Social Impact Bonds Research Articles

Regime diferenciado de contratações públicas e contratação por resultados no Brasil

Este trabalho objetiva, em síntese, o estudo da contratação por resultados como instrumento de ampliação da eficiência da Administração Pública. Para isto, a pesquisa é iniciada com a análise do cenário internacional e as principais espécies de contratos por resultado: Payment by Results (PbR) e Social Impact Bonds (SIBs), que têm como traço comum a transferência para o particular dos riscos financeiro e operacional na prestação de serviços de interesse público e a remuneração proporcional aos resultados. Estudar-se-á, ainda, o Regime Diferenciado de Contratações Públicas, inaugurado no Brasil para atender aos grandes eventos esportivos e posteriormente perenizado. Será demonstrado que o RDC inovou a contratação pública no Brasil com algumas características, como possibilidade de contratação integrada, sigilo do orçamento estimado, inversão de fases da licitação e previsão de um recurso único, tudo para garantir mais celeridade (na licitação e na execução do contrato) e evitar o conluio e outros ataques à concorrência pública. Por fim, serão estudados os contratos por resultados previstos no RDC – contrato de remuneração variável e contrato de eficiência – para fazer uma análise comparatista com o PbR e as SIBs e avaliar a implementação destas no Brasil sob o marco daquele regime diferenciado.

Funding Innovative Healthcare Programs Through Social Impact Bonds: Issues and Challenges

Funding Innovative Healthcare Programs Through Social Impact Bonds: Issues and Challenges

The broken promises of the social investment market

The United Kingdom is pioneering a new model for the delivery of public services, based around the device of a social investment market. At the heart of this social investment market is an innovative new financial instrument, the social impact bond (SIB). In this paper we argue that the SIB promises (partial) solutions to four aspects of the present multifaceted crisis: the crisis of social reproduction; the crisis of capital accumulation; the fiscal crisis of the state; and the crisis of political legitimacy. In this sense, we conceive the social investment market as a crisis management strategy. We draw on evidence from the world’s first SIB, the Peterborough SIB, launched in 2010, as well as from other SIBs, in order to assess the extent to which the social investment market delivers on its four promises. In doing so, we argue that the crisis of neoliberalism and the social investment market are not only in historical correspondence, but in a relation of causality to one another. In developing this argument, this paper contributes to contemporary theories of neoliberalism by investigating how concrete state developments and societal restructuring is being advanced around the idea of linking marketization with progressive social change. It also supports critical practitioners by offering a theoretical lens to identify the contradictions of this increasingly popular policy approach.

Public–private partnerships, social impact bonds, and the erosion of the state in Canada

Public–private partnerships and social impact bonds are both forms of private sector encroachment on state activity and are new frontiers of commodification that rely, ultimately, on subsidies or concessions from the state. This article provides an update on both models in the Canadian context, and it reviews theories that rationalize their emergence and growth. Both models have been nurtured by direct and indirect government support, as opposed to any demonstrated superiority, raising concerns that these models are proceeding contrary to the public interest.

A Swedish Market for Sustainability-Related and Socially Labelled Bonds. Institutional Investors as Drivers

