Social Impact Bonds Research Articles

Contributing to healthier populations by reducing energy poverty via innovative financial models

Abstract Issue/problem Energy poverty is a major challenge affecting 9.3% of the EU population (EUROSTAT 2022). Health problems attributable to energy poverty include respiratory diseases, heart attacks, stroke, and mental disorders. Governments must act quickly and intervene with policies and programmes that reduce energy poverty and promote citizens' health and well-being. Description of the problem We propose Social Impact Bonds (SIBs), a new family of instruments that address serious social challenges, to finance interventions targeting energy poverty,improving the health and well-being of households in a context of limited public resources. For this purpose, data from interventions to increase energy efficiency and combat energy poverty implemented during one year in 6 pilot sites in the framework of the EU project WELLBASED are used. First, a compliance check will be carried out, followed by an estimation of the costs, savings, and benefits of the application of SIBs to finance energy poverty reduction interventions with an impact on health. Results The results of the analysis will show whether the intervention to reduce energy poverty meets the necessary characteristics for a SIB to be implemented. In addition, the possible key actors that could lead its implementation are identified. Lessons If the interventions for the reduction of energy poverty carried out under the WELLBASED project are successful, SIBs could be considered as a valuable alternative to finance interventions that combat energy poverty and increase the well-being of citizens. Key knowledge on how to apply SIBs makers to tackle a serious social issue with important consequences on health will be at disposal of (EU and worldwide) local authorities and policy. Key messages • Energy poverty is a public health issue, requiring urgent support measures. • SIBs fund interventions via public-private collaboration to fight energy poverty and boost citizen wellbeing.

Validating weight optimization’s Impact on participants via Social Impact Bonds

Abstract Background To promote health for everyone, even the health-unconcerned, Okayama City has established the Social Impact Bond (SIB), which funds and executes social programs for defined outcomes, with third-party assessment. This study examined the normalization of participants’ physiques three years later to verify the effectiveness of SIB. Methods We conducted a study of a quasi-experimental design, non-randomized controlled trial. A total of 8,251 eligible people applied for the program. Of these, 1,599 were enrolled in the National Health Insurance System (NIH), and 731 of them were included in the intervention group in 2018. Among 705 non-participating matched members and randomly selected, 170 were used as the control group. Whether or not the standard physique in the endpoint (EP) FY2021, was used as the dependent variable, and the participation as the independent variable. Age, gender, and physique at baseline (BL) were used as covariates for logistic regression analysis. Results A total of 532 patients underwent health checkups for both BL and EP, and the follow-up rate was 60.5% in the intervention group and 52.9% in the control group. Examination of between-group differences in BL revealed that the mean age was 66.7 years significantly higher in the males’ intervention group and 60.6 years in the control group (p < 0.01). The crude odds ratio (OR) of maintaining or achieving standard BMI in the participating group was 0.90, and the adjusted OR was 1.23 and 1.31 after propensity score matching, both were not significant. On the other hand, when restricted to people with thinness, the pre-adjusted OR was 5.00 and the adjusted OR was 12.43. Conclusions Participation in the project contributed about 20% to 30% to weight optimization, and it could not be denied that it was brought about by chance. However, when limited to thin physiques, project participation was about twelve times higher, and the probability of having an appropriate physique was increased. Key messages • SIB might affect the BMI optimization for older people in improving thinness. • Efforts will be needed to encourage participation among younger age groups.

