This week I ran to a
write up by Jon Pratt about the flaws of Social Impact Bonds (SIB). Holding a MPA
degree from Harvard University, Jon Pratt is the executive director of the Minnesota Council of Nonprofits
and he has consulted with nongovernmental organizations on the development of
NGO associations and services in Canada, Costa Rica, Czech Republic, Hungary,
Poland, Serbia and Turkey.
To Jon, SIB is a good
supporter (e.g. Rockefeller Foundation, Kennedy School of Government, McKinsey,
New York’s Mayor Bloomberg, Goldman Sachs) and is attractive for public
officials, taxpayers and nonprofits. However, he has two claims about the flaws
of SIBs:
1. Your ability to get
legislative approval is almost certainly a displacement from other funding and
you will have to compute with existing programs. In other words, this
legislative approval would probably not generate any new funding.
2. SIB financed
services aim at producing better outcomes using advanced discipline. However, there
is no guarantee of getting funded as the payments are tied to results. Like in
the example of “No Child Left Behind” education legislation where school
administrators cheated in order to show good results, this carrot-and-stick
approach would probably not work.
So, why do we not
consider applying milestones to the programs and monitoring the whole implementation
of the social innovation/program from the beginning to the end? By doing this, we
can intervene in the intermediate steps so that the program is implemented as
intended. We should also remember that sometimes the program might not result
in good outcomes as a whole. However, in my opinion, intermediate steps might
make differences in people’s lives and the program might still worth getting
funded.
You can reach the
whole write up from the link below:
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