Identifying the best programs for solving serious social problems is challenging for governments in the best of times, and all the more so in a constrained fiscal environment where every dollar must count. This is particularly true in areas like juvenile justice where the most effective interventions may involve combining approaches that governments currently support through separate funding streams—and where politicians’ personal views may steer disproportionate amounts of funds to programs that sound good on paper but don’t deliver results.
But an innovative new financing tool called Social Impact Bonds may help solve some of these challenges. Social Impact Bonds, or SIBs, take traditional government funding structures and turn them on their head. Instead of paying costs upfront for a prescribed set of services, SIBs allow governments to define outcomes they want to achieve—and not pay a dime if those goals are not met.This article was originally published in Reclaiming Futures.