‘Pay-for-performance’ poverty plan
TheProvince.com – business – Feds consider social impact bonds, which pay non-profit groups for meeting mandated targets
March 11, 2012. By Jason Fekete, Postmedia News
Human Resources Minister Diane Finley says the federal government “can’t do everything” to meet Canada’s social challenges and is looking at the corporate and not-for-profit sectors to help deliver more services and tangible results.
Speaking to a few hundred Conservative supporters at the Manning Centre conference in Ottawa, Finley said millions of taxpayer dollars are spent annually on such social issues as tackling poverty, often without substantial improvements.
With that in mind, the minister said new approaches to philanthropy and addressing social issues are needed. The federal government can no longer afford to continue spending money on the same old approaches and expect to achieve better results, she said.
“Governments can’t do everything to meet our social challenges. Governments can’t simply fund every demanded service without regard for the taxpayers’ ability to pay,” Finley said in her speech at the Manning Networking Conference, which has seen Conservatives from across the country gather in the nation’s capital.
“Governments can, however, facilitate and empower others to deal with social challenges.”
The Conservative government is considering a number of new alternatives when it comes to the “social economy,” she said, including more strategic investing by government, the corporate sector and not-forprofit agencies to achieve measurable improvements.
Finley specifically noted in her speech the government is considering “pay-for-performance agreements” in which federal dollars are only paid when clearly identified targets are met. Such an approach would have the private sector more involved in addressing social challenges and delivering innovative solutions, she said.
In the same vein, she said the Conservatives are considering developing – as one of many options – what are known as social-impact bonds.
She said the bonds are essentially a contract between the government and private investors that provide upfront capital to finance an organization – often a not-for-profit agency – to deliver a social program.
The federal cash for the program is tied to results, so the government will pay the investor the agreed premium and the original investment only if the agreed outcomes are achieved, she said.
Adopting social-impact bonds would transfer the financial risk away from the government and taxpayer – who pay upfront without any guarantee of results – to the social group that will be paid for results, Finley said.
“Our approach will be incremental, it will be respectful of the government’s fiscal situation. The government cannot afford to do everything and we will need to leverage if we’re going to have maximum impact,” she added, promising the government will still take care of the vulnerable.
“We’re not relinquishing any of our responsibilities. What we are doing is creating more space and more freedom.”
The minister noted that last year she established a voluntary advisory panel on social partnerships that is providing the federal government with a number of new approaches to addressing social challenges.
Finley is already helping lead a contentious federal government examination of the public pension system. The Harper government has promised reforms are coming to programs such as Old Age Security – including possibly increasing the qualifying age to 67 from the current 65 – although the changes wouldn’t affect current seniors or those nearing retirement.
Kate Bahen, managing director of Charity Intelligence, an agency that conducts research and analysis on charities, said Canadians for “far too long” have been giving billions of dollars annually to charities without asking what sort of results it delivered.