CCHE Seminar Series: Impact of Incentive Contracts on Non-profits Delivering Homelessness Interventions Through Social Impact Bonds

Incentive Contracts on Non-profits Delivering Homelessness Interventions Through Social Impact Bonds

Stefanie Tan
University of Toronto


Abstract: In a Social Impact Bond (SIB), governments partner with private, for-profit, or social investors (who seek a blend of financial return and social good) to fund interventions by non-profit, voluntary, or private sector providers tackling social problems, and are only repaid if predetermined outcomes metrics are met.  These 100% p4p contracts are intended to enable more innovative new approaches to service delivery than in conventional p4p schemes using process measures.  This presentation will discuss the results of a comparative case study between two non-profit organisations delivering a homelessness intervention through a SIB contract.  We find evidence that the design of outcomes, introduction of performance measurement and incentives to meet outcomes led to high levels of managerial pressure, unintended behaviour, and potential sanctions for performance below agreed outcome targets.  This highlights the role of managerial responses to financial rewards and governance structure in mitigating or exacerbating opportunism and ‘crowding-out’ of intrinsic motivations among front-line staff.  SIBs may be a useful policy tool for upfront funding of public services, but should be approached with appropriate caution given the potential for adverse provider behaviour, investor sanctions, or suboptimal allocations of risk between commissioners, providers and investors.

Stefanie Tan is a Postdoctoral Fellow with the North American Observatory for Health Systems and Policy and the Institute for Pandemics in the Institute of Health Policy, Management and Evaluation, Dalla Lana School of Public Health, University of Toronto.  She specialises in health financing, outcomes-based contracts and comparative health policy. Previous to this, she was a Research Fellow in the Policy Innovation Research Unit at the London School of Hygiene and Tropical Medicine.  Her research has focused on Social Impact Bonds, a novel variant of pay for performance funding using outcomes-based contracting and incentives for innovation in the biopharma sector to combat antimicrobial resistance (AMR).