Inquisitive exploration of green finance, social finance, and capital formation in shaping economic development: insights from BRICS Countries

The significance of democratic commitment is highlighted on a global scale by the importance placed on offering a multitude of chances to establish enduring ecosystems and foster economic progress. Social finance, capital formation, and green finance have recently received a lot of attention from this perspective. Past studies mainly examined social finance and green finance in isolation. When investigating the individual impact of these important variables on economic growth in the occurrence of important events like the COVID-19 pandemic and other environmental pollution issues, most studies have mainly focused on developed countries, ultimately ignoring the different dynamics in emerging economies. The purpose of the research is to investigate the joint interaction between social finance (Social Impact Bonds), capital formation, and green finance (green loans, green investments, and green security) on economic development in BRICS economies. This research employed a longitudinal dataset from 2013 to 2023. The generalized method of moments (GMM) and fixed effect model (FEM) were employed in this research as statistical techniques for estimating parameters. The findings of this study revealed a positive joint relationship between green finance, capital formation, and social financing on economic development of BRICS economies. Therefore, measures that jointly promote social and green finance amidst environmental challenges or economic risks could present opportunities to mitigate the vulnerability of a country's economic prosperity. This research will surely guide policymakers in developing economies on how to give considerable attention to sustainable aspects while formulating policies and strategies aimed at economic development.

Outcomes-based contracts and the hidden turn to public value management

Despite long-standing criticisms of the paradigm, New Public Management (NPM) retains a strong influence over organizations in public administration. Social Impact Bonds (SIB) are an outcomes-oriented investment entity which has emerged from NPM with grand promises of social change. Building on a longitudinal case study of a health-based SIB, this paper identifies how key actors move away from NPM by resisting such management principles and shift toward Public Value Management (PVM). The paper finds that this is possible when the public interest and performance objectives are designed with a public value orientation whilst other NPM principles shift over time through resistance and negotiation. The paper provides insight into how key actors re-organize to embed public value in a financing and public service delivery structure that is often regarded as flawed and inefficient. The paper offers several contributions to public value literature, including the role of the state, as well as the emerging literature on SIBs and outcomes-based contracts.

The Role of Social Impact Bond on Utilizing Impact Investment to Develop Asir District in Line with the Kingdom’s Vision 2030: Academics and Economists' Perspectives

The social impact bond (SIB) is a new tool for financing innovative social projects and impact investment. This financial method has since been introduced (Warner,2013) in the whole world. SIBs are a strategically double-edged policy tool and policymakers should be prudent about SIBs because of legitimate convolution and management, responsibility, and precision (Tan, et al., 2021). The current study aims to explore the perspectives of academics and economists on the role played by Social Impact Bond in utilizing impact investment to develop Asir district in line with the Kingdom’s Vision 2030. The descriptive-analytical method was adopted by the researcher in this study to describe the responses of the study sample to its topic. Some indicators of the mean, standard deviation, and relative significance of each item of the study area were employed. This paper is eminently reflective, and the methodology on relies on an analytical research method. In addition, the results of 100 brief investigations collected in the Kingdom of Saudi Arabia are summed up to show the role played by Social Impact Bond in using Impact Investment and the circular economy's principles by businesses at the micro-level is underexplored in the literature. The findings of the study revealed that 82.3% of Academics and Economists perceive that the role played by social impact bond on utilizing impact investment to develop Asir district in line with the Kingdom’s Vision 2030 is effective, and the percentage of approval on the domain was high in terms of the mean of 3.86. Also, the study showed that Academics and Economists perceive Social impact bonds to include a wide range of interested parties such as Saudi governmental bodies, and investors to work together significantly to set up a SIB has many advantages as the mean hits 4.48 with a percentage of97.8 %. In light of the results, the study recommends decision-making bodies assess carefully what is the value added for applying social impact bonds.

Managing Social Impact Bonds: Intermediary Work and Designing Institutional Infrastructure

Collaborations addressing grand challenges seek social impact; whether such social innovations will endure beyond initial enthusiasm is a major issue. Over the last decade, Social Impact Bonds (SIBs) emerged to diffuse globally as a new form of cross sector collaboration to finance solutions for social problems. Crucially, SIBs rely on intermediary organizations to coordinate and govern relations across diverse actors with competing and conflicting interests and values. How an intermediary goes about this work has significant effects on whether the collaboration achieves the desired social impact and whether it endures. In this article, we examine the intermediary work that enables such a cross-sector collaboration by analyzing two of the first completed SIBs in Continental Europe. Our findings identify three main types of interweaving intermediary work of aligning, stitching, and knotting, that are supported by three distinct forms of institutional infrastructure (ideational, operational, and relational respectively) providing a significant contribution to the analysis of cross-sector collaboration by connecting intermediary work to institutional infrastructure.

