SIBNews leads today with a very encouraging article by Kristina Costa at the Center for American Progress which inspires and demonstrates why America was dominant in the last century – the ability to pick up new ideas and develop them for the greater good.
Sadly north of the border the knee-jerk anti-capitalist, reaction in some places rather misses the core point on SIBs: there isn’t any money and government has reached the limits of what it can actually spend (and indeed overstepped that mark).
Sadly, many in the NGO community who are looking at SIBs as something to pay lip service to (and then avoid at all costs) while sticking to traditional ways of raising funds (which are running out of steam).
The industry clearly needs to be mindful of how it rewards investors but at the same time, there is simply no option. However, as I note from say UK readers to this journal, the reticence to move out of the existing comfort zone is huge. I appreciate making a paradigm shift is difficult but isn’t suffering the closure of your NGO due to lack of funding much worse?
Have a good day.
Social Impact Bonds: Investing For Success
Kristina Costa – Center for American Progress
Since 2011, SIBs have moved from concept to execution in the US. These bonds are innovative financing tools for social programs: Private investors pay the upfront costs for providing social services, and government agencies repay the investors with a return—if and only if a third-party evaluator determines that the services achieve agreed-upon outcomes.
These agreements may be a viable source of expanding support for preventive interventions that could both demonstrably improve social outcomes and save cash-strapped governments money on later remedial services. When think tanks, government agencies, investors, service providers, and other groups began considering whether SIBs could work in the US, there was only one such deal underway: the HM Peterborough Prison SIB, which aims to reduce recidivism among inmates released from a facility some 90 miles north of London, England. Since then, New York City; Salt Lake City, Utah; New York state; and Massachusetts have all launched SIBs in the United States, and about 12 other states are known to be actively considering entering into these or other so-called Pay for Success agreements.
Social Bonds Program Path To Privatization, Critics Say
Karen Kleiss – Edmonton Journal
The Redford government will create a new $1-billion endowment fund to pay for social service programs using innovative financial incentives including controversial social bonds, which critics say open the door to privatization of public services.
The government’s flagship Bill 1, the Savings Management Act, would pull $500 million from the Heritage Savings Fund on April 1 this year and a second $500 million next spring.
The resulting Social Innovation Endowment fund will pay out up to $22.5 million in 2015, increasing to $45 million the following year. Thereafter, the minister can withdraw 4.5 per cent of the closing balance each year.
In the speech from the throne on Monday, Lt. Gov. Donald Ethell said the fund “will invest in new research and coordinate action between small businesses, cultural organizations and non-profits to address social issues including poverty and family violence.”
Premier Alison Redford first promised to introduce “SIBs” during the Tory leadership race in 2011, and in 2013 she told party supporters her government was moving toward modified “social infrastructure bonds.” Since then she has been tight-lipped about government plans.
Opinion: SIBs: An Investment In The Wrong Direction
Ricardo Acuna – Edmonton Journal
Do you have $5 million burning a hole in your pocket? If so, have we got a deal for you. The Government of Alberta will soon be allowing you to invest that money in the misery and poverty of fellow Albertans, and pay you a 10 to 20 per cent rate of return to do so.
The Alberta government’s Bill 1, introduced Monday in the provincial legislature, carves out $1 billion from the Alberta Heritage Trust Fund to create something called the Social Innovation Endowment Account. This account is designed, among other things, to fund the promotion and development of social impact bonds in Alberta.
If you’ve never heard of social impact bonds, you are likely not alone. Although Alison Redford has been talking about them since the 2011 PC leadership race, nobody has been paying much attention until now.
SIBs are a scheme introduced in the UK by David Cameron after the 2010 election there. The basic premise is that private investors will fund a program or project delivered by a non-profit or charitable agency. If that project meets its previously agreed-upon measurable goals, then the government will pay back the investors the full amount of their initial investment plus a 10 to 20 per cent return on their investment.