Academic journal article Canadian Journal of Nonprofit and Social Economy Research

Social Impact Bonds: The Next Phase of Third Sector Marketization?

Academic journal article Canadian Journal of Nonprofit and Social Economy Research

Social Impact Bonds: The Next Phase of Third Sector Marketization?

Article excerpt

ABSTRACT

The politics of austerity have pushed the third sector to the centre of attention as governments turn to non-governmental institutions to pick up the social deficits created by economic recession. Some governments have begun supporting alternative service funding through such innovations as social impact bonds (SIBs), a financial product used to encourage the upfront investment of project-oriented service delivery. This article provides an understandin7g of what SIBs are and traces their emergence within Canada while linking them to their cross-national origins. SIBs are situated conceptually within broader contemporary developments within the nonprofit sector, particularly the agenda of public sector reform and third sector marketization. This analysis focuses on the potential impact of SIBs on nonprofit policy voice and their capacity to represent and meet diverse community needs.

R?SUM?

Les politiques d?aust?rit? ont accord? une place centrale au troisi?me secteur. En effet, les gouvernements d?pendent de plus en plus des organisations non gouvernementales pour combler les d?ficits sociaux cr??s par la r?cession ?conomique. Certains gouvernements ont commenc? ? financer des services au moyen d?innovations alternatives comme les obligations ? impact social (OIS). Ces derni?res sont un produit financier utilis? pour encourager l?investissement dans l?offre de services par projets. Cet article explique ce que sont les OIS et retrace leur ?mergence au Canada tout en soulignant leurs origines transnationales. Conceptuellement, on peut les situer dans le contexte de d?veloppements contemporains relatifs au secteur sans but lucratif, particuli?rement la r?forme du secteur public et la marchandisation du troisi?me secteur. Cette analyse se focalise sur l?impact potentiel des OIS sur la communication de politiques sans but lucratif et sur l?aptitude des OIS ? repr?senter et rencontrer divers besoins communautaires.

Keywords / Mots cl?s : Nonprofit organizations; Third sector; Social impact bonds; Social innovation; Policy voice / Organisation ? but non lucratif; Troisi?me secteur; Obligations ? impact social; Innovation sociale; Communication de politiques

INTRODUCTION

The politics of austerity that arose in the wake of the 2007-2008 economic crisis in the West (Evans & Fanelli, 2013; McBride & Whiteside, 2011) has produced deep cuts to social services, just as the need for such support has been magnified. This situation has pushed the third sector to the centre of attention, most notably profiled in the Big Society initiative in the U.K. (Hilton & McKay, 2011; Ishkanian & Szreter, 2012)1, as governments turn to non-governmental institutions to pick up the social deficits created by economic recession and the state's retreat from social provision responsibilities.

The third sector, which includes a diversity of nonprofit organizations, has, at least since the reinventing government revolution of the 1990s (Osborne & Gaebler, 1992), been seen as an important government partner lauded for its cheap, efficient, and innovative localized service delivery. Governments have been keen to support alternative service delivery as a way to shrink public sector costs and responsibilities (Evans, Richmond, & Shields, 2005) and some have begun experimenting with tools to encourage alternative service funding through innovations such as social impact bonds (SIBs). SIBs are a financial product used to encourage private, philanthropic and/or public investors to provide upfront capital to support project-oriented service delivery by public, private, or nonprofit actors, or a combination of these actors.

The objective of this article is to provide an understanding of what SIBs are and why they have arisen at this conjuncture. Further, we conceptually situate SIBs within broader contemporary developments within the nonprofit sector, and trace the emergence of SIBs within Canada while linking them to their cross-national origins. …

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