Social impact bonds: state of play & lessons learnt

Today, the OECD released a report on Social Impact Bonds entitled “Social impact bonds: state of play & lessons learnt” prepared by Peter Ramsden (Freiss Ldt) with inputs by Antonella Noya and Stellina Galitopoulou (OECD).


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.”

Click here for the full paper.


Social impact bonds : Promises and pitfalls

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.


Publication: OECD handbook #7

The OECD LEED forum on Partnerships and Local governance just published its hand book #7 entitled ‘Innovative Financing and Delivery Mechanisms for Getting the Unemployed into Work’.

This hand book explores innovative sources of finance, looks into the delivery system and the possibility of combining new finance with new delivery models.

It proposes ways towards a new and more complex landscape of financial models for long term unemployment.

This publication was prepared under the supervision of Emma Clarence, Antonella Noya and Francesca Froy of the OECD LEED Programme with Peter Ramsden as lead author.


MILE closes out

MILE, the pilot Urbact network focusing on managing migration at the local level (why wasn’t it called MILL?!) has finished its frenetic 20 months of activity with a closing meeting in Brussels on the 25th July.

Freiss worked with MILE on their first cycle reports on migrant entrepreneurship and also developed the action planning approach in collaboration with QEC ERAN.

The productivity of the network was demonstrated by the nine cities developing 25 action plans across the 3 themes – find out more here.

The meeting was followed by the second of the URBACT citylap open meetings at which MILE was joined by OECD, ECAS,  Open cities, Eurocities and QEC ERAN for a deep discussion on what cities can do at their level to improve the situation for migrants and develop more cohesive communities.

Full reports of the meeting are available on urbact.eu.