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

3. Economic and political context — in the political sense, it is essential to provide guarantees that programs will not be phased out after a change in government at the beginning of a new political cycle. While Argentina and Colombia made some attempts to create enforcement mechanisms for SIBs that do not depend on political campaigns, the general recommendation is to launch projects within the political cycle and negotiate with elected politicians at the beginning of their elected term. The economic context is important in the sense that high inflation levels require contracts accommodating regular price increases. This is what happened in Argentina without an inflation adjustment mechanism, which obstructed the successful implementation of social impact bonds.

4. Availability of data — During the SIB ecosystem growth states, it is critical to have sufficient administrative data (or to have the resources to obtain the necessary data on your own) in order to develop SIB concepts and assess their impact. In Colombia, for example, the development of data banks resulted in data-driven decision-making.

5. Market Capacity — this includes investor willingness to take risks and to participate in the social investment process, access to expertise to design the SIB concept and the results evaluation system, and the availability of contractors to implement social impact bonds.

HOW SUCCESSFUL PROJECTS ARE SIMILAR

Social impact bonds (SIBs) emerged as a contractual mechanism at the junction of social investments and governmental social development programs. The original UK program, which laid the foundation for similar projects on a global scale, was based on the principles of long-term financing, regular monitoring of interim results, and the development of new tools for evaluating the social effect.

The British experience demonstrated the importance of having two additional participants within the project framework: the investor, the government, and the contractor benefit from the involvement of financial and expert mediators. The first type of mediator is concerned with coordinating transactions and managing contractual obligations. The second type of mediator reviews the project design, costs, and offers a social impact research toolkit.

The US experience solidified the understanding of SIBs as a tool within impact investing, whose organizational structure facilitated the development of more efficient social interventions and assessed their impact. It also demonstrated that large investors can offset the increased risks of participating in SIBs by economies of scale. Canada developed a format consisting of a conglomerate of investors, which allowed risk and expertise to be shared.

Negative experiences mainly stem from a failure to comply with the DREAM criteria (Demand from government, Regulatory framework, Economic and political context, Availability of data, Market capacity). For example, Portugal’s institutional environment led to SIBs duplicating existing community development funds. Canada’s experience was not successful because the stakeholder engagement scheme combined the roles of project operator and impact evaluator. The Danish experience was not extensive enough to build a results evaluation scheme, which in the context of roles mixed between the provider, project operator and evaluator, undermined project sustainability.

Investors need social impact bonds as an opportunity to enter the social investment sector at a relatively low cost. For the state, this type of project represents an option to outsource the social function and mitigate political risks in the event of failure. The market as a whole receives a new contractual mechanism and innovative impact assessment tools. The public benefits from improvements in a particular aspect of the social situation. And in general, all this means that such a tool is worth at least studying in more detail.

REFERENCES

1. Participants in social impact bonds. (2021). VEB.RF. (in Russ.).

2. A guide to Social Impact Bonds. (2017, September 26). Government of the UK.

3. A. P. (2013, May 10). The Peterborough principles. The Economist.

4. Andersen, M. M., Dilling-Hansen, R., & Hansen, A. V. (2020). Expanding the Concept of Social Impact Bonds. Journal of Social Entrepreneurship, 1–18. doi:10.1080/19420676.2020.1806100