Are SIB the future?

SIB stands for „Social Impact Bond“, which present a novel way to fund organization that address social problems and try to solve them. Nonprofit service providers finance their operations through investors, which intermediaries will raise capital from. Those investors will mostly be institutions with a social vision, but more and more individuals try to support social innovation.The clue with SIB now is, that the government will pay the investment as soon as they nonprofit delivers the promised impact. The intermediaries also organize evaluation and indepedent assessor to support the social organization and to measure their outcome.

Therefore the government only funds what works and doesn’t spend money for no results. Sounds easy, but is it really like that. Firstly how do the nonprofit service providers get picked, which social missions are more important than others and who gets to pick that. Also on the one hand it is really great that the outcome of a nonprofit is measured and that I think fosters an environment of delivering results, which can be really productive. But how long are they allowed to take to deliver results, maybe some organizations take longer to get deliverables however would have a really great outcome. Another point is that only nonprofits can get this funding, but what about all the social ventures that could produce the same outcome if not better and struggle to find initial fundings for their idea? I think they should also be considered.

In spite of my mentioned concerns I think SIB are a very good step in the funding of social change. In my home country Germany i sometimes have the feeling that the state funds a lot, but are bounded to keep funding the same nonprofits all the time, with not a lot of budget left for new and maybe better things. For this reason I think SIB provides the government with a way to sponsor new and different organizations that have already proven they are worthy of it and hence work for a greater social impact on society overall. For once the government could be at the verge of time and trends instead of always lagging behind.