Can social finance improve the outcomes of employment and training programs?

Summary

Social finance refers to methods of financing the delivery of employment or social services that promote both social goals and financial returns for investors and entrepreneurs. It can apply to well-established enterprises like Goodwill Industries or more recent innovations like social impact bonds whose returns are based on the achievement of program goals.

The paper identifies six program and financing models that fit under the social financing umbrella: the employment model, fee-for-service model, financial incentives, social purpose businesses, pay-for-success financing, and public–private partnerships.

The ultimate goal for any social finance model is to scale up proven local innovations to efficiently improve outcomes for disadvantaged groups in society. But the paper notes there is an additional benefit specific to employment and training programs – social finance models by their very nature intensify engagement with employers – something that most commentators agree has been lacking in these programs.

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