Three fascinating stories today – including a bipartisan proposal in the US to propose an act codifying at least part of the SIB universe. I am at the European Federation of Securities Exchange Convention in Zurich today…where, alas SIBs are not (yet) on the agenda, maybe next year…
US – Reps. Young And Delaney Introduce Social Impact Bond Act
Congressman Todd Young
Reps. Todd Young (R-IN9) and John Delaney (D-MD6) introduced H.R. 4885, the Social Impact Bond Act, on Wednesday, legislation that would foster the creation of public-private partnerships that harness philanthropic and other private-sector investments to scale up scientifically-proven social and public health programs. Joining Young and Delaney in introducing the bill were Reps. Tim Griffin (R-AR2), John Larson (D-CT1), Tom Reed (R-NY23), Jared Polis (D-CO2), Dennis Ross (R-FL15), Joe Kennedy (D-MA4), and Aaron Schock (R-IL18).
Under the proposed legislation, the federal government would establish desired outcomes to pressing social challenges that, if achieved, would improve lives and save government money. State and municipal governments could then submit proposals to work towards those outcomes—such as increasing adoption rates of teenagers in foster care, or improving the health and mortality rates of infants born into low-income families—by scaling up existing, scientifically-proven interventions. Private sector investors would provide the capital needed to expand the existing programs, and, if an independent evaluator were able to validate that the desired outcomes were met and money was saved, the investors would be paid back their initial investment plus a small return from the realized government savings.
The UK is the global leader in the development of Social Impact Bonds (SIBs) with 16 now in operation covering policy areas ranging from homelessness to prevention of public care for children.
A SIB is a mechanism that enables socially motivated investors to create both positive social impact in key public service areas and achieve a modest return on their investment. SIBs operate on a performance by results basis where risk of failure is held either by the investor or a combination of investor and provider. The commissioner pays for successful outcomes that in most cases result in either shorter-term cashable savings or longer-term efficiencies
National Government in the UK has put its weight behind the development of SIBs alongside the BIG Lottery with both funding and support in the form of the Commissioning Better Outcomes Fund (£35m) the Social Outcome Fund (£20m) and practical support from the SIB team within the Cabinet Office.
Innovation Fever Breaks Out As Development Landscape Shifts (subscription)
Sarah Murray – Financial Times
Global development organisations have been doing a lot of soul searching recently. With multinationals and private foundations moving into their territory, tackling everything from healthcare to food security, the sector is no longer the only game in town.