Association for Public Policy Analysis & Management

Panel: Social Impact Bonds – Challenges of Measurement, Impact and Policy Innovation

(Public and Non-Profit Management and Finance)

Social Impact Bonds (SIBs), also known as Pay for Success Bonds in the US, represent an emerging innovation where private investment is levered to fund social interventions. They are promoted as a funding mechanism that will allow innovation in delivering social outcomes and provide opportunities for new providers to enter the ‘market’ for delivering social outcomes. Currently there are 32 SIBs in the UK and 13 in the US covering a wide range of areas including youth unemployment; mental health; criminal justice and homelessness. Despite attracting substantial attention since 2007, thinking surrounding SIBs has largely been developed by proponents, practitioners, and policy-makers. The empirical evidence to date on SIBs remains very limited, largely developed by proponents. The academic contribution is currently a smaller, more critical literature (e.g. – taking a more cautionary approach to SIBs). This panel seeks to bridge this gap by exploring the relationship of the overarching SIB ‘project’ with broader trends in social policy, social investment and performance measurement. These are pressing questions in an environment where significant expansion of SIB based programmes is imminent despite the gaps in our empirical knowledge and theoretical understanding.

 The aim of this panel is to bring together international experience to explore what can be learned from this early set of SIBs in the UK and US through an evaluation framework that covers three phases of analysis. The first paper from the UK questions the motivations behind SIB design: what is the purpose of SIBs? How do they work? And is there evidence that they can deliver on their claims? The second paper, also from the UK, analyses SIBs as an innovative evidence-based intervention that can encourage policy making and policy change. The third paper, based on US case studies, considers the empirical justification and impact of SIBs as levers of public investment: do they broaden or narrow the scope of public support for investment in social programs?

These perspectives are important because they consider the lifespan of a SIB transaction, from its rationale and theoretical purpose, to its place as a new tool for evidence-based policy, to its tangible results in terms of increased investment in and access to social services. This panel triangulates the question of “what works” in social service delivery, evidence generation, and return on investment: what is the evidence to support Pay for Success? With many new transactions in the pipeline, a nuanced approach will be critical to future development. These authors will discuss the implications of SIBs and the challenges in their design and implementation. Concerns remain over public participation in the design process, voices of clients, high transaction costs, data transparency and accountability, and efficacy of SIBs in achieving strategic objectives, such as financial returns, broader social impact, or a new investment market.