A model to support the investment decisions through social impact bonds as effective financial instruments for the enhancement of social welfare policies

Despite the widespread opinion that the traditional finance is exclusively interested in the monetary return, in the last ten years this sector has been affected by a contamination of the public principles related to the social impacts. The global development and the spread of “win-win” financial instruments such as the Social Impact Bonds (SIBs) outlines a growing interest in making an investment that aims at generating benefits for all the subjects involved, always guaranteeing a monetary return to the private investor. The complexity of identifying the social impact sectors to be preferred, in a context characterized by different social needs, represents a critical issue in the SIBs investment. This research defines a model that can constitute a decision support tool for the public and private subjects in the preliminary phases concerning the resource allocation for a social program. The proposed algorithm allows to define a temporal priority of the social impact sectors that are simultaneously able to maximize the conveniences for all the subjects involved. Through the model, the public and private subjects will be able to determine the best allocation of financial resources according to the real social needs, contributing to an effective spread of SIBs both in Italy and abroad.