Paying for what works

Posted on April 4, 2011 | in Uncategorized | by CRC

In February, President Obama proposed the use of social impact bonds for seven pilot programs to elicit better results from social services. In an effort to reduce support for programs that are not effective, social impact bonds would create accountability for programs to succeed. Specifically, nonprofits, particularly foundations, would pay for the programs up front with the support of the government. The nonprofit and government would agree on performance measures used to evaluate the program’s success. If, several years later, those performance measures determine that the program is a success, the government would repay the nonprofit, and possibly provide interest with the repayment. This would reduce the burden of taxpayers' funds being utilized to back ineffective programs.

The implementation of social impact bonds could open doors for the role of evaluation in governmental programs. Typically, the government has been void of rigorous evaluations for social programs, leaving policy makers to guess as to which programs are having an impact. Or, when programs are evaluated and found to be ineffective, funding continues. In fact, 9 out of 10 major social programs for youth have been shown to have insignificant results. This suggests that a new approach is needed.

While the business of evaluation research will likely experience a boom if social impact bonds are approved, it will be an area of work where we will need to proceed with caution. The political and financial agendas involved with such a project are likely to be high stakes. Evaluators in this line of work must be ready to answer tough questions, with a lot riding on the answers.