As the Israeli economy has grown, income inequality and social gaps have expanded beyond the capacity of government and philanthropy alone.
The country’s overall unemployment was a low of 4.8% last year, but high jobless rates in both the ultra-Orthodox and Arab-Israeli communities means that more than half live below the poverty line, including more than 800,000 children.
Social Finance Israel has launched two social impact bonds to help bridge the gaps. The first, targeted on preventing type II diabetes, is the rare social impact bond that targets a mainstream, rather than vulnerable, population.
The second, which seeks to reduce dropout rates from higher education, has already started to repay investors. Other social impact bonds, focusing on prisoner rehabilitation, reducing mortality from colon cancer, reducing car accidents, and improving K-12 achievements for Bedouins, are also in the works.
Social Finance Israel’s Yaron Neudorfer met with investors, philanthropists, and field-builders in New York this week.