Nonprofits and community-based organizations are critical to our social fabric providing valuable services to populations in need. Whether it is child welfare, employment training, offender reintegration, homelessness services, or early education, nonprofits help to bridge key gaps in service provision and to address some of the underlying causes of poverty and social disadvantage. However, faced with growing service demand, declines in funding, and an increasingly precarious funding environment, many organizations are struggling to make ends meet and to secure the funding they require to survive and grow. These funding challenges were the inspiration for a three year study, the primary objective of which was to explore the promise, potential, and limits of new outcomes-based funding models most notably social impact bonds or pay-for-success contracts. First introduced in the UK in 2010, SIBs have attracted considerable attention and, in theory, they hold considerable promise. However, there continue to be questions around the ability of SIBs, PFS, and outcomes-based funding more broadly to deliver on these promises and to address the funding needs of the nonprofit sector. To explore these questions, the researchers conducted over 195 interviews with those working in these emerging funding markets including: members of government; providers; investors; representatives from the philanthropic community; and advisors and consultants. These conversations spanned three countries (Canada, the US, and the UK) and yielded valuable insights into both the challenges of funding the work of social service nonprofits, and the possibilities and limits of investment-based solutions. The hope is that these explorations, and stories from the frontlines of the funding marketplace, will help to inform future debates and discussions around how best to support the work of nonprofits and tackle prevailing forms of inequality, injustice, and marginalization.
A major report from this study, From Visions of Promise to Signs of Struggle: Exploring Social Impact Bonds and the Funding of Social Services in Canada, the US, and the UK, is now available.