As some of you may know, social Impact Bonds (SIBs) can be defined as “a mechanism that harnesses private capital for social services and encourages outcome achievement by making repayment contingent upon success” (Gustaffson-Wright et al., 2015). Since 2010, which marked the advent of the first SIB, 43 of them have been set up in 11 countries representing an investment of over €200 m.
Public welfare expenditures seek to achieve social impact but not all such expenditures succeed (see Social Impact Bonds: Promises and Pitfalls). The enduring nature of many persisting social issues like homelessness and unemployment suggests that varying approaches might be helpful. In this regard, social impact investing seeks to marry social with financial returns (OECD, 2014a).
Exploring the current state of play of SIBs:
Section 2 presents their geography and thematic scope.
Section 3 asks whether SIBs are scaling up social innovations and examines the roles of the different actors and in particular the role of commissioners, investors and service delivery organisations.
Section 4 examines the focus SIBs place on outcomes and the use of evaluation, and comments on monitoring systems and where the risk is placed. It also discusses whether the reward mechanism of the contract is able to deepen the focus on results throughout the delivery chain.
No known SIB had been evaluated ex-post at the time the paper was published (mid-2015) and it is therefore too early to know whether SIBs have produced performance improvements.
One of the conclusions of the paper, however, is that though it is often cheaper to pay for public services directly, SIBS have the potential to be more effective because they entail stronger performance management. They also represent a way to access to vast private sector investment resources in fields where policy failure can have very high costs – the advent of SIBs can lead to better learning and increased value for money on targeted interventions.
One of the main take-aways from the study is that “SIBs illustrate the need for continued experimentation in financial models for public service delivery. They may not answer all the questions that they raise, but they have succeeded in asking some important questions about how public money is used to achieve social outcomes and what changes when private money is brought into the mix.”
“It’s not only a question of resources; it’s also about how we spend them.”
As a social innovation expert and co-author of the Guide to social innovation (2013), Peter Ramsden from Freiss Ltd. was invited to be the keynote speaker for the event EUROCITIES Social Affairs Forum which focussed on ‘Involving citizens in social innovation’.
The event was held last month (16-17 March 2016) in Nantes and gathered 80+ participants from 33 different cities.
In an interview which he gave ahead of the Social Affairs forum, Peter answered some of the following questions:
What is social innovation and why is it important?
What are some of the benefits of social innovation to society and the wider economy?
What are the challenges of or barriers to social innovation?
What social innovations have you seen in European cities that you have found particularly striking?
What role could national and EU funded programmes play in supporting local social innovation?
Click here if you would like to read the whole interview.
If you are interested in finding out more about the lessons learnt from the Social Affairs Forum, please visit EUROCITIES’ website
This week I was in Paris to give a presentation about social impact bonds for a seminar organised by OECD LEED (Local Economic and Employment Development) in collaboration NetFWD. The agenda and the summary report of the event as well as other experts’s presentations are available here. To find out more about what SIBs are, how they can be structured and what concrete examples of SIBs look like, the slideshare of my presentation is available below.
This report, co-authored by Peter Ramsden (Freiss Ltd.) and Laura Colini for AEIDL in 2013 was commissioned by DG REGIO. It aims at presenting cases studies of projects supported by the European Regional Development Fund (ERDF) in order to achieve better living conditions in urban areas throughout Europe.
50 case studies were selected for their capacity to highlight good practice in responding to urban challenges within the cohesion policy between 2007 and 2013. The goal of this report is to inspire and inform the implementation of subsequent ERDF funded project accross the EU.
The selected initiatives covered areas such as smart growth; sustainable growth; inclusive growth; integrated area-based approaches; housing for marginalised groups; financial engineering; public participation and empowerment; and cooperation, networking and learning.
The table below sums up which cities were used as case studies in the document.
One of the main conclusions of the publication is that municipalities are capable of producing one-off good practices.
To build on this, the authors namely recommend that:
Cities ensure that smart growth projects are aligned with strategic planning policies for their region;
Multi-level governance relations be considered in sustainable growth projects;
Inclusive growth strategy be supported by “lively partnerships, which bring in civil society organisations representing people at risk of exclusion, and which embrace the various tiers of government”;
when it comes to housing for marginalised groups,”consent and if possible the active participation of the people” impacted by the project
Public participation be addressed from at project level as well as from a broader governance perspective.
“closer links between the small but innovative learning programmes and the relatively conventional mainstream” be created for integrated learning
Philip Blond, the so-called ‘Red Tory’ is on to something with his idea of decentralising investment. To do this you have to break up the monopolies and start with the banks. We need many smaller banks.
The equivalent of the break up of the Bell telephone monopoly into the baby Bells. Imagine RBS Natwest, Barclays, Lloyds, Tesco all trustbusted into fragments – maybe re-regionalised. Go Blond go! The question is whether the rest of the Conservative party is on board with such radical ideas or whether they are simply using him as a sort of communitywash designed to build their credibility until after the election. Holding my breath… The same goes for the idea of employing 5000 Alinsky style organisers.
