Social Impact Bonds (SIBs) are a policy phenomenon. They are a small part of the market for payment-by-results (PbR) contracts which, in itself, is a small part of the wider market for outsourced public services but their *potential* to transform public services by enabling government to pay social investment-backed charities for doing ‘what works’ is an ongoing source of hope for leading politicians. Most recently, in her ‘shared society’ speech in January, UK prime minister Theresa May celebrated her nation’s ‘global leadership on social impact bonds’.
My report, supported by Centre for Public Impact, is an attempt to look beyond the policy rhetoric and provide an overview of the global ‘market’ for SIBs as it is. The report is based on publicly available data up to June 2016, with some important policy updates from later in 2016.
Based on this data, the UK definitely is showing global leadership: 32 out of the 61 SIBs launched between 2010 and 2016 operated or are operating in the UK. However, the estimated cumulative total value of all these contracts put together is £153 million – compared to total UK government spending in one year (2014/15) of £746.7 billion and the £15 billion market for PbR contracts. The estimated size of the global market – including 10 US SIBs with a much bigger average contract size – is $514 million.
Despite their relatively small real life impact on the public service landscape, SIBs now play a significant role in debates about the future of public services in the UK and, in particular, about the role of charities in public service delivery. The report looks at why they’ve become so important, particularly in the UK but also in the US (where there are 10) and in 14 other countries (who had 19 operational SIBs by June 2016 between them).
While existing research from Brookings Institute, Social Finance and Nonprofit Finance Fund provides more detail on the technical structuring of different varieties of SIB, the intention of my report is to enable public sector commissioners and policymakers to understand SIBs in the context of both initiatives to promote social investment and the wider challenges facing public services.
It includes (the best estimates based on publicly available information of) the data for the 61 SIBs that had launched by June 2016 and concludes with ‘Emerging questions’ for the global market and ‘Recommendations’ for commissioners and policymakers.
You can download the report here. It would be great hear what you make of it.
David Floyd
Social Spider CIC
