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Lunch & Learn 32

June 19, 2018

Social Impact Bonds: Lessons learned and future directions

In the face of enduring social problems and scarcity of public funds available to tackle them, social impact bonds (SIBs) have recently emerged as innovative financial tools to mobilize private funds for public purposes. SIBs are public-private partnerships which fund effective social services through a performance-based contract. Bringing together national or local governments, social service providers, private investors, and financial intermediaries, SIBs aim to unlock new capital investment to fund programs that have a measurable positive impact on the lives of people in need. Here private investors bear the risk of innovation, but they can earn a financial return. If the program achieves predetermined outcomes and performance metrics, the government repays the original investment, and the program could be rolled out to scale; if not, investors take a loss and the program would likely be terminated. Since the first SIB was launched in Peterborough (UK) in 2010 to reduce reoffending among short-sentenced offenders leaving Peterborough prison, more than 100 SIBs were structured in 25 countries and about $300 million were raised in various areas of social service such as unemployment, health, and criminal justice. SIBs have also drawn strong ideological reactions ranging from enthusiasm to denigration. Evidence is seemingly much scarcer, a paradox for an approach relying on “payment by results”. With less than a decade in hindsight, what do we really know about the effectiveness of the first SIB experiments? What are the key lessons learned from early successes and failures? And what should we anticipate in the coming years, as a new generation of SIBs are being launched all across the globe?

With:
  • Gary D. Painter, Professor in Public Policy, University of Southern California (USA), Director at Sol Price Center for Social Innovation. Co-author of Payment by results and social impact bonds (Policy Press, 2018) 
  • Chris Fox, Professor in Public Policies' Evaluation and Analysis at Manchester Metropolitan University (UK), Director at Policy Evaluation and Research Unit. Co-author of Payment by results and social impact bonds (Policy Press, 2018) 
  • Ladislas de Guerre, Manager at Kois Invest, Specialist in innovative funding mechanisms such as Social Impact Bonds and Development Impact Bonds.
Podcast: