Using Social Impact Bonds (SIBs) to reduce costs and improve service quality in the public sector.
The SIB model is an innovative method of financing and developing public services. It aims to improve a social outcome through the collaboration of government, service providers and external investors. A SIB involves a series of contracts based on an agreement by government to pay investors for an improvement in a specific social outcome once it has been achieved.
Service providers address the social outcome by delivering an intervention to a group within a target community. The primary focus is on increasing spending on preventative services, and thus, SIBs act as a social futures contract. Unlike many existing public sector contracts, the measurement of social outcomes is a necessary component of a SIB. The roles of stakeholders involved are as follows: