Innovation reaches beyond the realm of technology. Saskatchewan is the first province in Canada to test a new form of financing called Social Impact Bonds (SIB). A SIB is a new financing model used to address difficult social problems where traditional approaches haven’t been successful. An agreement between a service delivery organization, an investor(s), and a government body encourages significant prevention-focused solutions for our communities and reduces the risk of funding unsuccessful projects.
Clint Repski was the government intermediary for the Sweet Dreams initiative, Saskatchewan’s and Canada’s first test for SIB’s. EGADZ, a Saskatoon-based organization that works with at-risk youth, had approached the Government of Saskatchewan for funding to establish a home for at-risk young mothers. Although traditional grant funding was not available at the time, Repski thought this might be a good opportunity to test the concept of a SIB.
“I talked to EGADZ and really defined the objectives and outcomes of the project. The Social Impact Bond is not a grant. It presents a risk to the organization as you must perform. You need to strive to reach the objectives of the project, as funding is at risk” shares Repski. “Fortunately, EGADZ was confident they could hit the objectives and they wanted a chance to prove their outcomes and ‘sing for their dinner.’”
The objective for the Sweet Dreams project was to keep 22 kids in the care of their mothers. “We know that if mothers and babies stay together for a minimum of six months after the child is born, strong bonds take place and there is less chance of the child ending up in government-funded care. There were also significant advantages for the mother in this project, including furthering their education while staying with their baby,” explains Repski.
The next step was to find investors who were willing to participate in the project. SIB’s are not a donation, they are an investment in specific outcomes. When an investor dedicates the money, they are putting those dollars at risk. The repayment of the investment is based on the success of the project, the higher the success the higher the return on investment. The Government only pays when outcomes are achieved. It’s win-win-win for each of the partners.
In this case, Colleen and Wally Mah dedicated $500,000 to the project. They had been exploring a donation to EGADZ in other forms and found that the SIB was an interesting model to explore. “These are amazing people, who want to better the lives of the people in their community” nods Repski.
To lessen the risk even further, Repski approached Conexus Credit Union to take on the remaining amount of the bond. “They are a community-based credit union with a strong focus on the province. As a financial institution, they were approached to demonstrate the legitimacy of the bond” continues Repski. “They were completely on board and commended the government for reaching out to the private service to help with social issues. It was seen as a bold step forward.”
Once EGADZ started the project, the results were astounding. Over the five years of the bond, 54 children were kept out of care. “There are a lot of success stories coming out. There were the short-term advantages of keeping kids out of foster care and the long-term advantages of education and jobs for the mothers. They knocked it out of the park,” shares Repski.
The social impact bond model is now being tested in the Mother Theresa Middle School in Regina with the goal of getting at-risk kids to graduate on time.
“This was not business as usual. Getting this through the existing processes was challenging but people were committed to making it happen,” smiles Repski. “We were able to do this in Saskatchewan because we know the players and can get them to the table, which is more difficult in other larger provinces. With the help of dedicated and creative people, we were able to get this through and made something significant happen.”
Read more here: www.saskatchewan.ca/government/news-and-media/2019/june/27/sweet-dreams