• JC Man

    Well, it sounds to me like DC Central Kitchen is a pretty good solution to reduce recidivism. Why do we need further private investors getting paid to reproduce that model? I have never understood why we need these enormous and expensive rube goldberg machines when the entire nonprofit sector effectively functions as R&D for government programs. And we’ve seen what perverse incentives have done elsewhere in our economy. The Social Impact Bond and its allied ‘solutions’ are well past their sell-by date.

    • Laura H. Chapman

      Exactly my point. The impulse to scale up and “replicate” shows how deeply the idea of franchising is tied to profit-seeking over nurturing and sustaining local efforts and especially highly skilled artisans and professionals. The SIB/Pay for Success concept is based on the idea that social services are not efficiently managed, not as cost effective as financial wizards think they should be–even when the financial wizards no nothing about what they wish to manage.

  • Laura H. Chapman

    The fallacy is thinking that scaling up is always a virtue.
    The Utah Preschool Program, by design, excluded students who might not lead to profits for the investors–children certain to be eligible for special education. Denial of entry into preschool on the basis of scores on the Peabody Picture Test and physical/mental conditions over which parents and the children have no control is a clear case of putting profits over social benefit. The public sector is bring raided for profits at every turn, and doing damage to the whole concept of having obligations to others that are not tied to monetary gain.

    • Yes, when our organization got swept up in the theory of change and impact craze, we were being pushed into a metrics orientation that would have resulted in basically being driven by the “score” instead of by our mission. Even some of the favoured examples of this kind of work to me tend to showcase that what happened here is the organization became very rigid and obsessed with demonstrating impact via a framework, to the detriment of the flexibility, risk-taking, and innovations that humans and communities require.

  • I think it’s time to declare that the emperor of “impact measurement” has mostly been without clothes since being spawned by “run it like a business” motivations (whether to comply with them or to attempt to moderate their influence). Particularly in human services, there are limits to quantifying outcomes and measuring impact. Social impact bonds are just another step in the wrong direction of pretending that one can come up with a matrix to figure out the value of a friend, or loss of life prevented by a harm reduction program.

  • lynneakin

    Social impact bonds fail on so many accounts. Firstly the model is fundamentally wrong. The investor gets a return on investment and the social organization gets what?… the opportunity to do more “good”. Take for example DC Kitchens. They spent years developing their effective program yet the social impact bond rewards the guy with the cash and not the people who developed the program so they can go on and develop the next innovative program. Then there is the huge problem with defining outcome measures that do not distort the program or result in people being excluded. In addition these bonds are short term typically 5-7 years with neither the investor or the government making any long term promises. Clients can get hurt or service systems distorted to accommodate the fallout from the end of a SIB. And lets not forget the set up costs with lawyers working hard for the investor and the government while often the service agency is not funded for legal help or involved as an equal partner in the SIB design.

    • Yes “run it like a business” has many unintended consequences, and is based on the flawed premise that businesses operate more effectively and efficiently than charities.

  • SophieB

    I couldn’t agree more with the previous posts. If indeed SIBs were used to try new things (R&D) then maybe there would be a place for them. But, that is not typically how they are used. They are also supposed to be used for prevention services–but they are typically used for tertiary prevention, which is actually intervention.

    They are incredibly expensive, but the additional money is not for direct services, it is for managing the grant/contract, program evaluation, and returns on investments. And, I have to laugh when the goals are so much more realistic–10% reduction in recidivism–than what nonprofits are typically expected to achieve while being reimbursed less than it actually costs to provide a program or service.

    The premise of social impact bonds taken to scale will result in community change is a farce. Yes, this works at times in the medical field, but that is not the same thing. If you provide enough people a vaccine, you can eradicate a disease. But, the thought that a single program or service can change entrenched social issues within a community highlights the fact that these ideas are not being driven or developed by people with experience in the field. Anyone with who has worked with juvenile offenders could have looked at the New York City SIB and known right away that is was not going to be effective. And, how can anyone consider the results of the Utah SIB and call it a success. Not only was this already being done and determined to be a successful intervention when it excluded those more difficult to help? How on earth can anyone call it a success when enough time hasn’t even passed to see if it actually reduces future costs–which is where the money to pay the investors is supposed to come from? The same is true for the original SIB done in England. Does the fact that a youth hasn’t re-offended in the first 6 months of being released from prison mean the SIB is a success? If these are going to pay investors without first finding out if they in fact reduce future costs then ultimately, where is the money used to pay investors really coming from?

    I guess it doesn’t occur to SIB supporters that without all of the additional layers of administrative costs that SIBs require, perhaps if nonprofits were actually paid what it costs to provide a service properly that the outcomes they produce could also be improved by 10%. Or, maybe someone could establish a SIB to study that?