Public–private partnerships in Social Impact Bonds: facilitating competition or hindering transparency?

ABSTRACT

The use of Social Impact Bonds (SIBs), which introduces the potential for investor profit in public service provision, has been widely discussed. Some argue that SIBs might promote government transparency because outcome data collection and evaluation are part of contractual terms. On the other hand, some argue that SIBs might hinder government transparency because more contractual parties might lead to more uncertain data ownership and because the profit motive transforms information into a competitive advantage. This paper looks at SIBs in five countries, examining how transparency differed between SIB and non-SIB financed programmes at the same social service provider. On the positive side, SIBs led to more and longer collection of outcome data and the publication of evaluations. On the negative side, it was found that SIBs tend to generate significant obstacles to the release of data to academic researchers and that sponsored evaluations do not measure impacts.

IMPACT

Government managers need to fully understand the pros and cons of all available financing mechanisms for social programmes. This paper shows how using SIB financing has changed data collection and evaluation in five European countries and explores the reasons for national differences.

KEYWORDS:

• Pay by results
• public–private partnerships
• outsourcing
• Social Impact Bonds (SIBs)
• social policy
• transparency

Acknowledgements

We would like to thank our providers in the UK, The Netherlands, Germany, Austria, and Switzerland as well as Alec Fraser and the other conference organizers and participants at the ‘Progressing the debate on Social Impact Bonds’ conference.

Disclosure statement

No potential conflict of interest was reported by the author(s).