The Creation of Social Impact Credits: Funding for Social Profit Organizations

Abstract

This chapter builds on the concept of social impact bonds to fund the nonprofit sector by developing a new financial funding instrument: social impact credits. We begin by reviewing how social impact bonds have been used and suggest possible ways to issue certificates that could be redeemable as tax credits. Using the public library system as a case for social profit credit candidates, we apply data to demonstrate the entire process of how a modified social impact bond framework can be created including the development of a trusted performance measurement and the actual selling of the instrument that act as credits. Potential outcomes and risks to individual libraries, the industry, investors, and the government are also discussed. Social impact credits as a way to fund social profit entities and provide tax incentives to investors introduces an environment of competition and has the potential to change the way the nonprofit sector operates.