Private money, public programs? There will always be strings

In response to the perpetual shortage of funding for a wide range of social needs, Ottawa just announced its commitment to the use of social impact bonds.  The emerging sphere of social finance throughout the world opens many new fiscal doors. Social finance is a term that refers to a range of instruments, including social impact bonds, which blend public and private money to tackle tough social problems.

The potential problem with social impact bonds is not the fact that they bring private capital into the social equation.  The primary concern with this instrument is the obsession with quantifiable performance outcomes.  These expectations can lead to perverse outcomes, such as selecting the participants most likely to succeed in a program rather than the ones who need most help.  The question of whose benefits are being measured must also be considered.  Finally, patient capital is required in order to achieve real social change.

ISBN – 1-55382-581-0