Social Impact Bonds (SIBs) bring investors, service providers and governments together in collaborative initiatives to improve social benefits.
A social impact bond (SIB) is an innovative tool for funding social services. Under a SIB, the government partners with a service provider to run a program. The government and the service provider identify the program's intended social benefits and set targets for each outcome. One or more investors lend money to cover the program's costs. If the program achieves its targets, the government pays investors back, sometimes with interest. If the program does not meet its targets, investors may not receive their full reimbursement.
Most SIBs include a partnership between government, a service provider, one or more investors, an intermediary and an evaluator.
SIBs are designed to enhance and add to services provided to address social problems and improve conditions for vulnerable people. They do not replace or cut existing services.
Investors are attracted to SIBs because it aligns with their corporate social responsibility, and may improve their business profile while promoting sector development. These benefits not only enhance the firm's success but they can also contribute to broad-based economic gains. Investors also have the potential to gain a return on investment, depending on the project scope.
SIBs are a relatively new way for governments to fund social services. As of January 2019, over 100 SIB projects have been launched worldwide, and over a dozen of those are in the area of child welfare.
The Southern Network has partnered with the Manitoba government to launch the program.
As part of the Landmark Social Impact Bond Strategy, the province will fund Restoring the Sacred Bond through a social impact bond, a financial investment arranged with private foundations.
The Manitoba government has budgeted up to $3 million to repay investors if the program reaches success on it key outcomes. As well, the province is working with leading Canadian social finance consultant, MaRS Centre for Impact Investing, to guide the Social Impact Strategy. MaRS is working with the Southern Network to identify and secure private investors for Restoring the Sacred Bond.
The program will be funded based on its success in reducing the number of days infants spend in care. If it achieves positive results, the investors will earn their money back plus a return. If positive results are not achieved, the investors will not receive their money back.
By investing in the Restoring in the Sacred Bond Initiative, in addition to a potential financial return, investors have the opportunity become an active philanthropic contributor to the Indigenous community and an innovative and culturally appropriate program that aims to help children and keep families together.