Social Impact Bonds:
The Next Phase of Third Sector Marketization?
MEGHAN JOY, PHD CANDIDATE,
POLICY STUDIES, RYERSON UNIVERSITY
DR. JOHN SHIELDS, PROFESSOR, DEPARTMENT
OF POLITICS AND PUBLIC ADMINISTRATION,
RYERSON UNIVERSITY
TUESDAY, FEBRUARY 11TH, 2014
Presentation Overview
2
 Why the Current Interest in SIBs?
 SIBs as a Market-oriented Policy Tool
 Practical Design and Implementation Challenges
 Fundamental Challenges
Why the Current Interest in SIBs?
3
Government
Transform funding and delivery
of social policy
Third Sector
Immediate and long term
payment
Private Sector
Altruism
Enhance Competitiveness
Reduce social service costs
Minimal delivery
prescriptions
Alternative to universal and
institutional care
Appeal to large nonprofits
Efficient public investment
Larger role for foundations
Greater transparency and
accountability
Political malleability
Service privatization
Access to government
policy design and delivery
decisions
Consulting firms will see
new business
opportunities
SIBs as a Market-oriented Policy Tool
4
 Marketization
 SIBs part of agenda to reform the public sector to operate
more like a private business
 Alternative service delivery complimented by alternative
service funding
 SIBs could facilitate privatization of service delivery
SIBs as a Market-oriented Policy Tool
5
 Social Innovation
 “Proven ideas that work to address unmet needs by applying
new learning and strategies to solve these problems”
(HRSDC, 2013, 9)
 Conceptualization heavily marketized
 Framed as alternative to big government
 SIBs used to transform nonprofits into efficient and innovative
market actors
Practical Design and Implementation Challenges
6
Government
No reduction in bureaucracy and
costs
Third Sector
Could reduce grant and donation
funding
Private Sector
SIBs a risky investment
Risk aversion
Reduced control over service
provision
Do not have full control over
results
Problems with evaluation
Competitive disadvantage in
service bids
Cherry-picking further excludes
the most vulnerable populations
Demands for evaluation and
monitoring
New management and evaluation
skills required
Risky for employees and service
users
Fundamental Challenges
7
 Model of philanthropy not intended to
displace state run social policy
 SIBs may represent privatization with the
nonprofit sector used as legitimation
 Social problems framed as an individual’s
lack of self-responsibility
 Social profit organizations may be less
willing to operate where they cannot make
money
Fundamental Challenges
8
 Need to expand, not reduce the vision of what the
nonprofit sector does
 SIBs can be both empowering and disempowering,
freeing and controlling

Need to assess who wins/loses with the broad implementation of
this policy tool
 Support for the third sector should include stable and
long term funding that covers core administrative costs
and community engagement and organizing

Provides sustaining foundation for the third sector and empowers
nonprofits to be innovative
Further Information and Follow-up
9
Joy, M. & Shields, J. (2013) Social Impact Bonds: The
Next Phase of Third Sector Marketization? Canadian
Journal of Nonprofit and Social Economy Research.
4(2): 39-55.
http://anserj.ca/anser/index.php/cjnser/article/view/
148
Meghan Joy: meghan.joy@ryerson.ca
John Shields: jshields@ryerson.ca