Promoting public sector innovation: who does what, when and how?

A strong and prevailing innovation imperative is sweeping across the public sector and despite a growing literature on public sector innovation (PSI), the actors driving these processes tend to end up in the background of analysis. Based in an analytical framework of narrative theory and organization studies, and the efforts to introduce Social Impact Bonds (SIB) in Sweden as empirical case, the aim of this article is to unpack and analyze the neglected initial stages of PSI. Building on a 4-year qualitative study, the analysis shows that actors promoting PSI narrate the public sector as in need to “open up” for (1) new actors; (2) new services and solutions; and (3) new forms of knowledge. Our findings suggests that the initial stages of PSI are substantially more formative than previously indicated. We show how the innovation at hand function as a discursive node towards which the actors’ storylines gravitate. Despite differences, the actors involved narrate their world similarly constituting discourse coalitions that connects and aligns their interests and objectives. We argue that the early stages of PSI are to be understood as cognitive and narrative struggles, or negotiations. The potentially good news here is that change continuously takes place in processes of PSI, despite narratives of inertia. The potentially bad news is that the same change is difficult to predict, control and govern.

New public management marketizers versus Neo-Weberian state modernizers? Institutional configurations of social impact bond utilization among 18 OECD countries

ABSTRACT Social Impact Bonds (SIBs), a New Public Management (NPM)-style commissioning model, contain elements of other reform framings, widening their appeal and potential for variation in differing reform contexts. This study implements a fuzzy-set qualitative comparative analysis (fsQCA), seeking configurations explaining SIB uptake across 18 OECD countries. The two high-utilization configurations produce an Anglo-American model of NPM marketizers and a European model of Neo-Weberian State (NWS) modernizers, whereas the four low-utilization configurations include exclusively NWS modernizers and maintainers, suggesting SIBs as a fertile case study of public management reform tools adapting and trajectories merging in differing national administrative cultures and contexts.

The Aspire Social Impact Bond: How social impact bond financing can promote positive social and economic outcomes

AbstractFinancing human service delivery through social impact bonds (SIBs) is the subject of some critical commentary in the academic literature, but this tends to be largely theoretical rather than empirically based. This paper presents empirical evidence of how SIB financing can promote positive social and economic outcomes for governments, not‐for‐profit providers, individual service beneficiaries and society more broadly. The paper presents some of the results of an evaluation of the Aspire SIB, which financed an innovative intensive case management program providing housing and wraparound supports over a 3‐year period for people experiencing chronic homelessness. Aspire participants experienced significantly improved outcomes and decreased service needs, delivering downstream cost savings across several areas of government service delivery. This paper describes how the SIB financing mechanism underpinned the success of Aspire by promoting flexible, collaborative, outcome‐focussed and data‐informed responses to a challenging, multi‐faceted social problem.

Vaccine Impact Bonds: An Alternative Way of Allocating the Economic Risks of Mass Vaccination Programs.