The report examines the role that Swedish institutional investors might play in the development of a Swedish market for sustainability-related and socially labelled bonds. Engagement by the financial sector is seen as a necessity for society’s ability to cope with the growing stress on welfare systems and the demands presented in the 17 United Nations Sustainable Development Goals (SDGs). While Sweden has been in the foreground with green bonds, the country is lagging behind many other western liberal market economies on social bonds. A point of departure for this research has been to better understand SDG 11, on the development of sustainable cities and communities, and what are viewed in Sweden as run-down and socio-economically weak suburbs. Drawing on international experience of sustainability-related and socially labelled bonds as well as previous experience of Swedish impact investing, the report analyses the drivers of and forces constructing this virgin market, zooming in on the role taken of three parties: institutional investors and the issuers, mainly local governments and property developers, with the financial sector acting as intermediary. The report finds that the institutional investors have taken a variety of approaches to social bond investing, which is an indicator of a lack of guidance from both the individual investor-organizations’ boards as well as the Swedish public. In the few cases where investments have been made, previous experience of both green investing and foreign social bonds were used as stepping stone. Overall, knowledge is weak, in relation to both evaluating risk and return and understanding the impact metrics linked to the bonds’ use of proceeds. Furthermore, potential Swedish issuers are yet to come forward. As is the case in other western countries, Swedish public financial institutions – such as the export agency and a government sponsored mortgage lender, appears to be at the forefront. Nonetheless, Swedish local governments, which play a central role in the high-tax economy’s delivery of public services, remains hesitant, prevented by the limited successes of previous experimentation with social financial instruments such as public social investment funds and social impact bonds. This is compounded by restrictive accountancy practices, organizational silos and a culture that shuns public-private collaborations. The report makes recommendations on how to help the socially labelled bond-market achieve take-off, such as enhancing the development of financial vehicles, private as well as government-sponsored, and speeding up the work with the development of standardized metrics. In addition, institutional investors need to step up, and be braver than they are currently – at least if they claim to take all the SDGs seriously. A key message to the issuers is not to ask for too much in relation to risk-sharing – socially labelled bonds must not be too complex in structure or too complicated to evaluate for investors. However, the grand message from the report, is just the spreading of knowledge of the value of developing a market for socially labelled bonds, and the role that domestic institutional investors can play, if they decide to increase their commitment.

Prospects for implementation of social impact bonds in Poland — an example of an intervention on the labour market

The aim of this article is to describe social impact bonds as an innovative instrument for financing social services. The first part presents the nature of this solution in its economic, institutional and legal aspects. Then we analyse the chances of social impact bond development taking into account the labour market and the financial market. In the next part, the authors present a proposal to use the model of social impact bonds in employment support services. The summary is a critical analysis of the model, presenting its weaknesses and relevant remedial strategies.

Dc Water: Turning Sewers from Gray to Green

Mark Kim, CFO of DC Water, believed building green infrastructure in Washington, DC, was an innovative way to improve the performance of the city's aging sewer system and save money. In considering the options to fund a pilot program, Kim was especially intrigued by a new financing structure: social impact bonds (SIBs). Partnering with Eric Letsinger of Quantified Ventures, they built on SIBs to develop an Environmental Impact Bond. This case discusses the risks and potential rewards of financing the pilot through a new structure at the intersection of public policy, finance, and science, the costs and benefits of employing green infrastructure, and the potential investor base for the new financial product. It also challenges students to consider the use of private capital to finance social outcomes. Excerpt UVA-F-1854 Rev. Aug. 29, 2019 DC Water: Turning Sewers from Gray to Green Mark Kim, CFO of DC Water (formerly called the District of Columbia Water and Sewer Authority), was sitting in his office in southwest Washington, DC, in May 2015, considering his options for the final phase of an infrastructure modernization project that had been underway for over 10 years. Under a newly renegotiated agreement with the US Department of Justice and the Environmental Protection Agency (EPA), the project's final phase would utilize innovative technology, known as low-impact development or green infrastructure, to be more environmentally friendly and less expensive than traditional sewer infrastructure. Kim worried, however, about the risks involved in implementation. Although the underlying technology had been proven over the last several years, it had not been widely implemented. Moreover, the infrastructure's performance depended on a number of variables specific to the location, including geology, soil conditions, weather, and the price of land. DC Water CEO and General Manager George Hawkins was hoping to proceed with the green infrastructure, and it was Kim's job to figure out how to pay for it. DC Water DC Water was an independent authority of the District of Columbia government. It provided water and sewer services to more than 681,000 residents of the District of Columbia, as well as 1.6million people in Montgomery and Prince George's Counties in Maryland and Fairfax and Loudon Counties in Virginia, covering a service area of approximately 725 square miles (see Exhibit1). In 2016, DC Water pumped an average of 99million gallons of water per day to its customers through a network of 1,350 miles of pipes, four pumping stations, five reservoirs, three water tanks, and 9,510 fire hydrants. It also operated 1,900 miles of sewers, 160 flow meters, nine wastewater pumping stations, 16 stormwater pumping stations, 12 inflatable dams, and a swirl facility. DC Water's Blue Plains Advanced Wastewater Treatment Plant was one of the largest facilities of its type in the world, covering more than 150 acres and treating an average of 290million gallons of wastewater per day. . . .

