Goldman Sachs (A): Determining the Potential of Social Impact Bonds

Case Solution

Andrew Hoffman
WDI Publishing at the University of Michigan ()

Alicia Glen, director of the Urban Investment Group at Goldman Sachs, will campaign for the creation of a Social Impact Bond (SIB) tomorrow. Proposed by New York Mayor Michael Bloomberg as an investment that will reduce juvenile incarceration rates, the SIB would be the first of its kind in the U.S. And the bank would operate in a traditionally state-owned, non-state environment. profit. Glen wondered if Goldman should only invest if a philanthropic organization like Bloomberg Philanthropies was underwriting part of the loan. She also wonders if the transaction costs are too high or if legal or political obstacles are emerging to block implementation. Students are asked to understand social investing and create a 2X2 matrix to assess performance expectations on social and financial impact.

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