Expressions of confidence in SIBs from Accenture and a UK Minister top the headlines today, happy reading:
Accenture Supports ‘Pay for Success’ Initiatives For U.S. State And Local Governments
Business Wire
Accenture is offering to provide services and other support for state and local government “Pay for Success” (PFS) initiatives tied to U.S. federal government Social Innovation Fund (SIF) grants. The SIF Fund was created to foster a collaborative environment between nonprofits and state and local governments by offering innovative funding approaches for public sector social and human services programs. Accenture is supporting this initiative by offering services and technical guidance, including up to a total of $1 million worth of discounted services, to help nonprofit organizations and state and local government entities advance their PFS initiatives.
Pay for Success is an emerging approach leveraging Social Impact Bonds to attract philanthropic and other private funds to help achieve positive social services outcomes and reduce the need for government services in the future. The government only repays the investment when the agreed-upon outcomes are achieved. This innovative financing mechanism has the potential to attract significant new capital to address critical social needs and transform government’s approach to delivering some preventative services.
Civil Society Minister Puts Faith In Social Impact Bonds
Ellie Ward – Pioneers Post
Social impact bonds should play a key role in the development of improved public services in the UK, says minister for civil society Rob Wilson.
Speaking yesterday at a conference organised by Social Finance on behalf of the Big Lottery Fund’s Commissioning Better Outcomes Fund and the Cabinet Office’s Social Outcomes Fund, the minister said that this type of social investment put “the best outcomes for people at the heart of the service being delivered”.
He continued: “They put evidence at the heart of building better services for the public. The investment creates the space to innovate and develop better solutions to the social problems we face. Finally, and perhaps most importantly it’s a model that rewards successful innovation but where the taxpayer only pays for the services that actually work.”
Social impact bonds made up part of the UK government’s “bigger picture” plan to improve public services in the UK, he said, which also included “taking forward initiatives such as the Social Value Act and the Buy Social campaign” – which was created by Social Enterprise UK to encourage people to purchase ethical products and services.
“We in government want to unlock more opportunities for charities and social enterprises to deliver public services, opening up public money and contracts for the sector…We all know that government, whether central or local, doesn’t have all the answers.
“We need new thinking, new ideas and new ways of addressing big social issues. And that is where charities and social enterprises can help. These are expert organisations that are on the front line so they see what works well and what doesn’t,” said Wilson.
A Quick Look At Social Impact Bonds
LiveNews
A new source of funding for the public sector or a new way to privatise public services?
Social impact or social investment bonds (as they are also known) are the next Great Leap Forward in privatising the state for the benefit of private investors. A relatively recent innovation, they have now arrived in New Zealand almost by stealth via the Ministry of Health (see more details here). In December 2013 the Ministry of Health released a registration of interest (ROI) to identify suitable outcome areas and capable service providers with the potential to deliver a social bond pilot.
Social impact bonds (SIBs) are essentially a performance-based contract. Their supposed innovation is derived from the inclusion of third-party investors who provide money to fund the operations of a social service programme. The idea is that private investors and the government enter into a contractual arrangement whereby the investors fund services and get paid for achieving specific outcomes (for example reducing prison recidivism rates). If the outcomes that have been agreed are achieved then the investors receive their capital back plus a profit margin. If the offered service does not meet the outcomes that have been agreed the investors lose their money. For governments this is attractive – it gets the operation of expensive social services off their books and creates the illusion that they are saving money.
Sounds like a win-win doesn’t it? The government pays up if the programme works; the investors lose if it does not.
However it is not so simple and social investment bonds have a number of drawbacks.
Creative New Funding Mechanisms Have Been The Focus Of Nonprofits
Jerry Rubin – Boston Globe
In her article on Dan Pallotta’s crusade to persuade donors to focus on nonprofit organizations’ impacts rather than their overhead (“Debating the costs of providing help”), Sacha Pfeiffer neglected one important part of the story. The nonprofit field has developed very effective ways to measure impacts and the return on donors’ support.
Jewish Vocational Service and other nonprofits have undertaken studies of social return on investment that measure and monetize specific client outcomes and create a ratio of those dollar outcomes over expenses. More recently, nonprofit organizations, including ours, have begun using creative new funding mechanisms, such as social impact bonds, which not only measure outcomes, but link public and private funding to those outcomes and the savings they create for state government.
The nonprofit field is moving well beyond the traditional tension between charity and overhead that Pallotta is fighting.