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This paper analyzes the Social Impact Bonds (SIBs) and their potential to unify social entrepreneurs, the government, and financial markets to solve social challenges. The first section analyzes the emergence of the social investment market as a political economy. In addition, it explains how SIBs bring together the key stakeholders in the design a...
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... the past decades, numerous countries have experienced several structural changes concerning their role to deliver services to citizens. These changes have been characterized by a predilection for market deregulation, which prioritized tax reduction and privatization over centralized models of welfare state (Edwards, 2011, 2012). According to Nicholls & Tomkinson, “New Public Management” 2 and “Reinventing Government” 3 are the two key approaches that represent the evolution of the state and its internal functioning (2013). In both cases, the goal was to transform the state into an entity capable of achieving the levels of productivity and efficiency comparable to the best-run private companies. This makeover, driven by a “more efficient use of scare public resources”, encouraged market- based models of welfare delivery, which introduced tendering processes in areas that used to be state responsibilities (McHugh et al., 2013). In this context, the so called “third sector” delivered welfare goods and services which allowed it to grow exponentially (Allen, 2009; Millar, 2012). The “third sector” is hard to define because of its diverse organizational structure and wide- ranging purposes. Experts declare that the third sector is composed of different social sector organizations, which are non-profitable and self-governing, remain institutionally separate from the state and receive voluntary member contributions (Phillips & Hebb, 2010; Salamon et al., 1999). However, this definition rejects the fact that the third sector can also be profit-oriented. As seen in Figure 1, and for the purpose of this research, this sector is identified as an intermediary between the public and private sector, with the capability to be both for-profit and not-for-profit (Kenny, 2013; Pestoff, 1992). Changes concerning the funding of third sector organizations reshaped their strategies. Traditionally, philanthropic donations, charitable foundations and government grants provided one-way finance to social sector organizations (Kingston & Bolton, 2004; Phillips & Hebb, 2010). But over the course of time, in Western Europe, the allocation of public resources was transformed towards contracts and payments; whereas in the U.S., public grants were heavily reduced while the commercial income of the third sector simultaneously increased (Defourny & Nyssens, ...
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Citations
... Impact investing refers to investments that deliver measurable social/environmental returns along with financial profits (Bugg-Levine & Emerson, 2011;Nicholls, 2010;Ormiston et al., 2015). Impact bonds are an outcome-based policy-making strategy in which private investors receive a rate of return if pre-agreed social/environmental outcomes are achieved (Liebman, 2011;Rivera-Acevedo, 2015). At the time of this research, 93 impact bonds are being implemented, including one in Colombia (Social Finance UK, 2017). ...
The informal economy accounts for half of the economic activity in Colombia. Street vending is a major part of the informal sector. In the context of a rapid urbanization due to internal conflicts, low skilled workers find a last resort for income generation as street vendors. Even though studies have revealed that street vendors can have high profits, they usually remain poor. A primary reason is their continuous indebtedness outside the regulated financial market. This paper proposes a comprehensive questionnaire survey on the socioeconomic profile of street vendors. This tool can be used to assess the individual credit risk and incentivize the financial inclusion of the poor. It can also be used for evaluation processes by the government or impact investors.
