The Children’s Aid Society is piloting an innovative new idea to fund social services, Social Impact Bonds. According to an article in Crain's New York Business, CAS has received a grant from the Rockefeller Foundation for the pilot.
Social Impact Bonds began in the United Kingdom as a way to entice private investment to support more effective social services. Funds committed by private sources are used to improve outcomes over a number of years that deliver savings to government that are then used to pay back investors with a premium and invest in more prevention. For example, in the UK social impact bonds are being used to reduce youth offending over several years. The increased investment needed to engage non-profits and develop new ways of operating paid for by SIB funds.
In theory, Social Impact Bonds should deliver better services at reduced cost and help to shift social programming from expensive interventions, like jail or prison, to more effective prevention services.
Despite the promise of SIBs many questions remain. It is too early to know if SIBs work. There has been no large scale evaluation of the approach. The measures of “success” by design have to be very narrow to generate real cost savings over time. An SIB approach takes time to implement, contrary to the short term approaches most private and government funders currently utilize in the US (one or two year grants). A commitment to action research and evaluation are also needed to make sure that success is understood.
To learn more about Social Impact Bonds visit the Young Foundation’s web site