Hot on the heels of the NSW government's launch of Waratah bonds for mum and dad investors last week comes the news that the Treasurer, Mike Baird, will announce the introduction of "Social Benefit Bonds" in the state budget to be delivered later today. This time the bonds are directed at charitable trusts and philanthropists, rather than mums and dads, and more particularly, at institutional investors - the typical buyers of bonds.The bonds draw on the concept of Social Impact Bonds or Pay for Success Bonds, which were first introduced in the UK in March 2010. The idea is that investors will fund social programs, thereby generating public sector savings.Typically, the programs will be early intervention or preventative programs that if not implemented would result in considerably greater long-term expense to the community overall. If the programs are successful then investors will get a return on their investment (presumably funded from the implied savings generated). If there are no savings, then investors get no return.It all sounds very vague and this is the stumbling block in any proposal of this sort. Another such program was launched in London two weeks ago, following the devastating riots. The program aims to raise £40 million to provide intensive help for families blighted by crime, addiction and poor education. Four trials will be run in the London boroughs of Hammersmith & Fulham and Westminster, and in Birmingham and Leicestershire.However, no details have been provided as to how the project will be managed; how participants will be selected; what the definition of success is, and what the time period will be.Closer to home, Westpac New Zealand launched Red & Black bonds after the last earthquake in Christchurch, with the aim of raising NZ$50 million from which a portion of the coupon payable would have been directed to the Christchurch Earthquake Appeal Trust. The bond issue failed to reach the minimum required level of take-up and was quickly abandoned.In this case, the concept was comparatively simple. The bonds were aimed at mum and dad investors and would pay a 5.8 per cent per annum coupon, of which 0.5 per cent would go to the charity. They would have a five-year term to maturity. It was very clear how the funds would be disbursed, who the beneficiary (in the first instance) would be and how long the investment would last.   Yet, one explanation given for the failure of the Red & Black bond issue was that mums and dads in New Zealand like to keep their investing and charitable activities separate. It is unlikely there is anything unique about NZ mums and dads in this respect. And, as might be expected, charitable trusts and philanthropists are likely to be much tougher again. Both run their activities very much like businesses these days. Investment and philanthropy are kept quite separate. The former is undertaken to maximise income generation to fund the philanthropic activities, within the limitations of clearly defined risk and ethical considerations. The latter is guided by