Australia’s Turnbull government continues on a track to encourage SIBs in latest budget while others get rather locked into a substitution argument around philanthropy which misses the issues and addresses the question I wasn’t aware anybody was asking…
Budget 2016: Social Sector Welcomes Innovation
Ellie Cooper – Pro Bono Australia
Leading organisations for social investment and social business have welcomed the federal government’s approach to innovation in the budget, which includes a $96.1 million fund to test innovative policies that engage the private sector.
Social Ventures Australia (SVA) said the government’s Try, Test and Learn Fund, which aims to reduce long‑term welfare dependency, could boost Australia’s social investment strategy.
The organisation said the four-year $96.1 million fund was an important step towards promoting a more innovative, agile and impactful social services system.
“The fund could unlock opportunities for the development of innovative service and finance models, and attract co-investment from the private sector in important social initiatives,” SVA CEO Rob Koczkar said.
“Private capital is never going to replace the need for ongoing investment by government in critical services, but there is scope for it to have significant impact in areas including affordable housing supply, social impact bonds (SIBs) and social enterprise development.
“The great strength of the SIB model is that it requires governments, community services organisations and investors to examine the data about what really works to improve the lives of people in need, to accurately cost the service and the savings it generates to government.”
Impact Investing Is No Substitute for Philanthropy
Chicago Now
This letter to the Sun-Times by Phillip Jackson, Founder and Executive Director of Chicago’s Black Star Project, ably summarizes everything that’s wrong with the recent announcement by the MacArthur Foundation, the Chicago Community Trust and the Calvert Foundation that they plan to join forces to lend money to nonprofits, a behavior they style “impact investing.” Impact investing has been shown ineffective in virtually every context in which it has been tried, and under every name by which it goes, whether “pay for success,” “social impact bonds,” “social enterprise,” “philanthro-capitalism,” or any of the other monikers designed to suggest that rich people can help poor people without actually, you know, giving anything.
If impact investing replaced other types of investing—in weapons manufacturing, say, or tobacco—it would be harmless, if not necessarily useful. (Some economists doubt divestment makes any difference to the stock price of the companies shunned.) But when impact investing is designed to replace actual grants, that’s when we have a real problem.