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Sep 2017 | Tax & Spend

MANITOBA TAKES INNOVATIVE STEP FORWARD WITH NEW SOCIAL IMPACT BOND STRATEGY
HON. SCOTT FIELDING, MANITOBA MINISTER OF FAMILIES

The province of Manitoba is facing many challenges in addressing problems affecting our most vulnerable citizens. Our government is interested in taking innovative approaches to solving those complex social issues.

Under the previous NDP administration, Manitoba’s debt doubled in eight years. Yet the increase in spending failed to deliver meaningful progress on persistent social problems. Statistically, Manitoba continuously ranks among Canada’s highest rates of violent crime, child poverty and the highest rate of children in government care. We strongly believe that government needs to think outside the box about evidence-based initiatives that will provide real results for the Manitobans who need it most.

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Manitoba has the highest rate of children in care in the country at more than 11,000 children as of March 2017. That number increased by 87 percent over the past decade. The child welfare budget exceeded $514 million in 2016/17, an expense that has become uncontrollable as the number of children in care continues to increase year over year without positive outcomes. 

We know that far too often, current social programs measure the number of people they serve instead of how well the program addresses the problem that created its need. As a government, we want to start addressing the underlying causes of social issues, rather than waiting to react to issues after they become a crisis.  We believe the best way to accomplish this goal is through innovative social financing strategies that bring more money and resources to prevention and early intervention initiatives, as opposed to crisis management. One way we plan to do so is through the implementation and use of Social Impact Bonds (SIBs).

SIBs are social financing mechanisms that attract more money to address social issues through partnership with community, non-profit organizations and the private sector. Governments enter into agreements with organizations who wish to deliver a social program focused on prevention, as well as investors who are willing to pay for the operating costs and delivery of pre-defined social outcomes.

SIBs encourage partnership with government to deliver prevention programs designed by experts and front-line service organizations. The government sets a specific outcome to achieve in collaboration with service providers, secures private investment and repays investors only if the service provider meets the project’s outcome. These types of arrangements focus more on outcomes and successful programs through effective measurement.

By creating a new channel for philanthropy, we hope to help solve costly, complex social issues and benefit the broader community. SIBs are a new tool to tap into Manitoba’s potential to find creative solutions and foster new business, social and community partnerships.

SIBs find a way to use private capital for the public good. While traditional government programs may be funded regardless of whether they are working, SIB projects would only receive tax dollars based on success. This type of innovation will give Manitobans better value for their money and provide an efficient addition to current funding, not a replacement.

If outcomes are achieved, government proceeds with payments to investors. Those can range from basic repayment to market-beating returns. These payments generally reflect the level of government savings that the program was able to create.

Our goal is to have better long-term outcomes for vulnerable citizens through an approach centred on prevention and a focus on high-cost, historically-challenging issues.

We recognize the adoption of SIBs requires a major change in the way government does business. This includes a shift from tracking activity to reporting outcome. It requires the formation of new partnerships that cut across the philanthropic, investment and social sectors. The success of future SIBs must also involve education and increased capacity among service providers.

There are more than 200 Social Impact Bonds world-wide and some in use in Canada. In Saskatchewan, a successful partnership created the Sweet Dreams support home for single mothers, which has already shown important results. The provincial government, Conexus Credit Union, EGADZ Saskatoon Downtown Youth Centre and a private donor partnered on the project, which is expected to save the province up to $1.5 million over five years by reducing the number of children in government care. By 2019, Sweet Dreams aims to teach 22 children and their mothers the necessary skills to move into the community and stay together as a family unit for at least six months. The payment scale stipulates if 17 to 21 children remain out of foster care, investors will receive repayment plus five percent interest. They will not be reimbursed if fewer than 17 children stay with their mothers.

The Heart and Stroke Foundation partnered with the Public Health Agency of Canada in 2017 to launch a $4 million Community Hypertension Prevention Initiative. Its goal is to enroll 7,000 pre-hypertensive Canadians in a six-month program to teach healthy behaviour and control blood pressure. Eleven investors are on board, a mix of corporations, charitable foundations and individuals. Upon successful completion, investors will be paid principal and 6.7 percent interest.

The Progressive Conservative Party of Manitoba first introduced the SIB concept in 2015 as a proposal to improve outcomes of front-line social services through innovative financing options for non-profit groups. The concept became a component of the 2016 provincial election campaign.

Once elected, Premier Brian Pallister mandated his Minister of Justice and Minister of Families to find new ways to reduce and mitigate social issues through the implementation of SIBs. The departments of Health and Education have also met with stakeholders to discuss opportunities for SIBs. Implementation could occur in the areas such as of recidivism, at-risk families, green initiatives and Indigenous skills training. The premier established a caucus working group to assist and make recommendations to ministers and caucus to find opportunities to use SIBs.

 

“We know that far too often, current social programs measure the number of people they serve instead of how well the program addresses the problem that created its need. As a government, we want to start addressing the underlying causes of social issues, rather than waiting to react to issues after they become a crisis.” 

 

As a government, we have done our homework. After carefully studying examples around the world, we took a major step in July 2017 towards the launch of our first SIB. As Minister of Families, I announced the posting of a Request for Proposals for a consultant to help create a made-in-Manitoba approach to fund social programs.

In the months ahead, we will hire an intermediary to connect organizations such as service providers, non-profits and charities with investors that could range from community foundations to major financial institutions.

We will welcome the intermediary’s help to lay the groundwork for a solid plan our government will eventually assume and operate. We see this as a smart spending plan several years in the making here in Manitoba that will have a meaningful impact on the lives of vulnerable citizens.

Our plan will have professionals lead and teach government officials best practices and design and deliver a landmark Social Impact Bond in the coming months, as well as issue a call for proposals for many more SIBs.

Our government knows this new strategy must recognize existing challenges and acknowledge lessons learned in the past. We must consider the unique characteristics of our communities and leverage professional expertise to ensure that Manitoba gets SIBs right.

Rather than accepting the status quo, we are embracing this exciting work to make Manitoba the most improved province in social innovation. We anticipate a strong plan that ensures SIBs deliver positive, long-term benefits that serve Manitobans in need and strengthen our communities. 

 

SCOTT FIELDING is Manitoba’s Minister of Families and Member of the Legislative Assembly for Kirkfield Park in west Winnipeg. He graduated from the University of Manitoba with an advanced bachelor of arts in economics and political studies and served as a Winnipeg city councillor, where he chaired the finance committee and Winnipeg Police Board.