Working Paper: NBER ID: w18991
Authors: Mark Pauly; Ashley Swanson
Abstract: This note considers a relatively new form of financing for social services, the "Social Impact Bond." Proponents of Social Impact Bonds argue that they present a solution to several problems in funding social services, including performance measurement and the distribution of risk. Using a simple model, we demonstrate that Social Impact Bonds have many features present in standard financing arrangements. They will lead to greater program success when investors' effort can positively influence outcomes, but are unlikely to do so otherwise. We conclude that the value of this funding innovation will be strongly context-dependent.
Keywords: No keywords provided
JEL Codes: H0; H51; I1; I10; I13; I18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Investor's engagement (effort) (G24) | Probability of program success (p) (C89) |
| Traditional funding models (G19) | Probability of program success (p) (C89) |
| SIBs (H74) | Financial barriers faced by nonprofits (L39) |
| SIBs (H74) | Implementation of programs (C88) |