Government under pressure: investing in better outcomes through social impact bonds

Abstract

With shrinking resources and declining federal transfers, provincial governments across Canada are forced to provide increased levels of supports to vulnerable individuals with decreasing resources (Janssen & Estevez, 2013). Governments continue to face obstacles in meeting the needs of vulnerable populations such as children, single parents, and those who are homeless, to name a few. Manitoba, for instance, faces demographic challenges related to an influx of newcomers who are seeking refuge, resettlement, and housing supports, an aging baby boomer population that will need end-of-life supports, as well as a growing number of children in government care. Instead of funding programs based on their activities and outcomes, this paper presents outcomes-based financing, such as the social impact bond, that reward service providers who are able to demonstrate proof of outcomes and can show how the intervention improved the lives of the individuals it was meant to serve. Under a social impact bond, government engages non-traditional partners in the private and non-for-profit sectors, and the community as a whole becomes part of the solution to challenging social problems.

Setting realistic expectations: The narrow use-case for Social Impact Bonds

“…Going Forward: Defining the Appropriate Use-Case for SIBs Hodzic (2018) is correct in characterizing the SIB as a kind of loan; it can be misleading to think of SIBs like traditional bonds, for a range of reasons (Disley, Rubin, Scraggs, Burrows, & Culley, 2011, p. 1). I have argued elsewhere (Giacomantonio, 2017) that SIBs represent a kind of conditionally forgivable loan that may serve to maximize philanthropic granting capital in cases where philanthropists are not otherwise willing to provide non-repayable grants.…”

“…Sandra Hodzic's (2018) article in the previous issue of JCSWB identified a range of social and financial pressures faced by provincial governments across Canada, to which Social Impact Bonds (SIBs) are being considered as a response. Primarily, focusing on the case of Manitoba, Hodzic identifies reductions in federal transfers, shrinking resources, expanding elderly and newcomer populations, and priorities to improve child welfare as pressures on government to do better in social service provision in a climate of fiscal constraint.…”