of growth. But this may soon change.
Just as the formation of the venture-capital industry ushered a new approach toward funding innovation within the private sector, impact investment has started to bring opportunities to the social sector. For instance, government agencies in the UK, the US, and several other countries have recently begun exploring the potential of social-impact bonds, which are financial instruments related to social programs sponsored by the private sector.
If the private programs improve a metric, such as the prisoner-recidivism rate, equally or more than a similar government program, investors make money. If there is less improvement, investors lose money.
Read more at HBR.
