Impact Evaluation and Social Impact Bonds

How Rigorous Impact Evaluation Can Improve Social Impact Bonds

Social Impact Bonds

In recent years, Social Impact Bonds are being increasingly used by the British government to deliver public services via outcomes based commissioning. They are also becoming increasingly common in the U.S. By linking payments to good outcomes for society, SIBs are used not only to provide better value for money, but also as a driver of public sector reform. In the words of guidance published by the British government’s Cabinet Office:

“[Social Impact Bonds] are … designed to help reform public service delivery. SIBs improve the social outcomes of publicly funded services by making funding conditional on achieving results. “

While SIBs are not without their critics, their proponents argue that the bonds are a great way to attract private investment to the public sector while focusing all partners on the delivery of the desired social outcomes. This new way of commissioning services also encourages prime contractors to subcontract delivery of some service to the community and voluntary organisations, who bring their own experience, expertise and diversity to the provision of social services.

GtD have completed evaluations that have helped shape social impact bonds, and through our work we have identified five key questions that should be asked by anyone thinking of setting up a SIB or is looking to improve the design of their SIB:

1. Will it work?

Some services delivered by SIBs fail before they start because the planned intervention cannot plausibly achieve the desired outcome. In other words, just because an intervention reduced the number of looked after children entering the criminal justice system doesn’t mean it should work for all young people at risk of offending. That said, if the evidence base around a particular intervention is weak that does not mean one should not proceed – but it should promote a SIB design that includes an evaluation that can state quickly whether the SIB is delivering the hoped for outcomes.

2. Who can benefit from this intervention and who can’t?

We all want to help as many people as possible. However, we can quickly lose sight of who we are seeking to help when we are simply meeting output targets. In other words, if public services are funded by the number of clients they see, then providers could be tempted to increase numbers by accepting referrals of people for whom the service was not intended. So to achieve your outcomes – and receive payments – it’s vital to monitor intelligently the profile of your beneficiaries and ask yourself, “If my targeting were perfect are these the clients I would want to work with to deliver my intended outcomes?”

3. Are we doing what we said we were going to do? And does it work?

Interventions can fail simply because they don’t do what you said you were going to do. If, for example, you are working with young people to raise career prospects and your operating model includes an assessment of need (because the evidence base suggests that assessments increase effectiveness) then it should be no surprise that you did not meet your outcome targets if an assessment was completed with only half of your clients. Identifying your key outputs, monitoring their use and predicting outcomes based on their use can give you much greater confidence in achieving your intended impact.

4. What do we need to learn and how do we learn quickly?

All SIBs we have seen collate a lot of data about their beneficiaries and the service provided but few use those data to their full potential. With predictive analysis, we can monitor who appears to respond best, who is not benefiting and what form of service delivery is the most effective. In other words, is one-to-one work or group work more cost effective? As such you can learn how to define your referral criteria better or learn how to improve your operating model, even within the first months of a SIB.

5. How can we build a counterfactual?

A counterfactual is an estimation of what outcomes would have been achieved without the SIB. Comparing your SIB’s outcomes to the counterfactual can highlight some areas for learning and how to improve over time. Consideration should be given to the counterfactual at the commencement of the SIB. Full advantage can be taken of the publically available data sets to construct the counterfactual: for example, the National Pupil Database, Justice Data Lab or the Health Episode statistics. (Top tip: consent from beneficiaries to use these data sources is generally required).

To discuss how GtD’s impact evaluation can help improve your organisation’s SIB, please contact Jack Cattell, jack.cattell@getthedata.co.uk