The ironclad Monitor and social impact bonds

There's a lot of interest in my earlier post about social impact bonds, and I'll be keeping an eye on the topic and providing updates. In the meantime, here's a link to an interesting column from the Harvard Business Review blog (free when you register) pointing out the special funding arrangements required of the designer of the ironclad ship the Monitor because of:
how challenging the Monitor was to the Navy establishment when its inventor John Ericsson and his partner Cornelius Bushnell asked them to approve its design: not only was it "ironclad" unlike the wooden ships of the era, it sailed almost wholly submerged, with only its strange gun turret cresting the waves.
Here's the key passage for our purposes:
Only after more deft politicking by Mr. Bushnell and more explanations from Mr. Ericsson did the board approve it, and only then with special conditions protecting the Navy. It doled out the $275,000 cost in installment payments, and made them all conditional on the Monitor proving itself in a "test"—meaning an actual battle with the enemy.
The authors speculate as to why a funding method that was used during the Civil War was not used much in the interim but has become a creative tool now.
Arguably, today's public sector has become so generally risk-averse that an arrangement designed for an extreme risk situation —dire military threat, drained war chest, dodgy inventor — now is needed for even the surest bets. Meanwhile, perhaps the ranks (and wallets) of socially-minded investors have swelled so dramatically that it's much easier to round up private capital to take flyers on potential game-changers.
Maybe the explanation is somewhat simpler, having to do with large salaries and low taxes. It's a provocative question in any case, and adds a little more color to an interesting picture.

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