Позитивные изменения. Том 2, № 2 (2022). Positive changes. Volume 2, Issue 2 (2022)

THE US EXPERIENCE. A TOOL WITHIN IMPACT INVESTMENT

McKinsey's U. S. office in 2012 came to the following conclusion about social impact bonds (SIBs): they are a social intervention assessment tool that allows the government to pay for results and investors to invest in things that actually make an impact. The introduction of SIBs in the United States began as an attempt to catch up with the British experience (Moodie, 2013). Design for the first projects started in 2013. Despite a higher volume of impact investment than in the UK, SIBs failed to immediately be adopted as a common tool in the United States. This is primarily because SIBs are not a type of investment, but rather a contractual mechanism that requires an experimental design.

Social motivation is an important aspect: the profit would be higher at the same risk level when working with commercial players.

Thus, Americans saw SIBs primarily as a tool within impact investing which facilitated the development of more efficient interventions in the social sphere and assessed their impact.

Like in the UK, the first social impact bonds project in the US was also focused on reducing the reoffending rate among ex-convicts. Goldman Sachs (2020) acted as the investor in partnership with the city of New York. The investment totaled $9.6 million, with the expectation that the entire amount would be repaid upon meeting the goals. If the results exceeded expectations, the investor would receive a financial return comparable to that of typical lending, pro rata to the performance above the target.

The Center for Public Impact (a BCG foundation) notes (2016) that large investors can offset the increased risks of participating in SIBs through economies of scale. Social motivation is another important aspect for the investor: the profit margin would be higher at the same risk level when working with commercial players. As of 2016, SIBs remained largely a British story, as more than half of them were conducted in the UK. Proponents of this format see the advantage of social impact bonds in outsourcing the financial and political risks of addressing social issues, while creating opportunities to improve social impact tools.

We should note that descriptions of the US experience in implementing SIB never mention that investments were repaid per the "costs x key interest rate + assessed value of the social impact" formula, just that the actual investment was recovered. In other words, the American funding model is less economically feasible than the British model.

THE EU EXPERIENCE. TOOL FLEXIBILITY

A policy brief from the European Parliamentary Research Service (Davies, 2014) describes SIBs as a way for public authorities to try out a social service without spending money on it in the absence of positive results, and without bearing political responsibility. The policy brief also considers this innovative tool as a part of social investment, with its respective cost allocation. For example, during the implementation of the European Commission's investment program, an agreement was reached (Fraboul, 2020) between BNP Paribas and the European Investment Fund with the aim of facilitating access to funding for social organizations. The project featured an investment of €10 million to support 1,000 students and 130 children.

An important feature of SIBs emphasized in the European experience is that this mechanism lowers the entry barriers for investors in the social investment sector, by offering the potential for recouping invested funds from the state. Further, the emphasis on measurable results allows investors to spend money on more expensive projects, as their impact will be more pronounced than that of conventional social investments.

German-Dutch cross-border cooperation is a good example of how an investor can benefit from a social issue. The idea of the project was to "provide Dutch workers with work opportunities in Germany," that is, to integrate labor markets in the cross-border regions of the Netherlands and Germany (Koekoek, 2016). Companies were effectively investing in the retraining and mobility of their would-be workers, achieving positive social and economic effects. However, this raises the ethical question of the state paying money to a private company that benefits from a social impact bonds project. In the context of the European Economic Community, the answer lies in the plain of European solidarity and the value of integration per se. But in other contexts, the rationale for similar projects seems much more complex.