Social Uncertainty Evaluation of Social Impact Bonds: A Model and Practical Application

Francesco Rania,Maria Cristina Migliazza,Annarita Trotta,Abdellah Kabli,Rosella Carè

doi:10.3390/su12093854

Francesco Rania, Maria Cristina Migliazza + Show 3 more

Open Access

https://doi.org/10.3390/su12093854

Copy DOI

Journal: Sustainability	Publication Date: May 8, 2020
Citations: 12	License type: CC BY 4.0

Affiliation: Magna Graecia University, University of Cagliari

Abstract

In the last years, Social Impact Bonds (SIBs) have gained popularity in the impact investing space. A number of scholars and practitioners are debating—in theory and practice—the opportunities, challenges and obstacles of these financial models. Amongst others, social uncertainty evaluation metrics appear as a critical factor for the future development of the SIB market. The present work aims to shed some light on this issue, by realizing a practical application of a model—which is an extension of a framework previously proposed—for social uncertainty evaluation in SIBs. In our exploratory analysis, 34 SIBs were selected for the empirical tests. We combined the Analytic Hierarchical Process (AHP) with the creation of aggregate measure, deriving by suitable indicators at the end of the tree. Our findings open new avenues for future research in the field of uncertainty factors in the SIB landscape. Finally, our results represent a basis for implementing a prediction model for social uncertainty evaluation.

Highlights

The present work aims to shed some light on this issue, by realizing a practical application of a model—which is an extension of a framework previously proposed—for social uncertainty evaluation in Social Impact Bonds (SIBs)
Our analysis focussed on social uncertainty, meant as the possibility that an SIB could not reach the intended impact or generate the expected social outcomes
The study was conducted in order to apply the model previously developed by Scognamiglio et al [5] in a practical context by trying to improve it and to understand if and how it was able to reveal uncertainty in SIB projects

Summary

Introduction

Built around a collaborative public–private contract, SIBs represent a new funding model that aims to improve service quality and to enhance the social outcomes achieved by using private resources rather than public funding. Proponents of SIBs often suggest that these new schemes have the capacity to leverage additional resources for innovative services that will help, in the near future, to improve social outcomes and cost savings for the public commissioner [6]. SIBs involve payment-by-results (PbR) through a contract between public service providers and private investors [41], in which investors provide the upfront financing to service providers for the interventions that target a social outcome. The commissioner ( named the outcome payer) makes PbR payments based on the level of social outcomes achieved.

Results

Discussion

Conclusion