SIBs Report.pdf - Forum for the Future

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The Future of Social Impact Bonds in the US Summary Report

Forum for the Future: Helen Clarkson, James Goodman, Clare Martynski The Raben Group: Jamal Simmons, Karen Marangi, Donald Gaitlin, Robert Raben

1. Introduction “An ounce of prevention is worth a pound of cure” - Benjamin Franklin Social Impact Bonds (SIBs) are a particular type of impact investing. Despite their name, they are not bonds or debt instruments but rather multi stakeholder partnerships managed through a series of contracts. These contracts are outcomes-based, in which a commissioner (often a public sector body) sets up a contract with one or more non-profit organizations to provide a service. The public sector body commits to pay for this service on the basis of the improvement it makes to social outcomes for a defined population1. The primary aim of this project is to better understand the current and potential future political landscape impacting the development of Social Impact Bonds (SIBs) in the United States, and to proactively develop a broader communications strategy to address the political discourse on these innovative financial vehicles. Forum for the Future worked with the Rockefeller Foundation and the Raben Group to develop scenarios which examine the future of the funding of social outcomes in the US in the next twenty years. These scenarios have formed the basis of the SIBs communications strategy prepared by the Raben Group for the emerging field of SIBs. About scenarios Scenarios are plausible, coherent and challenging descriptions of possible future worlds. They can be a powerful tool to help organizations navigate the future. By exploring what might happen, and 1


tackling uncertainty head-on, organizations can be better prepared to mitigate the risks and seize the opportunities presented by a changing world. Scenario planning is a way of discussing complex future issues in a clear and structured way in order to identify and prioritize risks and opportunities. Scenarios are tools that we use to help people think about the different possibilities in the future - they are not an outcome in themselves. The aim is to challenge perceptions about what the future holds and encourage people to consider uncertainty when creating strategy. Scenarios are not predictions and there is no such thing as a “right” scenario. The future may contain elements from of all of them, although as they are developed using expert insight and up to date literature, it is unlikely that nothing in the scenario comes about. The important thing is to use the scenarios to stretch thinking and challenge assumptions, to help people imagine a future that is very different from today. No one can predict the future and our assumptions are constantly challenged by developments.

2. Key Findings It is, of course, impossible to predict exactly how the political landscape of the US will play out in the next couple of decades and therefore what the future of SIBs might be. However, the ambition of this project was not to make a prediction, but to develop a set of scenarios that explore the possible outcomes for SIBs and a communications strategy that helps shore up the success of these tools. The key messages are set out in section 6 below and are shaped by the insights from the scenarios work that success for SIBs should not be defined too narrowly.

Through this work we have observed that there appears to be an assumed path for a successful SIBs market: that success means that SIBs become a mainstream financial product. However our scenarios show SIBs surviving or having different impacts in different possible futures. For example, in Scenario Four SIBs have proven the importance and expedience of funding preventative approaches in the medium term, leading to changes in government spending policy, and the evolution of different SIB-type products. In this scenario, therefore, SIBs have created significant change, even though SIBs themselves look very different. We believe that this should be deem