Social Impact Investing

SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE
sometimes mixing government stakeholders within sectors, and involving multiple stakeholders in a single
service area in just over one-third of cases (40 out of 112 examples, sometimes including private
providers). Australia, France, Japan and the United Kingdom have the most centrally-managed services,
Australia and Canada have many regionally-managed services (state or provincial level), and local
government is involved in 7 settings out of 12 in Germany. The United States has by far the most tiered
settings, with no area involving fewer than two government partners.
Table 5.5 The governance of social services is complex and varied across countries
Note: C/F is central or federal, R is regional (referring to states, provinces or counties), L is local (municipalities, local governments,
city governments), Pr. denotes private provider involvement. Data is provisional.
Source: OECD, correspondence with national-expert reviewers.
5.52 A number of issues for the SII discussion can be derived from the above. First, SII by sector will
involve different business models by country, designed to ‘fit’ into pre-existing public models, and so
transferability of good SII practice will therefore need to be assessed accordingly. Second, the complexity
of systems and number of stakeholders in public settings is likely to limit the size of social enterprise startups
generally, as the potential of co-production to scale will be limited or otherwise transaction costs may
be high. Third, where sector investment and sector impact are not aligned in terms of management
(primary health services improving school attendance in the United Kingdom for instance) additional
challenges to measuring assessing the value an impact, and delivering reimbursements, will be additionally
complex creating further transaction costs. Fourth, private enterprise is already a notable co-producer in the
United Kingdom and the United States (cases are highlighted in bold in Table 5.5), the examples of which
can inform practices in other countries. Finally, in some cases, the management and the resources by sector
will not be aligned, for instance when central government block grants pay for local level service delivery
(including outsourcing), which can create uncertainty and risk in regards to sustainability of SII funding
sources, complementary public services, and the expectations for the social impact made by any given SII.
5.53 Evidence on how public resources are shared between levels of governance is shown in
Figure 5.9. Using the example of Canada, on the top right-hand side of the figure, shows that sub-centrally
derived revenues (y-axis), at below 60%, are lower than the proportion of total government expenditure
undertaken at the sub-central level (x-axis) at over 60%. This means that some central government funding
74 © OECD 2015