The case for social investments in welfare/government
- The social contract of welfare is under strain and public confidence in the services provided by government is wavering.
- There is a need to drive more efficient use of public resources in order to more cheaply drive impact and outcomes as well as freeing up public resources to adequately cover critical needs.
- Social investments as a phenomenon are growing as a potential solution to evolving problems in welfare and public service delivery.
- Social investment can drive early interventions that save government resources downstream in the development life cycles of welfare problems.
- Government services are not proactive enough to catch welfare problems before they become complicated.
- Legislation requires public services to react when problems become visible but there are no direct incentives to stop problems from developing in the first place.
- Sweden is innovative in that many municipalities (80ish) that have allocated money into "social investment funds" to try to fund early interventions.
- Private investors participating in public social investments can share financial risks, provide support in governance and management of implementation and navigate markets of solutions and service providers.
Social impact bonds / social outcomes contracts
- Traditional procurement drives much to strong focus on activities rather than results and outcomes leading to the potential for public buyer and private/non-profit service provider incentives to diverge.
- A new trend in public procurement is contracting on outcomes to align incentives of public, non-profit and private actors around specific measurable outcomes.
- Social outcomes contracts / Social Impact Bonds are a new experimental type of contracts between public and private/non-profit service providers and private investors to try new operating models to solve social problems.
- Intermediaries are brokers of relationships and project management experts that help private, non-profit and government parties to align and find agreement on social investments.
- Public sector organizations are generally not capable of analyzing needs and potential solutions of complex welfare problems. Further they have a terrible track record of following through on projects that run for more than 1 year and especially get sloppy around evaluation and lessons learned from implemented projects.
Potential areas for social innovations and investment
- Labor market integration
- Social integration of migrants
- Prevention of health problems, mental health notably
- Any issue area where the responsibilities and specifications for functional solutions span across public sector silos or across public, private and non-profit sectors. This is the Achilles heel of the public sector, the inability to organize across silos or across sectors.
