A new type of financial instrument is challenging the idea that giving and investing are separate and distinct. The social impact bond (SIB) is an experimental hybrid that applies a profit motive to some of the most intractable social problems.

The government of Canada added itself to a short list of agencies around the world considering SIB programs, which can be seen as an alternative to charitable donations — great for investors looking to place capital in a way that will generate economic and social value at the same time.

The appeal for governments is obvious. The private sector provides the upfront funding, while taxpayers pay only if the programs work (allocating tax dollars as a small profit return to the original investors).

(READ the story from Canadian Business)