The impact of social impact bond financing
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Author (Corporation)
Publication date
2023
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01A - Journal article
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Parent work
Public Administration Review
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Volume
83
Issue / Number
4
Pages / Duration
930-946
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Publisher / Publishing institution
Wiley
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Abstract
Social impact bonds (SIBs), also known as Pay for Success, are an innovation in Payment by Results contracting. Investors finance programs and are repaid based on the “SIB effect,” which includes changes in outcomes attributable to financing. We generate a quantitative estimate of this part of the SIB effect for two active labor market programs in the Netherlands and Switzerland. Comparing program impacts within providers using SIB and non-SIB contracts suggests financing has positive impacts on public benefit receipt, employment, and income. Qualitative research suggests this is because SIB contracts increased pressure for all involved parties, leading to the institutionalization of selection and greater resources for SIB-financed services. Contracts with high pressure, like SIBs, may compromise both performance requirements and the potential to measure performance. We examine the implications of these findings in relation to agency and stewardship theories and highlight the significance of SIBs as multilateral as opposed to bilateral contracts.
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ISBN
ISSN
0033-3352
1540-6210
1540-6210
Language
English
Created during FHNW affiliation
No
Strategic action fields FHNW
Publication status
Published
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Peer review of the complete publication
Open access category
Hybrid
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Citation
Hevenstone, D., Fraser, A., Schlittler, L., Przepiorka, W., & Geuke, G. (2023). The impact of social impact bond financing. Public Administration Review, 83(4), 930–946. https://doi.org/10.1111/puar.13631