Quote of the week
“Offloading risk is definitely a key goal.”
— Gianni Ciufo, Deloitte
Yesterday the Globe and Mail reported that the federal government hopes to get some programs and services financed and delivered though a device known as the “social impact bond.”
The social impact bond concept is a relatively new idea pursuing a question that New Public Management asked 25 years ago: how can governments get the private sector to do what historically has been the work of government?
Because, of course, it can do the job better…
Earlier examples of this trend have included alternative service delivery arrangements such as special operating agencies and public private partnerships (P3s).
Of course, a simple way of engaging other sectors is by directly contracting them to do the work of governments. Trouble is, the thinking goes, it’s not enough to just pay other sectors to do the job. You need to incentivize them to deliver real results and measurable outcomes if taxpayer money is to be saved.
Thus, the social impact bond, a pay-for-service arrangement.
Gianni Ciufo of Deloitte explains social impact bonds this way: an investor or bank puts up the money so that a service delivery organization can do the work. Based on that organization’s success in
meeting the agreed-upon results and outcomes, the investor gets a rate of return, or payment, from the government.
The concept is hot in the U.K. and the United States but, according to Ciufo, less so here in Canada. He attributes this to what he calls the “conservative banking environment.”
But if it works, Ciufo adds, everybody should win: the investor, the government, and the taxpayer.
Not everyone thinks they are the answer. Check out this article: http://www.theglobeandmail.com/commentary/private-money-public-programs-there-will-always-be-strings/article11765335/