1. Social Impact Bonds: The Next Neoliberal Thing
Sanford F. Schram
Political Science Department
Hunter College, CUNY
Public Policy Program, Roosevelt House
Presentation at Massey University, Auckland, New Zealand, March 26, 2014

2. Neoliberalism: Social Impact Bonds as One Piece of the New Puzzle
Neoliberalism Defined
Political Liberalism
Economic Liberalism
Neoliberalism vs. Neoconservatism
Market Fundamentalism as the Return to Laissez Faire
Marketization of the State as Plan B
Privatization, Contracting, PPPs, Performance Management, Evidence-Based Practice, Managed Care, Social Impact Bonds

3. Neoliberalism in Social Welfare Provision
Marketization of State Operations Public-Private Partnerships Philanthrocapitalism— Buffett Pledge Gates Foundation Education Health Blurring the Boundaries State, Market, Civil Society The Non-non-profit

4. Social Impact Bonds Defined
A Social Impact Bond is an instrument used by a public entity to enlist private investors to loan money to pay for public services with the incentive they will make a profit if the service meets designated targets.

5. Social Impact Bonds (SIBs): A Fast-Track Global Social Policy
First developed as an idea by New Zealand Economist Ronnie Horesh in 1988.
First SIB issued in London for Prisoner Reentry Program in 2010.
Canada, Australia and the US have followed with SIB programs.
5 states currently have SIBs for prison reentry and child welfare programs. Other areas are being considered.
US President Obama has set aside $485 million in FY2014 to fund state pilot programs for Pay for Success Bonds (SIBs by another name).

6. The Rationale for SIBs Experimental programs go unfunded
Governments need new sources of revenue
Preventive Programs could produce long-term savings
Incentives of Pay for Success produce results

7. SIB Standard Model

8. Graphic Version

9. Outside Evaluation is Key

10. It’s More Complicated in Practice: The NYC Juvenile Reentry Program

11. NYC Projections: Success Payment Schedule for the Rikers Island Reentry Social Impact Bond
Reduction in Re-Admission Net Savings ($) City Payment to MDCR
≥20.0% $20,500,000 $11,712,000
≥16.0% $11,700,000 $10,944,000
≥13.0% $7,200,000 $10,368,000
≥12.5% $6,400,000 $10,272,000
≥12.0% $5,600,000 $10,176,000
≥11.0% $1,700,000 $10,080,000
≥10.0% (breakeven) $ ≥ 1,000,000 $9,600,000
≥8.5% $ ≥ 1,000,000 $4,800,000

12. Selecting Interventions
Focus on prevention
Multi-year track record (5+ years)
Record of rigorous evaluations
Statistically significant results
Sizable constituent base
Replicable and scalable intervention
Deliver taxpayer benefits in 5 years

13. Current Policy Areas Program Area Intervention
Chronic Homelessness Permanent Supportive Housing
Juvenile Justice Functional Family Therapy
Low-Income Seniors Not Specified

14. Internal Issues
• Requires coordination between multiple players and strict adherence to multiple criteria in order to work
• Not all social problems will be a good fit due to measurement challenges and the
difficulty of defining outcomes
• The time horizon for social change is often longer than government funding cycles;
appropriations laws would need to be changed
• Lack of existing infrastructure, especially intermediary organizations and third-party
evaluators
• Social services would need to place a greater emphasis on outcome measurement
• Could create unintended consequences in cases where social interventions were not
effective

15. External Issues • Crowds out conventional funding
• “Teach to the Test” effect
• What Works agenda wins over the What’s Right agenda
• Economic criteria become the exclusive baseline for social programming
• Private Financiers call the shots—only the programs they will invest in get funding

16. Conclusion Neoliberalism is a Juggernaut
The Solutions to the Problems of Neoliberalism seem to be more Neoliberalism
The What Works Agenda is winning over the What’s Right Agenda
Marketization of the State needs to be Challenged to put people first