The Liberal government of Prime Minister Justin Trudeau is planning to add new funding streams to existing programs in a bid to link federal spending more closely to charitable and private sector organizations to help pay for and deliver services.
What makes the approach attractive to governments is that it shifts the financial risk from taxpayers to investors who give financial backing to social service providers to test new and successful ways of delivering programs. Investors assume the risk and governments are only obliged to cover investors’ costs and profits if the programs work.
Documents obtained by the Canadian Press under the Access to Information Act show the federal government envisions adding social funding streams to a variety of programs in the future, including the Impact Canada Fund set up in the 2017 budget that already finances new ideas for clean technology and municipal infrastructure.
Social Development Minister Jean-Yves Duclos said the concepts underpinning social finance and social innovation — helping vulnerable populations, crafting community-specific plans, creating partnerships and addressing multiple issues at once — can be found in various forms in the ongoing talks with provinces and territories on early learning and child care, deliberations on a national poverty reduction strategy and the national housing strategy.
Minister Duclos is overseeing work on a federal strategy to be completed this year about how to unlock what the Liberals believe are billions of dollars in private cash that could finance programs and services and test new ways to deliver them.
Social impact bonds see service providers’ partner with private or philanthropic backers who cover the up-front costs and the government pays a return on the investment only if certain outcomes are met. In one such arrangement involving the Chicago education system, returns are set at 8%.
