1. 3/15/2011 Social Impact Bonds: A revolution in go…
Dowser - Uncovering Stories of Change
News and Ideas
Interviews
Mini Case Studies
Multimedia
About
Search...
News and Ideas
Social Impact Bonds: A revolution in government funding
March 14th, 2011 11:00 AMBy Rachel Signer
In his recently proposed budget, President Obama has asked for up to $100 million to implement
programs funded by Social Impact Bonds (SIBs). These bonds are the cornerstones of a new way to pay for public services, one that its
proponents hope will address social problems with greater efficiency and higher success rates than current government approaches. In
the UK SIBs were piloted to tackle the problem of prisoner recidivism by funding intensive counseling, employment, housing, and other
support services for recently released prisoners. Something known as supportive housing is a potential area where SIBs may make their
debut in the U.S. This program would deal with homelessness from a preemptive approach, by paying people who are at-risk of having
to go live on the streets to stay in their homes.
The model of Social Impact Bonds consists of governments agreeing to reward private, for-profit entities, called “social impact bond-
issuing organizations” (SIBIOs), for their work. But the government only pays if the services deliver as promised, and only out of
government cost savings. No taxpayer money will be wasted on failed programs in this plan. The idea behind these bonds is that
investment is like prevention, and social problems can be more effectively addressed before they urgently need a cure. Governments,
unlike private financiers who are motivated by potential profits, are likely to wait until a problem needs mitigation, rather than foreseeing
it.
In addition to supportive housing, SIBs may be used to fund programs that address prisoner recidivism, assisted living, kindergarten
readiness, workforce development for at-risk populations, and visiting nurses, according to what Kristin Giantris, of the Nonprofit
Finance Fund, told Dowser. Giantris also said that SIBIOs will rely on one fundamental question to identify sites of intervention: “What
area has the greatest opportunity for investment that will result in strong outcomes and save the government money?”
Actually putting the SIB program into practice may not be as simple as it sounds. Giantris mentioned some long-term concerns,
particularly around the ability to scale the SIB model. Specifically, the challenge is determining how to create an asset class so that there
is liquidity and comparability. “It’s very hard to develop market-oriented security,” she said, without a large enough sample of these
projects nation-wide. She also said that there is the question of “how to satisfy investor interests while having enough time to achieve
measurable outcomes.” Some issues may require more than 5 years involvement to show the cost savings. Education is one example
dowser.org/social-impact-bonds-a-revol… 1/5

2. 3/15/2011 Social Impact Bonds: A revolution in go…
where we might have to wait years to see results, said Giantris, and it could be too long for investors to wait as it increases the risk of the
investment.
Harvard Economist Jeffrey Liebman, in a report for the Center for American Progress, has analyzed potential successes and challenges
of the Social Impact Bonds plan. There may be obstacles to the program’s success, according to Liebman, if interventions do not meet
five main criteria. They will need to have sufficiently high net benefits, have measurable outcomes, have a well-defined treatment
population up front, use a credible impact-assessment method, and include strategies for reducing harm to populations in cases where
interventions are unsuccessful and investors pull out. Liebman also suggests, given the newness of the concept of Social Impact Bonds,
that it be applied to models that have already proven effective. He also predicts that successful interventions will provide savings to the
government that exceed program costs. Furthermore, Liebman foresees the first Social Impact Bond programs occurring at the level of
local government.
20 retw eet Like Be the first of your friends to like this.
Tags: govermment agencyCategories: News and Ideas
Share this Post
Twitter
Delicious
Facebook
Stumbleupon
Digg
Google Buzz
Send to a Friend
Related Posts
Apps 4 Africa, an example of government crowd-sourcing, announces winners Big Ideas: Alan Khazei on reevaluating the roles of
government and citizenship
One Response
1. Social Impact Bonds: a revolution in government funding « make something happen
[...] http://dowser.org/social-impact-bonds-a-revolution-in-government-funding/ [...]
March 14, 2011 at 10:54 pm Reply
Add a Comment
* Name
* Mail (not displayed publicly)
Website
dowser.org/social-impact-bonds-a-revol… 2/5

3. 3/15/2011 Social Impact Bonds: A revolution in go…
Notify me of followup comments via e-mail
Submit Comment
Facebook
Twitter
Mailing List
RSS
Popular Posts
Top ten crowdsourced funding platforms
A sun-powered collective
Eight trends in social entrepreneurship to watch for in 2011
B Corp: Better laws for business
Books in Brief: Where Good Ideas Come From
Tags
behavior change business citywide conscious consumerism conservation corporate social responsibility economic development
education entrepreneurship environment food fundraising global social enterprise startup sustainability tech
twitter volunteerism/service youth View All Tags →
Recent Comments:
Thanks Dowser for the profile. We are starting a national network called the Community Power Network... - Anya Schoolman
A great idea. The fact that the founder seeks to “tap good intentions by using them as branding... - Matt CM
Thanks so much for sharing my post on the Acumen Fund. It’s an incredible organization doing... - Kelly Meeker
http://www.youtube.com/watch?v =GIkDadhyQvY - Jeri Merendino
Check out this eye-opening and inspiring video from CAN-DO.org about the Haiti Domes Project. - Jeri Merendino
Become a Contributor Submit a Tip
Monthly Archives
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
dowser.org/social-impact-bonds-a-revol… 3/5

4. 3/15/2011 Social Impact Bonds: A revolution in go…
June 2010
May 2010
April 2010
Sites We Like
Alltop – Social Entrepreneurship
Alvin Hall's Guide to Good Business
America Forward
Ashoka Tech
Aspen Ideas Festival Videos
Beth Kanter – Beth's Blog
Beyond Profit
CGI-U Videos
Change.org – Social Entrepreneurship
Christian Science Monitor – Making a Difference
Design for the Other 90%
Echoing Green – Spark Blog
Encore
Frontline/World Social Entrepreneurs Series
Gates Foundation – Living Proof Project
GEL Conference Videos
GOOD
Guy Kawasaki – How to Change the World
Huffington Post Impact
It Magazine
Jay Rosen – PressThink
Just Means Blog
McKinsey and Company – What Matters
NewsTrust
Next Billion
Nicholas Kristof
Ode
Paul Tough – Whatever it Takes
PBS Newshour Social Entrepreneurship Series
Philanthrocapitalism
PopTech
PRI's Social Entrepreneurship Series
Pro Publica
Public Innovators
Sasha Dichter
Social Earth
Social Edge
Social Finance
SocialDocumentary
Springwise's Social Cause Blog
Stanford Social Innovation Review
TED
The Feast
The Guardian (UK) Global Development Site
Treehugger
ViewChange
YES! Magazine
Privacy Policy
dowser.org/social-impact-bonds-a-revol… 4/5

5. 3/15/2011 Social Impact Bonds: A revolution in go…
Advertise
Feedback
Archives
Sitemap
Contact
© 2009 - 2011 Dowser Media
dowser.org/social-impact-bonds-a-revol… 5/5