Social Impact Bonds (SIBs) are an internationally established and successful way to finance the delivery of public services, first introduced in the UK.
Involving cooperation between the government, a social service provider and a social investor using multi-party partnerships to bring together the right organizations to solve social challenges.
The GCC’s first Social Impact Bond is being piloted in Abu Dhabi as part of an agreement signed between the Department of Community Development, the Authority of Social Contribution – Ma’an, Aldar Properties, Aldar Education and the Zayed Higher Organization for People of Determination to support the employment of people of determination.
• An innovative and internationally recognized mechanisms that leverages private investment to support high-impact social programs
• Social Impact Bonds are also known as pay-for-success contractual agreements between public sector entities and private sector investors, who finance social interventions up front in exchange for future payouts that are dependent on social outcomes being achieved.
• SIBs represent a fundamental shift in the way social challenges across the community are being addressed by the government.
• Government: Identifies a social challenge among the community.
• Authority of Social Contribution – Ma’an: Receives the identified social challenge from the government and will facilitate the creation of the Social Impact Bond framework and support the contractual arrangements between government departments in Abu Dhabi, social service providers, and third-party investors.
• Investors: Provides the funding to the Service Providers are not taking out a debt.
• Service Providers: Generate the plan of action required to solve the identified social challenge. They need to ensure the programs/products are effective and may need to modify or refine their approach in order to improve their effectivenses.
• The general public who are facing the identified social problem: receive the products and solutions from the Service Providers, improving their lives and providing sustainable positive impact.
• Social Outcome Assessment: Ma’an will be responsible for monitoring the Social Impact Bond and measuring its performance. Regular assessments would be conducted and presented to the government to ensure that the project’s key performance indicators in addressing the social challenges are being measured and met.
• Payment: The government makes payment to the Investors for every outcome achieved, while the identified social challenge is successfully met and effectively addressed.
• Sustainability & Collaboration:
A Social Impact Bond is a vehicle the government uses to pay for outcomes in solving social challenges and those can be set to be outcomes that promote sustainability. Government is not paying for activities or doing things, but are only paying when people’s lives have improved. The model also allows for collaboration among different entities and businesses in the private, public and social sectors to solve social challenges faced by the general public, therefore reducing the reliance on the government as the sole solutions provider therefore, encourages innovation in the way we solve social problems.
• Economic Efficiency:
In a Social Impact Bond model, a Social Impact Bond can be used to find ways to generate social outcomes more efficiently, or to improve situations that are very costly for the government to deal with, thereby heling government to save money.
Under a Social Impact Bond model, public money is never spent on failure. It means that the government, investors and service providers are transparent and accountable with how public money is being spent and that is solely done by achieving outcomes which would solve the identified social challenge. The money goes further in the doing of good rather than as a one-time spending because of this model.