Setting realistic expectations: The narrow use-case for Social Impact Bonds

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Obligacje społeczne – stan rozwoju w Polsce

The primary purpose of the article is to describe the development status of social impact bonds in Poland as an innovative instrument for social services financing. Within the framework of the defined purpose realisation, the first part of the article presents the short characteristics of social impact bonds, with particular emphasis on the subject of their activities, i.e. social problems to be solved using them. The second part of the article is focused on discussing the state of work related to launching the first national social impact bonds and social impact bonds accelerator and the characteristics of the implemented projects.

Struggling for the Moral Market: Economic Knowledge, Diverse Markets, and Market Borders

abstractFocusing on the recent emergence of behavioral and experimental economics and its implications for the design and implementation of social policies, we demonstrate that geographies of marketization are not confined to the narrow study of the models of neoclassical economics. We structure our argument around what we perceive as key dimensions of marketization and their variegated geographies: First, we argue for renewed attention to the naturalization of abstract market knowledge and its methodological separation from real markets in the wake of the behavioral and experimental turn. We then turn to really existing markets, conceptualizing them as articulations of a variety of economic and social rationalities struggling over an apparent “moral market.” Third, we focus on the role of the nonhuman in marketization processes and discuss the work of market devices in making these market arrangements possible. In the fourth and final section we turn to the “human side” of marketization. Our argument is that market struggles connect with the formation of “quasi-subjects” that oscillate between attempts to reestablish autonomy and their dissolution in the disciplining webs of behavioral and experimental market devices. Throughout the text we illustrate our arguments on the so-called social impact bonds as a concrete example for the types of policy intervention informed by economic behaviorism and experimentalism.

Paying for impact: Venture philanthropy and social investing as funding models for integrated care

Introduction: The growing prevalence of chronic diseases and population aging are placing a heavy burden on healthcare systems around the world. In particular chronic disease patients would benefit from a better integration of their care, but integrated care also holds a big potential to generate value – better quality, patient experience and lower costs – for the healthcare system as a whole on the long term. To achieve these results in the future greater investment in integrated care is needed now. Venture philanthropy and social investing VP/SI, which utilizes mostly private investor and foundation money with – in general – the aims of both causing a positive, measurable social impact and making a financial profit although not all VP/SI feature the financial return piece – e.g. foundations, could be an alternative funding model to accelerate the necessary growth of integrated care. Policy context and objective: The 2015/16 survey of the European Venture Philanthropy Association EVPA highlights overall growth for the European VP/SI sector, 108 organizations allocated €6.5 billion between them since they began their operations, a 30% increase compared to 2013. The objective of this contribution is to highlight the distinctive features and models of VP/SI and elaborate potential opportunities for integrated care models to tap into this source of financing. Highlights: VP/SI is often implemented through direct private equity investments, debt, grants or fixed-income securities for social entrepreneurs. Alternatively also pay for success models, such as social impact bonds, social impact incentives, impact innovation challenges or shared saving models, gain in importance. In our contribution, we will discuss these different financial instruments and illustrate their applicability to financing integrated care by using examples of successful implementations around the world. One example, we will discuss is the German OptiMedis AG who secured a large six-digit equity investment by the social impact investment fund BonVenture to promote the further development and scaling of its population-based integrated care models. Further models from the UK, Mexico and other countries will be used to demonstrate pay for success models. Transferability: The ethos of VP/SI seems to be predestined for integrated care initiatives and could enable the development, testing, implementation and scaling of integrated care approaches. Unbound from the fragmented departmental approach of health care payer or state-funded projects, it may help to align the incentives of all stakeholders to maximize social impact. Conclusions: VP/SI offers great opportunities for integrated care approaches to attract necessary funding to achieve its aims and should also be evaluated by policy makers as alternative funding mechanism. However, the impact and value-based approach of VP/SI has also implications for integrated care insofar empirical evidence will gain in importance. The need for outcome-oriented evaluation and pay for success models will rise and evidence-based models will be preferred.

