Social Impact Bonds: A Guide for State and Local Governments

Published Friday, November 1, 2013 | by Jeffrey Liebman, Alina Sellman

Quick Facts

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In June 2013, The Harvard Kennedy School's Social Impact Bond Technical Assistance Lab (SIB Lab) published a guide by Jeffrey Liebman and Alina Sellman to help state and local governments explore Social Impact Bonds and the Pay for Success approach. As leaders in the Pay for Success field, the SIB Lab's step-by-step manual should prove very useful for governments considering this approach as a way to adapt to the new reality of diminished resources available to fund the increasing demand for social services. The onus for action often lies with the state and local governments (E.g., county, city) for such adaptive strategies and this Guide should be very helpful for governments trying to pay for what works. 


Why We Need a New Approach

Each year, governments spend hundreds of billions of dollars addressing social problems. But in most cases, we have no idea how effective this spending is. Performance is rarely assessed, and measurement tends to focus on tracking the number of people served and the amount of service provided rather than the outcomes that are achieved. At the same time, tight budgets cause us to under-invest in prevention, even when we know that doing so will lead to greater expenditures on remediation down the road. Our fiscal predicament also threatens to stifle innovation – how can we come up with the resources to test promising new ideas when we can’t even afford to pay for what we are already doing? And we are simply not making rapid enough progress in addressing social problems. From recidivism to school readiness, and obesity to workforce development, we lack proven, cost-effective, scalable strategies.