Vaccines can be an appropriate tool for combating pandemics. Accordingly, expectations were high when the first Covid-19 vaccines were administered. However, even though the vaccines have not met these high initial expectations, vaccine manufacturers and their investors were making large profits, while most of the associated economic risks have remained with the taxpaying public. Thus, this paper applies the concept of social impact bonds to mass vaccination programs by conceptualizing vaccine impact bonds (VIBs) as an alternative to the advance purchase agreements (APAs) for Covid-19 vaccines. Rather than rewarding vaccine manufacturers and their investors based on the quantity of doses distributed, VIBs intend to link the real-world vaccine impact to the financial returns of vaccine manufacturers and their investors. This paper indicates that VIBs can theoretically shift the economic risks of mass vaccination programs from the taxpaying public to private investors, thereby aligning commercial and public interests. However, it also identifies several major weaknesses such as the complexity of defining and evaluating the vaccine impact as well as the inherent trade-off between relieving taxpayers (through VIBs) and allowing innovation. As these substantial drawbacks outweigh the theoretical strengths of VIBs, this paper calls for further research in order to identify better alternatives to the Covid-19 vaccine contracts.

Socially responsible investment: Ex-ante contracting or ex-post bargaining?

This paper shows how a socially and environmentally aware firm principal can motivate a profit-oriented manager to pursue positive environmental, social, and governance (ESG) outcomes. In the model, the manager produces a verifiable output that creates social costs but also engages in an unverifiable output that promotes ESG. The paper demonstrates that an ex-post bargaining contract is preferred to an ex-ante commitment contract if the unverifiable output substantially improves ESG or if there exist substantial social costs. The paper also examines how social impact bonds can be more effective than short-term debt when used to finance social programs.

Contracting ‘person-centred’ working by results: street-level managers and frontline experiences in an outcomes-based contract

ABSTRACT Outcomes-based contracting (OBC) has been heralded as a mechanism for improving the efficiency and effectiveness of social programmes yet has persistently failed to deliver meaningful support for people experiencing social disadvantage. This mixed-method study evaluates the contractual shift of a British support service for adults with multiple, complex needs from bilateral fee-for-service arrangements to an outcome contract in the form of a ‘social impact bond’. Our findings add much-needed empirical evidence on the implications of OBC for personalization and co-production of public service delivery. In contrast to prior payment-by-results experiments we find evidence of enhanced person-centredness and asset-based practice.

Smart City Projects Financing

The implementation of advanced digital technologies and innovations in smart cities for the provision of more efficient, sustainable, and inclusive city services, the development of infrastructure, and the improvement of citizens’ quality of life require appropriate financing technologies. In addition to purely public (for example, green bonds, social impact bonds, state subsidies, etc.) and purely private (venture investments, leasing, etc.) financial instruments, various options for public-private partnerships and financing with and against the participation of the community (participatory ), which increase the efficiency of budget financing due to the agreed distribution of risks and responsibilities between stakeholders. The bibliometric analysis of publications indexed by Scopus using the keywords “smart city” and “public-private partnership” using the VOSviwer tool allowed establishing the periods of growth (2013-2019 and 2022-2023) and decline (2019-2022) of the popularity of this topic among scientists, countries-leaders of research activity (USA, India, China, Italy, Spain, Great Britain, Canada and Germany), dominant directions of cross-sectoral research. The analysis of the Smart City Index Report (IMD Smart City Index Report) showed that in 2023, the top 5 leaders were Switzerland (Zurich), Norway (Oslo), Australia (Canberra), Denmark (Copenhagen), and Great Britain (London). With the help of the Google Trends toolkit, an analysis of the dynamics of Internet requests over the past 10 years from citizens of these countries, as well as Ukraine and the world, was carried out using identical keywords. The analysis proved that both in these countries and in the world as a whole, public interest in the development of the smart grid was recorded (in Ukraine, the highest peak (100 GT Scale) was in 2019; in Great Britain and Switzerland – in 2018, in Denmark – in 2017 and 2022, in Australia and Norway – in 2016) against the background of an almost absolute (except for Great Britain and Australia) lack of public interest in issues of public-private partnership. A regression model was developed to study the impact of participatory financing on the readiness level of Ukraine’s regions (as of 2020) to implement smart local development technologies. An integral indicator was used as the resulting variable, within which data on the assessment of the availability of electronic public services and the level of automation and digitization of public services (the number of state and local self-government bodies that provided the possibility of using electronic democracy tools), the level of use electronic platforms for communication with state bodies (the number of registered “E-appeals”, published “E-petitions” and reports on “E-consultations”), the availability of the Internet (the number of Internet subscribers and the share of households that have access to Internet services home). In the modeling process, adjustments were made for the gross regional product and the population of the respective region, the weighting factors were determined by the method of principal components, the estimation of the model parameters was carried out by the method of least squares, the calculations were made using the MS Excel spreadsheet and the Statistica application program package.

