The Province of Saskatchewan is leading Canada in a new funding model for addressing social issues known as Social Impact Bonds.  The Social Impact Bond model involves a partnership between government, private investors and non-government social service providers, in which private money, rather than government grants and spending, is invested to achieve specific social outcomes through novel initiatives. Under the Social Impact Bond model, the government sets a social outcome that it wants to see achieved and private investors are brought in to place capital in the hands of non-government social service providers for the purpose of achieving that outcome.  The government promises to pay the investors a return if (and only if) the social outcome is achieved after a specific period of time.  This model shifts the risk of social program spending not achieving target outcomes from the government to private investors.  The net effect is to place less burden on the taxpayer and to provide an incentive for private innovation to be used to address complex social problems. The Government of Saskatchewan was the first province in Canada to implement the Social Impact Bond model last year through an initiative called “Sweet Dreams”, where $1 million was raised from private corporate investor Conexus Credit Union and private individual investors Wally and Colleen Mah for Egadz Saskatoon Downtown Youth Centre to open a supported living home in Saskatoon for at-risk single moms and their children.  Since its inception, the program has achieved positive results that are expected to result in net savings to the Government of Saskatchewan and provide a return for the private investors. In response to the success of this first-in-Canada Social Impact Bond initiative, Saskatchewan Premier Brad Wall has appointed Kelvington-Wadena MLA June Draude as the Government’s Legislative Secretary for Social Impact Bonds.   The appointment of Draude to this new position signals that the Government of Saskatchewan is keen to find new projects that would benefit from this innovative approach to addressing social issues.  This presents an opportunity for innovative new programs to be brought forward and developed that would not necessarily have been funded previously using traditional channels of government social spending. Setting up a Social Impact Bond involves aligning the goals and interests of the government, private investor and non-government social service provider participants.  While this initially may be challenging, the success shown through the Sweet Dreams program demonstrates that the benefits to all three participants can be well worth the effort.

About the author: David is an associate practicing in the Saskatoon office.

About McKercher LLP: McKercher LLP is one of Saskatchewan’s oldest, largest law firms with offices in Saskatoon and Regina. Our deep roots and client-first philosophy have made us a top ranked firm by Canadian Lawyer magazine (2011, 2013). Expertise, experience and capacity provide innovative solutions for our clients’ diverse legal issues and complex business transactions. This post is for information purposes only and should not be taken as legal opinions on any specific facts or circumstances.  Counsel should be consulted concerning your own situation and any specific legal questions you may have.