A fine article today discussing the Michigan moves to develop the markets for SIBs and hence help the state progress accountable, productive social programmes in a time when the government coffers have run dry.
Can Fancy Finance Fund Fights Against Social Ills?
A new method of financing government programs such as early childhood education and prison reforms is generating a near giddiness among states and philanthropists eager to participate.
Social impact bonds allow foundations and private-sector investors to participate in funding programs aimed at easing social ills and earn a financial return if the programs are successful.
“Interest in social impact bonds is sweeping the United States,” said philanthropist Phillip Fisher, whose Mission Throttle organization in Southfield is at the forefront of this emerging social investing model here.
Michigan is among a handful of states that are in the process of developing projects that can be financed by social impact bonds.
“I’ve never seen anything move as quickly from concept to execution as I’ve seen with this social impact bond model,” said Joe Pavona, Gov. Rick Snyder’s special adviser on the project.
In September, Michigan was one of eight states chosen in a national competition to receive technical assistance from the Harvard Kennedy School of Government in designing social impact bond projects.
Established with support from The Rockefeller Foundations, Harvard’s Social Impact Bond Technical Assistance Lab conducts research on how governments can foster social innovation and improve results from social spending programs.
But social impact bonds aren’t really bonds. And there’s little evidence so far that they can alleviate social ills while earning profits for investors.