Social Impact Bonds

Social Impact Bonds for Youth and Families

EBA: A Scaling Expert for Proven Programs

As states and countries around the world tackle deep-rooted societal issues, innovative contracting strategies such as social impact bonds, or pay-for-success contracts are becoming popular. Social impact bonds or pay-for-success contracts (SIB/PFS contracts) are based on a commitment from government to use a portion of the savings that result from improved social outcomes to reward private investors who fund the early intervention activities.

Social impact bonds 'seeks to drive significant non-government investment into addressing the causes of deep-rooted social problems with returns generated from a proportion of the related reduction in spending on acute services. The ambition is to create positive government spending cycles that enable significant tax payer savings through improved social outcomes.'

Source: J. Liebman. Social Impact Bonds: A promising new financing model to accelerate social innovation and improve government performance, Feb. 2011. pg. 11.

Source: J. Liebman. Social Impact Bonds: A promising new financing model to accelerate social innovation and improve government performance, Feb. 2011. pg. 11.

Leveraging EBA's Experience with Scaling Proven Programs

In most discussion of SIBs, it is assumed that the program intermediary's primary function is to put the deal together. As such, the primary emphasis is on fiscal components, such as:
  • identifying the potential for cost-savings
  • assessing financial risk to investors
  • structuring/monetizing the bond
  • recruiting and securing investors
Less attention is paid to the intervention programs selected or to issues of replicability/scalability. Failure to identify and address these issues undermines one fundamental objective of SIBs - to take effective proven programs to scale. Previous studies show that even if a high-quality, proven program is selected, failure to monitor and manage fidelity can negatively impact long-term outcomes. In our experience, the role of the program intermediary is to manage significant implementation risks inherent in taking proven programs to scale, such as:
  • lack of trained, skilled and motivated workforce
  • lack of accountability during procurement and contracting
  • lack of data management and systems support to ensure continuous quality improvement

A Future Full of Potential for Youth and Families

The potential range of applications for social impact bonds/pay-for-success contracts is still being examined, however many believe that this approach is broad enough to enable change in four key ways, including:
  • Unlocking an unprecedented flow of social finance
  • Creating an 'evidence incentive'
  • Creating an 'innovative incentive'
  • Changing the role of government
While this area is still being explored, it is becoming clear that financial and social goals need not be mutually exclusive. If we can break through traditional boundaries of "socially responsible investment" and implement properly with integrity and efficiency, this exciting and innovative concept of impact investing has the potential to radically change our definition of 'public-private partnerships.'

If you are interested in speaking with EBA about your social impact bond project, email us at or call us toll-free at (202) 815-3999.