Canadian Government Executive - Volume 25 - Issue 03

12 / Canadian Government Executive // August/September 2019 GOVERNMENT Unlocked Potential to Transform How We Fund Social Services By Wenjue L. Knutsen, PhD Social Impact Bonds: C anada is among the world’s first countries that experi- mented with a new tool to fund social services – the So- cial Impact Bond (SIB). Typi- cally, a SIB utilizes private investors to fund social welfare services. Under this model, the government will only need to repay the private investors if performance outcome targets are met by the third-party service provider. Ideally, a SIB can fund social intervention programs, transfer the risk to private investors, and potentially even lead to long-term cost-savings for tax- payers. By 2018, there were more than 100 SIBs operating worldwide in 24 countries which raised more than $400 million. At the 2013 G8 meeting, a Social Impact Investment Taskforce was established and in 2015, this taskforce transformed into a Global Social Impact Investment Steering Group, whose membership includes 13 countries plus the EU. In 2015, Prime Minister Justin Trudeau identified a Social Finance and Social In- novation Strategy as a priority. Since 2014, Canada has at least launched four SIBs – two in Saskatchewan and two launched by the federal government. Architects of SIBs have high expectations for SIBs, including cost-savings, funding stability, evidence- based payments, addressing chronic social issues, and incentivizing social innovation. Can SIBs deliver these promises? The United Kingdom launched the world’s first SIB in March 2010, which paved the way for SIBs around the world and acted as a template for other SIBs to come. The SIB was used to fund interven- tion services to reduce reoffending by male short-term prisoners at a prison in the City of Peterborough. In total, private investors provided nearly £5 million upfront. The outcomes of funded intervention services were assessed by an independent agency. By agreement, the UK’s Ministry of Justice and Big Lottery Fund will repay the inves- tors if the outcome assessment shows these