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Public Asked to Support ‘Social Impact Bonds’

Resource type: News

The Irish Times | [ View Original Source (opens in new window) ]

By Patsy McGarry

The public are being asked to identify the social issues and/or interventions that have the most potential for a scheme of what are called social impact bonds.

A social impact bond (SIB) is a public-private contract in which the relevant public-sector entity agrees to pay a private-sector investor if significant improvements in social services for a defined population are achieved.

This “defined population” could include reoffenders, the homeless, children with ADHD or diabetics, for example.

Clann Credo, the social investment fund, with Chuck Feeney’s Atlantic Philanthropies and the Centre for Effective Services, is conducting research to identify high-potential SIB areas in Ireland.

It is being advised by Social Finance in the UK, the first organisation to launch SIBs. It did so last September in Peterborough where reoffenders were concerned.

SIBs were included in the programme for government (2011-2016).

Where a SIB contract is concerned, private capital is raised from socially-motivated investors to fund interventions and preventative services that aim to deliver improvements.

Financial returns to investors depend on the degree to which these interventions are successful.

If they fail, the investors may lose money. If successful, the public sector pays investors a return based on agreed measures of the results.

As an example of how SIBs might apply in Ireland, it is suggested that, where children with ADHD are concerned, a SIB “targeting a reduction in behavioural drug prescriptions could potentially bring private-sector funding to the issue if the public sector agreed to pay a proportion of any savings from reduced medication costs to investors if agreed targets are met”.

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