At first sight my reaction was ‘Bravo’ as we need what the french would call a ‘Contre pouvoir’ at the local level. Only by challenging public services (and demanding more and better) will we get social justice in poor places. But remember this has been tried before. The Community Development Programme in the early 70s came out of the Home Office. It was closed down after a few years because it used radical agitprop methods, and moved the argument from one about individual cycles and pathologies of deprivation to a bigger debate about how structural change had created unemployment in these communities. Obama’s first major success in Chicago as a Community Organiser came in a radical campaign to bring employment services to the South Side by creating an angry movement in the neighbourhood out of the frustrations and betrayals and confronting the bureaucrats with a mobilised and organised group.
Saul Alinsky was a grassroots organiser who believed in provocation and achieving social change by all means necessary. His book set of rules for radicals provided a toolbox for a whole generation of activists. These same tools are being used by London Citizens to press for a living wage for the low paid. Alinsky would have been proud but it remains to be seen whether the Tory Squirearchy will really go for a solution whose logical outcome would be a minimum wage of more than £7per hour. What would be the reaction of the private sector to paying 15% more on their wage bills when their main hope of the Tories is to pay less national insurance?
I cannot resist ending this post with a quote:
“There’s another reason for working inside the system. Dostoevski said that taking a new step is what people fear most. Any revolutionary change must be preceded by a passive, affirmative, non-challenging attitude toward change among the mass of our people. They must feel so frustrated, so defeated, so lost, so futureless in the prevailing system that they are willing to let go of the past and change the future. This acceptance is the reformation essential to any revolution. To bring on this reformation requires that the organizer work inside the system, among not only the middle class but the 40 per cent of American families – more than seventy million people – whose income range from $5,000 to $10,000 a year [in 1971]. They cannot be dismissed by labeling them blue collar or hard hat. They will not continue to be relatively passive and slightly challenging. If we fail to communicate with them, if we don’t encourage them to form alliances with us, they will move to the right. Maybe they will anyway, but let’s not let it happen by default.” – Saul Alinsky
One of the reasons I like the site is that it combines structured knowledge on migration presented in categories and tags.
I also like their use of the phrase good ideas and the way that they have sought to have 100 of these in this field. Their good ideas index (see below for copy of this) shows that they have a real understanding of domain.
A good example describes the Generation project in Boba (Amadora) which was set up by Jorge Miranda. When you go to the case study page there is a good account of what they have done including some results (under the title successes!). On the right are some additional resources including the contact, the web page and then a second box on further reading (which might be titled further resources) which includes a short film, a case study on the project by the ministry (in English and located on the EUKN website). This example begins to show us how we could work across platforms with EUKN and others but act as a central organising site that pulls the knowledge together according to the clouds. At the bottom you can see the tags which apply to this case and by clicking visit other cases in the same tag family. There is something strange about going to a Canadian site and finding a well organised, clear and clean description of an EU funded project!
In the E-library area you get short summaries of useful documents and links. This is a major effort of capitalisation as you are taking knowledge from one source and adding value to it by giving it a description which allows the user to see the key documents in this sub domain. They also have longer and more discursive articles – for example a piece by Tariq Ramadan the new Chair of Identity and Citizenship in Rotterdam. Integration is a concept from the past. “Contribution” is the concept of the future.” – Dr. Tariq Ramadan
The learning exchange area focuses mostly on events which are either webinars (web based lectures using a tool like webex) or face to face meetings. About 90% are online events with a mostly North American and German focus.
I like this site because it allows the reader to make judgements about the complexity of issues and the extent of success. It does no over simplify the message or claim to provide all of the answers. You leave the area feeling that you have had a good taste of what is possible. The site is fairly new as it is still marked Beta on the header so I am sure it will mature further. In particular I would have thought that they could have had short introductions to the domains of their five areas in the same way as we are preparing for our clouds. However, I like the way that they never dominate the page with too much text which we are likely to do in our intros.
Cities all over Europe are beginning to plan how they can respond to the crisis and also use the opportunity (immortalised by Rahm Emanuel, Chief of Staff for President Obama, ‘you never want a good crisis to go to waste’) because, as he argues, it is an opportunity to do things that you wouldn’t be able to do normally.
In the UK cities are facing rapidly growing unemployment which is hitting young people especially hard. Cities are responding to the crisis by thinking of how they can use their available Working Neighbourhood Fund money and the new Future Jobs fund to create schemes to provide employment to this new generation.
EU president Jose Manuel Barroso hosted a meeting on January 27th to which Freiss were invited to speak about Social Innovation.
At the meeting Barroso promised to ‘find a home’ for social innovation in Brussels. He took away a proposal from Ana Vale of Portugal to encourage Member States to reprofile their ESF programmes to focus 3% of the vast €72 billion programmes on social innovation.
Vladimir Spidla and Danuta Hubner also supported the meeting which was convened by BEPA the Bureau of European Policy advisers. Geoff Mulgan gave a useful outline of how social innovation could serve the European project. Diogo Vasconcelos, former minister under Barroso gave the summing up.
Let us hope things move on from here to find new ways of innovating in public policy.