New insights on social finance research in the sustainable development context

AbstractResearch on sustainable finance has experienced significant growth in recent years, but the exploration from a comprehensive perspective is still in its nascent stages. As of July 2023, our research revealed that this area remains relatively underexplored in the existing body of knowledge, leading to a notable lack of comprehensive research analyzing the current state‐of‐the‐art in the social finance arena. To address this gap, our study takes a pioneering approach by utilizing scientometrics and network analysis techniques, specifically employing VOSviewer and Bibliometrix in conjunction with Web of Science and Scopus databases. By merging data from both sources and removing duplicate entries, we established a consolidated database of 401 relevant studies. Through our analysis, we have identified prominent authors, sources, and the most influential studies in the social finance arena. Additionally, we examined the coupling of studies and authors to ascertain their significance in this emerging domain. The results have unveiled several prominent further research, including mainly social banking, Islamic finance, social innovation, the impact of the COVID‐19 pandemic, impact investing, social impact bonds, and Sustainable Development Goals. By shedding light on the current landscape, our findings comprehensively understand the field's progress and potential directions. This insight is valuable for market participants, researchers, policymakers, and decision‐makers seeking to navigate and contribute to the evolving landscape of sustainable finance with a social focus. Furthermore, our innovative use of scientometrics and network analysis sets a precedent for future research exploring the complex interplay between finance, development, and sustainability.

Social Impact Bond assetization struggles: A comparative case study of the United Kingdom and Germany

Assetization has become a promising analytical lens in the field of economic sociology and related disciplines. It highlights the creation of reliable income streams for investors instead of competition, tradability and the short-term nature often highlighted in the analysis of (financial) marketization. The Social Impact Bond (SIB) is a noteworthy phenomenon to explore the potential development of assetization. The SIB developed from an original idea, wherein the risk for social programme delivery was supposed to transfer from the state to private investors, to a scheme, where the state increasingly de-risks private investors, particularly in the United Kingdom. We present a comparative case study of two SIBs from a SIB-hesitant institutional environment (Germany) and the United Kingdom, a country that supports SIBs through government investment funds. In both cases, we find assetization not being a straightforward process, which is why we focus on assetization struggles. We find assetization struggles along two dimensions: first, we observe actors struggling in relation to the investor return element of the SIB, second, we observe actors struggling in relation to the question of how, and to what extent the SIB framework should change the organization and practices of social work on the ground.

Codesign in Action: Design Principles to Successfully Manage Transformative Social Innovation

To meet grand challenges, organizations must rethink how they establish their objectives and processes in a more sustainable way. Social innovation is seen as a very promising way to respond to this call. Nevertheless, social innovation encounters difficulties in scaling and reaching its transformative power. On the basis of the theoretical framework of transition management, our article focuses on the codesign of transformative social innovation by trying to identify how actors can manage it successfully during the experimentation phase. We have conducted research based on the design science methodology to develop both concrete solutions to solve empirical problems and build strong design propositions. The results and design propositions stem from the analysis of three case studies of French social impact bonds (SIBs), which are contractual tools funding social innovation programs. SIBs are, by nature, codesign processes involving different types of stakeholders (private funders, public commissioners, and nonprofit organizations). This article provides six design principles to support the cooperation and alignment of multiple stakeholders to foster their scaling up, which is crucial for perpetuating social innovation. This research contributes theoretically to both the social innovation scaling literature and the transition management framework and offers practical guidelines to help social practitioners to codesign and manage transformative social innovations.

