Social Impact Bonds: The Next Phase of Third Sector Marketization? Meghan Joy, PhD Candidate, Policy Studies, Ryerson university Dr. John Shields, Professor, Department of politics and public administration, Ryerson university Tuesday, February 11th, 2014

Presentation Overview Why the Current Interest in SIBs? SIBs as a Market-oriented Policy Tool Practical Design and Implementation Challenges Fundamental Challenges

Why the Current Interest in SIBs? Government Third Sector Private Sector Transform funding and delivery of social policy Reduce social service costs Alternative to universal and institutional care Efficient public investment Greater transparency and accountability Political malleability Immediate and long term payment Minimal delivery prescriptions Appeal to large nonprofits Larger role for foundations Altruism Enhance Competitiveness Service privatization Access to government policy design and delivery decisions Consulting firms will see new business opportunities

SIBs as a Market-oriented Policy Tool Marketization SIBs part of agenda to reform the public sector to operate more like a private business Alternative service delivery complimented by alternative service funding SIBs could facilitate privatization of service delivery

SIBs as a Market-oriented Policy Tool Social Innovation “Proven ideas that work to address unmet needs by applying new learning and strategies to solve these problems” (HRSDC, 2013, 9) Conceptualization heavily marketized Framed as alternative to big government SIBs used to transform nonprofits into efficient and innovative market actors

Practical Design and Implementation Challenges Government Third Sector Private Sector No reduction in bureaucracy and costs Reduced control over service provision Problems with evaluation Cherry-picking further excludes the most vulnerable populations Could reduce grant and donation funding Do not have full control over results Competitive disadvantage in service bids Demands for evaluation and monitoring New management and evaluation skills required Risky for employees and service users SIBs a risky investment Risk aversion

Fundamental Challenges Model of philanthropy not intended to displace state run social policy SIBs may represent privatization with the nonprofit sector used as legitimation Social problems framed as an individual’s lack of self-responsibility Social profit organizations may be less willing to operate where they cannot make money

Fundamental Challenges Need to expand, not reduce the vision of what the nonprofit sector does SIBs can be both empowering and disempowering, freeing and controlling Need to assess who wins/loses with the broad implementation of this policy tool Support for the third sector should include stable and long term funding that covers core administrative costs and community engagement and organizing Provides sustaining foundation for the third sector and empowers nonprofits to be innovative

Further Information and Follow-up Joy, M. & Shields, J. (2013) Social Impact Bonds: The Next Phase of Third Sector Marketization? Canadian Journal of Nonprofit and Social Economy Research. 4(2): 39-55. http://anserj.ca/anser/index.php/cjnser/article/view/148 Meghan Joy: meghan.joy@ryerson.ca John Shields: jshields@ryerson.ca