Government Ministers are encouraging private investors, philanthropists, charity group and other groups to donate money to the bonds, which will be used to help break the cycle of deprivation and would therefore not cost the taxpayer anymore money.
The taxpayer already foots a bill of £4bn a year for assisting 46,000 of the most deprived families in the UK.
Investors who support the bonds will get paid a return for any of the projects which are a success.
The scheme will be trialled in Hammersmith, Fullham and Westminster in London, and Birmingham and Leicestershire, with an aim to raise up to £40 million.
The scheme has been launched after Ministers became concerned that the current focus on treating the problems of individual cases creates a costly cycle of deprivation which can be impossible to break. Therefore, it is hoped that with the use of social impact bonds, several problems will be intensively tackled in a family setting.
Civil Society Minister Nick Hurd, said: "We must not be afraid to do things differently to end the pointless cycle of crime and deprivation which wrecks communities and drains state services.
"Social impact bonds could open serious resources to tackle social problems in new and innovative ways."
Mr Hurd went on: "We want to restore a stronger sense of responsibility across our society and to give people working on the front line the power and resource they need to do their jobs properly.
"Social impact bonds could be one of many Big Society innovations that will build the new partnerships between the state, communities, businesses and charities and focus resources where they are needed."
The trials are expected to be up and running next year.
"For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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