SOCIAL IMPACT BONDS AS AN INTERNATIONAL FINANCIAL INSTRUMENT FOR PUBLIC BUSINESS-PROJECT IMPLEMENTATION

The article analyzes the mechanism of creation and functioning of social impact bonds. In the process of implementing social programs with the participation of the state, there is an urgent need to find and attract capital assets. However, not all financial instruments that exist on the market are able to provide the set goals precisely in the long-term perspective of achieving social effects. For this purpose, such a new financial instrument as a social impact bond is proposed. Due to its simplicity and convenience, this type of bond provides benefits both for socially vulnerable segments of the population and for investors who aim to be socially significant and responsible in society. At the same time, the effectiveness of the use of investment capital in this case will depend on the level of social effect, which must be measured and evaluated. The use of social impact bonds and their results have been confirmed by the experience of many countries around the world.

Crime Prevention through Social Finance and Social Impact Bonds

The rate of adoption of the Social Impact Bonds (SIBs) remains substantially low despite the perceived public attention. Even considering widespread interest in the SIBs model, the low adoption mode suggests that the program is still in its early diffusion phase. In a bid to reduce or control crime rates, the SIBs model represents one of the strategies geared toward social reforms. It was initially piloted in 2010 at Peterborough prison with private financing for crucial social programs. The government could only pay returns to successful programs as an underlying condition. Besides its adoption in the United Kingdom, several states in the United States borrowed similar SIBs programs. This paper examined various aspects of measures of converting cases of recidivism into valuable financial assets and the shortcomings of such programs within the domain of the criminal justice department.

Contract, Status and the Bonds of Welfare

This article explores the relationship between contract and status in the context of contemporary social policy. Using examples of contract in the areas of unemployment policy (what is here called the workfare contract) and what has become known as the financialisation of the welfare state (Social Impact Bonds), the article identifies the types of bonds and obligations involved in those contracts and their sources. Drawing critically on Émile Durkheim and Max Weber's work on the history and pre-history of contract, it is argued that issues of status - the status of the unemployed and capital, amongst others - lie at the core of those contracts. Consequently, unlike analyses that equate aspects of contemporary social policy with a shift from status to contract, it is argued that contract and status are inextricably linked and that a fuller understanding of contract depends on an exploration of the non-contractual dimensions of contract.

Factors influencing intention to invest in Shariah-compliant social impact bonds in Malaysia

Purpose The purpose of the paper is twofold. Firstly, this study aims to investigate the factors influencing stakeholders’ intention to invest in Shariah-compliant social impact bonds (SC SIBs) in Malaysia. Secondly, this study compares the differences in the perception of different stakeholders on the importance of the factors. Design/methodology/approach Using the extended theory of planned behaviour, the study undertakes a questionnaire survey on licensed capital market investors and individuals involved in the development of the financial market (developers). A total of 260 complete and valid responses were obtained from the survey. Multiple regression and Mann–Whitney tests were carried out to achieve the two objectives, respectively. Findings The results reveal that attitude (β = 0.447, p < 0.01), subjective norm (SN) (β = 0.255, p < 0.01) and moral norm (MN) (β = 0.163, p < 0.01) are significantly positive predictors of intention to invest in SC SIBs. In terms of the differences in the perceptions of the two parties, the results show that the factors have more effect towards developers than investors. Originality/value The empirical evidence from this study on the factors that influence stakeholders’ participation in SC SIBs is useful to the policymakers and interested parties in taking the next steps to develop, implement and promote SC SIBs to stakeholders in Malaysia. Fund managers can use the study’s insights to promote positive attitudes, SNs and MNs towards SC SIBs, especially targeting developers who are more influenced by these factors. More importantly, the results indicate a need for different strategies to influence the stakeholder investment behaviour of SC SIB in Malaysia to ensure that it is sustainable and viable in the long run.