Recent Innovations in Socially Responsible Investing (SRI): The Role of “Socially Responsible Bonds” in Spurring Sustainable Development

While it has become clear that the global community needs to utilize partnerships between the public and private sectors to achieve broader economic and development goals, there has been less discussion about the potential role of investors in shaping and participating in this movement. Part of this may be due to familiarity with traditional methods such as official development assistance (ODA) and relatively less understanding about recent innovations in socially responsible investing (SRI), including social impact bonds and development impact bonds. As economies like Korea have begun to show greater interest in harnessing various investment strategies to achieve broader social goals, we find it critical to better understand what financial tools are available within the context of encouraging sustainable development. As such, this paper highlights the potential role investors can play in contributing to broader social issues both at home and abroad through an examination of recent innovations in SRI – specifically, the category of so-called “socially responsible bonds.”

Government under pressure: investing in better outcomes through social impact bonds

With shrinking resources and declining federal transfers, provincial governments across Canada are forced to provide increased levels of supports to vulnerable individuals with decreasing resources (Janssen & Estevez, 2013). Governments continue to face obstacles in meeting the needs of vulnerable populations such as children, single parents, and those who are homeless, to name a few. Manitoba, for instance, faces demographic challenges related to an influx of newcomers who are seeking refuge, resettlement, and housing supports, an aging baby boomer population that will need end-of-life supports, as well as a growing number of children in government care. Instead of funding programs based on their activities and outcomes, this paper presents outcomes-based financing, such as the social impact bond, that reward service providers who are able to demonstrate proof of outcomes and can show how the intervention improved the lives of the individuals it was meant to serve. Under a social impact bond, government engages non-traditional partners in the private and non-for-profit sectors, and the community as a whole becomes part of the solution to challenging social problems.

Contratos de Impacto Social na rede estadual de São Paulo: Nova modalidade de parceria público-privada no Brasil

Este artigo analisa o desenvolvimento de uma nova modalidade de parceria público-privada na educação brasileira, o denominado Contrato de Impacto Social (CIS), cujo projeto-piloto, patrocinado pelo Banco Interamericano de Desenvolvimento, está em fase inicial de implementação no Estado de São Paulo. Diferentemente da filantropia tradicional, que se legitima no pretenso caráter não-lucrativo de suas ações, o CIS assume a possibilidade de obtenção de taxas de retorno com “investimentos sociais”, ensejando a criação de um novo ecossistema de finanças sociais e incorporando ao contexto da privatização da educação agentes interessados em capitalizar com a provisão de serviços públicos a populações vulneráveis—no caso em tela, a estudantes do Ensino Médio da rede estadual paulista. Esse tipo de contrato—cujo pagamento é feito mediante a “entrega” de resultados—levanta uma série de questões éticas, jurídicas e político-pedagógicas relacionadas à realização de “experimentos sociais” com estudantes em condição de vulnerabilidade. A partir da análise de documentos internos da Secretaria de Estado da Educação de São Paulo, cotejados com fontes provenientes de escolas estaduais, concluímos que, já desde o início de sua implementação, o CIS da educação paulista não apenas rompe com padrões de ética científica, mas também viola o princípio da gestão democrática escolar consagrado na Constituição Federal.

Social Impact Bonds: A Tax-Favored Investment?

Salt Lake County, Utah, like many other counties throughout the nation, has struggled with finding a meaningful and effective way to address persistent homelessness and high rates of recidivism within the county. Current government funding for programs to address these issues is limited and their effectiveness is often unknown. The result is costly: 43% of persistently homeless individuals in Salt Lake County become chronically homeless within two years; 74% of high-risk offenders return to county jail within four years of their release; and the Salt Lake County jail is currently operating at full capacity. These issues also result in numerous other social and financial costs to society. In an attempt to address these issues, in December 2016, Salt Lake County launched a million dollar initiative to provide more than 500 of the county’s most vulnerable and at-risk population with innovative, evidence-based, preventative services never before available to these residents. Unlike other social programs, the government (and taxpayers) will not have to pay anything initially. Instead, investors will provide the upfront capital to finance the program and assume the risk of an unsuccessful program. If the program is successful in achieving pre-determined results, only then will the government repay the investors their initial capital, as well as a small return on their investment. The structure of the Salt Lake County program is just one example of a new type of financing mechanism that has recently emerged: social impact bonds (“SIBs”). Although still in their infancy, SIBs have generated a lot of excitement. They have received support from the Obama administration, major financial institutions, policy experts, philanthropic organizations, and universities. As a result, numerous SIBs have already been launched in communities across the country and world to address issues ranging from unemployment and child welfare to education and mental illness. Despite this initial excitement, SIBs have not yet generated sufficient private capital to truly make an impact in the United States. This Article is the first to argue that U.S. tax law is one factor that significantly contributes to the lack of private SIB investments in the United States. To demonstrate the chilling effect that the tax law has on these potentially powerful investments, I first describe the concept of a SIB, its benefits and limitations, and the likely tax implications to private SIB investors. Against this backdrop, I then consider from a normative perspective whether Congress should modify federal income tax laws to make SIBs a more tax-favored investment for private investors. My conclusion is that a tax policy change is needed.

