Global Social Impact Bond Update: Canada, Making the Play or Warming the Bench?

You know that anxious feeling you get when you’re watching your favorite sport or activity and you wish you could jump in there and be a part of the action? But instead, you think it might be easier to just sit back and watch things unfold…

We are at an inflection point in the trajectory of social impact bond development in Canada.  Awareness and general knowledge about SIBs continues to increase – governments, non-profit service agencies, and some impact investors are keenly following global developments and wondering how they can parlay the model in our political and economic environment.  As true Canadians were are keenly observing, thoughtfully processing, and even offering support – but not enough support to get us off the sidelines.

The recent BC announcement about a Cabinet appointed Advisory Council on Social Entrepreneurship has moved (at least some) motivated individuals off the bench and closer to the field.  Gordon Hogg (Canada’s first parliamentary secretary of Social Entrepreneurship) and Al Etmanski will co-chair this Council and one of their strategic objectives is to help facilitate more access to capital for social enterprises pursuing socially innovative methods.  The SIB is one area they will explore in an attempt to find a pilot.

But what about the rest of Canada?  There are some service agencies doing excellent work in reducing youth at risk of crime, single-mother homelessness and unemployment, improving housing support for adults with disabilities, mental health, and hypertension prevention.  Unfortunately, one of the common barriers to their sustainability, growth and increased impact is access to funding.

The recently launched Task Force on Social Finance’s report “Mobilizing Private Capital for Public Good” acknowledges that SIBs are one innovative way in which government, private investors and social enterprise can come together around prevention strategies, raise additional capital, and improve social outcomes.

In addition, SiG has related initiatives:

Great ideas, great background, great discussions.  But how can we move this from the theoretical to the practical?   

Borrowing lessons from abroad, Social Finance, along with the Young Foundation in the UK have acted as the R&D intermediary for some groundbreaking SIB efforts.  As a human resources mash-up of seasoned investment bankers as well as social development thought leaders, their collective brain trust has navigated the first SIB pilot and has announced the commencement of advanced research in multiple areas: youth truancy, children in care, and drug rehabilitation, in addition to increasing the number of pilots in prisoner re-offending.   

In Australia, the latest SIB pilot announcement is another initiative that spectators are adding to their watch list.  The Centre for Social Impact, a partnership of Australian academic institutions, has undertaken feasibility studies in the areas of juvenile re-offending and mental health and has investors and government supporting a re-offending pilot.

In the US, many leading foundations and impact investing intermediaries are organizing themselves to identify SIB pilots.  An update of a few of the emerging initiatives:

  • Harvard researcher Jeffrey Liebman has released a US-focused SIB report for The Center for American Progress;
  • The Nonprofit Finance Fund, through a grant from the Rockefeller Foundation, have set-up a community of practice to share discussion and information;
  • Social Finance Ltd. has opened a US office in Boston to explore SIB opportunities in the US; and
  • The Obama administration will soon announce a $100m fund specifically tied to social impact bonds or “pay for success” bonds.  

The SIB movement in Canada is like a good old-fashioned game of pond hockey in the dead of winter.  There’s room for more players, and nobody really wants to be on the sidelines watching with anticipation (and in the cold!).  But the crucial question to answer is how to organize the group to work effectively, all while supporting everyone’s broader goals.

I welcome your discussion on how Canada can proceed with SIBs in tandem with global developments.

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