Capitalization of Social Impact through SIBs: A Bipartisan approach

Capitalization of Social Impact through SIBs

Politicians in the US are all in for economic growth and the support of the "backbone of our economy", small business. When starting a new venture, which may eventually become a new business, social impact bonds represent a new means of incentivizing the public good with capitalist ideals.

Social Impact Bonds (SIBs) start with the government identifying a target area for social innovation. Then the project is given an intermediary who identifies investors and organizations to carry-out the venture based on previous experience. Once the project is completed and if outcomes are favorable the government pays the intermediary who then pays back the investors and organizations. (McKinsey Social Impact Bonds Report). This methodology allows for social problems to be solved by a unique combination of the public and private sector.

My undergraduate experience was in Economics and I can see why this solution could be great at addressing problems that the market, even when functioning efficiently, could not solve. This is why SIBs have a range of bipartisian support. For example, just this past April two senators Young (R-IN) and Bennet (D-CO) introduced legislation to expand SIBs(Young 2017). The reasoning for this support is it pairs the social supports that the democrats favor with the reduction in taxpayer spending the republicans favor. The actual efficacy of the programs can be varied. As Bob pointed out in his post, the difference between outcomes and impact can often be conflated(Santamaria 2017). In doing so its difficult to tell whether programs are truly solving the underlying social issues or rather just meeting outcomes goals. To assess social impact requires a strong knowledge of the stakeholders involved. Take an issue such as increasing access to education. A outcomes goal may be increasing graduation rates; however, the schools may be lowering requirements to achieve the rates instead of achieving the impact of overall education increases.

In the context of social innovation it is complex to say how to precisely ensure that impact is being valued just as much as outcomes. SIB's represent an interesting partnership between the public and private sector to begin to address social issues; however, it is only a start. In order to ensure that the public good is the final outcome, ventures and organizations that take advantage of the benefits that SIB's distribute must have the target stakeholders involved in assessing their impact. In doing so, the future for more public-private partnerships for the social good have a strong future.




Citations:

http://mckinseyonsociety.com/downloads/reports/Social-Innovation/McKinsey_Social_Impact_Bonds_Report.pdf

Santamaria, 2017. http://cmusocialinnovation.blogspot.com/2017/09/conflating-outcomes-and-impact-case.html

Young, 2017. http://www.payforsuccess.org/resource/sens-young-bennet-collins-booker-introduce-social-impact-partnership-legislation