A Responsibility to Profit? Social Impact Bonds as a Form of “Humanitarian Finance”

ABSTRACTRecent years have seen the emergence of social impact bonds (SIBs), geared toward funding social interventions while earning financial returns. The article proposes to conceive of SIBs as a practice of contemporary humanitarianism. In an effort to trace the politics of such humanitarian finance, the article analyzes a SIB that sought to improve outcomes for homeless persons in London. It argues that, instead of relying on sentimental stories, the project was animated by a results-oriented, technocratic culture geared at solving social problems (rather than just alleviating suffering). Its mode of reasoning, however, directed attention to highly vulnerable individuals – and away from the structural conditions that perpetuate poverty. But at the same time, the scheme reworked exclusionary constellations “from within.” Thus, such humanitarian finance simultaneously performs a relation of inequality and a relation of assistance. The article makes the case for an ongoing engagement with both dynamics.

The Amagasaki Pilot Social Impact Bond in Japan – Participation of SMEs in Public Markets

Social Impact Bond (SIBs) attracts massive attention recently not only by major enterprises, but by SMEs in Japan to solve the social problems. This paper analyzes the first SIBs case on youth employment support in Amagasaki, Japan as well as the first SIBs case in Augsburg, Germany. Further, it considers the entry of SMEs that are familiar with local fields and circumstances to realize public-private partnerships and examine the possibility of their participating into the SIBs in Japan. SIBs invite the process improvement of the public procurement. Across SIBs, participation of SMEs in solving social problems conforms to the growth strategy of the Japanese government, and as a result to contribute the process improvement of public procurement.

Austerity in the making: reconfiguring social policy through social impact bonds

Social impact bonds (SIBs) are spreading worldwide in the absence of public debate and proof that they improve social outcomes, despite claims to advance evidence-based policymaking and transparency in government. A critical policy reading of SIBs elucidates this conundrum. We argue that SIBs are part of a neoliberal political project that uses austerity as an economic and moral symbol to manufacture consent for social service reform. The intent of this research provocation is to identify future avenues for empirical research on SIBs to further assess how the tool reconfigures social policy in a profoundly neoliberal direction.

Surveying the SIB economy: Social impact bonds, “local” challenges, and shifting markets in urban social problems

ABSTRACT Confronted with the challenge of how to address complex urban problems in a climate of fiscal austerity, many governments around the world have turned to a new funding tool: the social impact bond (SIB). Pioneered in the UK in 2010, SIBs are investment contracts in which investors offer upfront funding for preventative social programs, with government agreeing to repay the investment and provide a return if these programs meet specified outcomes. Though SIBs have been the focus of a growing policy and academic literature, little is known about the work of building the SIB market infrastructure, the actors performing this labor, and the challenges and struggles encountered along the way. Drawing from the results of a larger 3-year study of SIBs in Canada, the United States, and the UK, this article maps out the essential features of each respective “SIB economy” and examines how the unique struggles encountered in each context reflect key tensions between the “financial” and the “local”; between urban financial elites and the logics of risk/return, standardization, and scale; and the local nature, contexts, and contingencies of urban social problems and related markets in social and public services. The result is a different lens through which to evaluate the nature, limitations, and future of social impact bonds.

Social Impact Bonds and Institutional Investors: An Empirical Analysis of a Complicated Relationship

Over the past 8 years, social impact bonds (SIBs) have attracted increasing attention from scholars, policy makers, and investors. Notwithstanding good intentions and policy makers’ enthusiasm, SIBs have failed to attract significant private capital. Considering the SIBs issued worldwide until December 2017, we look for the critical success factors of SIB funding by investigating both the financial and contractual characteristics of SIB contracts. We find that institutional investors are more likely to participate in an SIB funding when there are fewer agency problems.