Bank of America could be planning to enter the much-discussed world of social impact bonds, a financing arrangement that helps fund ambitious projects aimed at the public good.
The Charlotte bank has applied for a trademark on the phrase Anything a Society Truly Wants Can be Financed and Achieved. Its trademark application goes on to say that it pertains to social impact bonds or project financing for socially beneficial programs.
Essentially, social impact bonds allow different investors to put up money toward achieving, say, reducing homelessness or boosting the high school graduation rate. Investors make a return if the goal is reached.
New York City announced the countrys first social-impact bond program in August, financed by Goldman Sachs. Its goal is to reduce recidivism among young people at Rikers Island jail.
It works like this: Goldman provided a $10 million loan to MDRC, a nonprofit that will implement an education and counseling program at the jail. If recidivism falls by 10 percent, the New York City government will pay MDRC, which will in turn pay back Goldman.
If recidivism falls further, Goldmans investors would make a profit.
Social impact bonds are already off the ground in Britain and Australia, and are also commonly known as Pay for Success programs. The White House said this year that it would like the federal government to put $100 million toward these programs.
Bank of America did not provide any information on its plans.
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