The Nonprofit Quarterly discusses some recent road bumps with SIBs in the UK…
Bumps And Slowdowns In UK SIBs
Rick Cohen – Nonprofit Quarterly
At a recent program of Georgetown Law School and Independent Sector on the for-profit social enterprise dynamic in the U.S., the gap between the hype and the reality of social impact bonds was evident. A presenter from Social Finance acknowledged that for all of the years of hype, there are only four Social Impact Bond projects actually operating in the U.S. There may be more in the works, but the breathless endorsement of the concept in the U.S. relies on an exceptionally thin repertoire of SIB experience—of which not one has reached even an interim payment point.
That contrasts somewhat with the constant drumbeat of promotional articles, white papers, and reports on the upside of social impact bonds, which have been endorsed by a number of states and by the Obama administration (as “pay for success,” since, strictly speaking, social impact bonds aren’t really bonds at all). The Center for American Progress identifies 15 states with social impact bond projects either underway (New York, Utah, and Massachusetts) or under consideration (Washington state, the District of Columbia, South Carolina, Pennsylvania, Michigan, Maryland, Illinois, Connecticut, Ohio, New Jersey, California, and Colorado).
The concrete experience that advocates in the U.S. have drawn on to justify their SIB enthusiasm is from the UK, which saw a number of SIBs get underway with the active involvement and promotion of the Tory/Liberal government of David Cameron. The Cameron government even has a specific office dedicated to promoting SIBs. The first SIB in the world appears to have been in the UK, a project to reduce recidivism, much like the dominant program focus of the U.S. social impact bonds in Massachusetts and New York.
This past week, SIB enthusiasts encountered some reason for nervousness. The Guardian published an article titled “Social Impact Bonds: Is the Dream Over?,” following up on the news that the UK government’s first SIB, the recidivism project at the prison in Peterborough, would be replaced by an “alternative arrangement.” The government has revealed a new policy initiative called Transforming Rehabilitation, whose structure doesn’t fit the SIB as currently structured. Both the government and the SIB sponsors at Social Finance took pains to explain that the new policy doesn’t mean that the Peterborough SIB was a failure, but had been operating as expected, despite its not having reached its first assessment and payment point.