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

Purchase the full report on GlobaLens (Case study #  1-429-375)– published 02/2014, 16 pages.
Developed by: Joanna Herrmann (Erb ’16), Ashlyn Gurley, Jimmy Ward (’14), and Kyle Alexander under the supervision of Andrew Hoffman

DESCRIPTION: The “Goldman Sachs: Determining the Potential of Social Impact Bonds” and “Shaping Social Impact Bonds” cases describe a new financial and social investment instrument—social impact bonds—through the eyes of traditional financial investment bank Goldman Sachs, specifically its Urban Investment Group. Taking place in 2012-13, the cases explore the questions and challenges Goldman Sachs decision-makers had when determining whether to participate in using this new social investment instrument. Their thought process raises the possibility of societal improvements through innovative financial instruments and how government, non-profit, and traditional finance could work together to unleash new capital on old issues. This case was written under the supervision of Andrew Hoffman, director of the Erb Institute, by graduate students Joanna Herrmann, Ashlyn Gurley, Jimmy Ward, and Kyle Alexander at the University of Michigan.


    After reading and discussing this case, students should be able to:

  • Comprehend the history and basic structure of a social impact bond (SIB).
  • Identify with and differentiate among the choices a bank is faced with when exploring social investments.
  • Apply the background information to assess if Goldman Sachs should invest in a social impact bond.
  • Construct a recommended expectation on returns for social and financial impact in a 2×2 matrix.