Evaluating social impact bonds: questions, challenges, innovations, and possibilities in measuring outcomes in impact investing

Abstract

Against a backdrop of economic turbulence and fiscal austerity, governments in the advanced economies are increasingly testing social impact bonds (SIBs) as a way of supplementing the public financing of social programs. SIBs are part of the emerging impact investing industry, where investors aim to achieve social or environmental objectives, as well as financial returns. As more SIBs move into execution, there is a need for independent evaluations of their outcomes and impacts that promote both accountability and learning, interrogate theories of change, and engage beneficiary stakeholders. Community development professionals should learn more about SIBs, explicate the relationships among individual, household, and community results, and support communities in holding SIB investors and sponsors to account for their declared intentions and outcome targets.

Keywords:

• evaluation
• impact investing
• measurement
• social impact bonds
• social outcomes

Acknowledgments

The author thanks the editors of this special issue – Mary Emery, Jane Leonard, and Norman Walzer – for the opportunity to contribute here, as well as Jennifer De Bien and Sonja Vanek for their assistance. He also wishes to recognize the important leadership in impact investing and evaluation by Margot Brandenburg, Paul Brest, Antony Bugg-Levine, Cathy Clark, Jed Emerson, Eme Essien, Sarah Gelfand, Steve Godeke, Paula Goldman, Karim Harji, Tessa Hebb, Andrew Kassoy, Nancy MacPherson, Ben Thornley, and David Wood.