NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, June 4, 2019

By Nadine Pequeneza

When I started making The Invisible Heart, a documentary film about Social Impact Bonds (SIBs), the concept was relatively new. It was 2015 and there were roughly 45 SIBs globally. Observers had great hopes that this new financing model would revolutionize social service delivery. By making private investment available to social programs, SIBs were expected to bring innovation, more money, and better outcomes for society’s most disadvantaged people. Private investors would be paid a return only if the program achieved predetermined outcomes, such as reducing prison recidivism or improving academic performance.

My film, which premiered on TVO in January 2019, focuses on two SIBs: a Toronto program to house the chronically homeless that was still in the design phase and a Chicago pre-kindergarten program that was entering its second year of implementation and about to deliver its first results. I also highlight a third SIB—a program to reduce hypertension—as a way to chronicle Sir Ronald Cohen’s efforts to promote impact investing globally.

I wanted to document SIBS that represented a variety of issue areas, populations served, investor types, and stages of completion from design to evaluation. Having high stakeholder participation was also a critical factor in deciding which SIBs to feature.

Today there are 151 SIBs in 29 countries, but there is little evidence that they are delivering on their promise. After three years filming the evolution of this financing model, I believe we need to consider that SIBs might be doing more harm than good.

Photo courtesy of Martin Fisch.