The social impact bond market is set for a boost with a £1.3m grant from Omidyar Network to support its expansion globally.

Omidyar Network, which describes itself as a philanthropic investment firm, will fund Social Finance in the UK with around £493,436 over two years, while its US sister organisation will receive up to around £800,000 over the same period.

Omidyar Network’s grants will support the expansion of social impact bonds in the United States, Ireland, Scotland, Australia Canada and Israel, as well as in the international development sector.

Commenting on the funding, Amy Klement, vice-president of investments at Omidyar Network said: “The potential of social impact bonds are aligned with Omidyar Network’s mission to explore market-based solutions to help address society’s most intractable problems.

“The approach allows for an injection of capital into proven and innovative social services, requires government and program providers to focus on results, offers the taxpayer savings, and represents a scalable means of investing in social ventures. We are pleased to do our part in helping these two pioneering organisations realise the promise of this innovation.”

A number of social impact bonds have recently been announced in the UK. London has launched a £5m social impact bond to prevent homelessness, while a Scottish-based YMCA has launched one of six social impact bonds which will be sponsored by the Department of Work and Pensions. 

Social impact bonds raise private investment capital to fund prevention and early intervention programmes. Using a payment-by-results contracting model, the government repays investors only if and when an independent evaluator determines that the agreed social outcomes have been achieved.