Introducing Social Impact Bonds in Colombia

ACRONYMS DNP National Planning Department EoT Educación Orientada al Trabajo FARC Revolutionary Armed Forces of Colombia IDB Inter-American Development Bank FC Fundación Corona OECD Organization for Economic Co-operation & Development PBR Payment by Results SAF SIB Action Framework SIBs Social Impact Bonds SIPA Columbia University, School of International & Public Affairs CONTENTS i. Executive summary 1 ii. Project context 3 iii. Social Impact Bonds: an overview 4 iv. Research approach 5 1. ‘Identifying’ SIB scope & feasibility 7 2. ‘Engaging’ the SIB coalition 17 3. ‘Measuring’ SIB progress & impact 31 4. Conclusion 44 5. Appendix 46 6. References 67 7. Acknowledgements 69 i. EXECUTIVE SUMMARY Colombia is at a significant crossroads in its history. The onset of a new era of institutionalized peace, in addition to economic development in line with ‘middle-income’ expectations, comes with new requirements for reducing inequality, boosting productivity, and limiting workforce informality. Social Impact Bonds (SIBs), alongside other innovations in social financing, stand out as promising instruments for addressing these challenges. They remain nevertheless untested outside of markets with a well-established impact investment sector and a critical mass of available financing for preventive social activity. Fundación Corona has over fifty years of experience in strengthening capacities to drive social development, quality of life, and equity. This puts the foundation in a critical position to leverage its expertise and alliances with the supranational, domestic public, and private sectors to build a market for SIBs in Colombia. Its partnership with the Inter-American Development Bank, the Multilateral Investment Fund, the Swiss State Secretariat for Economic Affairs, and the Administrative Department of Social Prosperity endow it with an even stronger impetus for establishing a SIB ecosystem capable of grouping a broad set of players to the table. The methodological approach put forth by our Columbia-SIPA team will help identify the essential tenets for the development of this ecosystem, and lay out clear, actionable recommendations for implementation by its major stakeholders. Through undertaking in-depth international benchmarking INTRODUCING SOCIAL IMPACT BONDS IN COLOMBIA 1 and generating an assessment of Colombia’s market preparedness, this project will endow Fundación Corona with the core conditions for decision-making across three facets of SIB market activity – Identifying, Engaging, and Measuring. Armed with these learnings, the foundation will be poised to play a major part in the historical creation of a social financing ecosystem in Colombia. This document brings together the output of a wide-ranging analysis undertaken between November 2016 and May 2017. Structured around these three key tenets of SIB market activity - ‘Identify’, ‘Engage’ and ‘Measure’ - it takes the reader through the major global trends that have shaped the global SIB environment, and puts forth specific recommendations for the Colombian context. A specific focus was placed on the key social theme of employability. 1. The analysis first highlights the factors that allow for a SIB to get off the ground, and – when it does – that determine what scope the intervention will take. Driving policy innovation, assessing the existence of demand and supply side factors, identifying suitable issue areas that align with already proactive policy priorities and ensuring that public budgeting can be suitably transformed are all key factors to take onboard in order to build a SIB environment of scale. 2. The document then showcases how the engagement of a diverse set of stakeholders requires clearly defined leadership, strong decision-making structures, and consistent communication to ensure smooth and flexible implementation. The role of performance management is proven to be critical, particularly when it comes to understanding stakeholder motivations, being able to translate insights to each of these motivations, and being able to adapt an intervention when change is needed. In a context of market development, government support platforms and incentives can be catalytic for encouraging first and second entrants. 3. Finally, high quality data and information management before, throughout and after a SIB intervention prove to be equally crucial. Driving greater data coordination and broader data access have contributed to the design of robust social interventions, as well as to the establishment of clear and agile information practices within and between key SIB stakeholders. Building this data infrastructure – whether from the top-down or the bottom-up, will be a fundamental requirement for a sustainable SIB ecosystem. Our analysis leaves us hopeful for the development of a robust social investment ecosystem in Colombia. Above all, the broader socialization of the SIB concept, the formal institutionalization of SIB financing models in government policy, and the significant upgrading of social data coordination activities at interministerial and public-private levels remain the key challenges for making SIBs a success. COLUMBIA UNIVERSITY - SCHOOL OF INTERNATIONAL AND PUBLIC AFFAIRS 2 CLIENT ORGANIZATION Fundación Corona (FC) is a civil society organization committed to Colombia’s social development and the improvement of the quality of life among highly vulnerable populations. Specifically, FC seeks vulnerable communities’ involvement in the collective formulation, design, and implementation of high impact public policies in areas such as education, health, economic development, and citizens’ participation. The foundation was created in 1963 as a private initiative representing the social and ethical responsibility of the Echavarría Olózaga family, who have been linked during three generations to the country’s industrial development. Through its fifty year trajectory of reducing Colombia’s social inequalities, FC has exhibited a constant desire to grow and improve, pursuing innovation internally and tapping into key learnings from international experiences in social development. COUNTRY BACKGROUND Colombia has emerged from a long history of conflict and has begun to overcome persistent structural challenges. While abundant natural resources, two coasts and a connection to Central America position the country strategically to be one of the most prosperous in the region, Colombia remains a country of contrasts. Its large cities face the quandaries imposed by fast urbanization, and rural regions, notably the Pacific coast, still suffer from prolonged poverty and underdevelopment. The country’s development needs have also changed vastly over the past 15 years. Despite sustained economic growth, social and economic challenges remain with regional disparities becoming more acute. As an emerging economy, Colombia’s social safety net and fiscal capacity is smaller than that of developed countries like the United States or the United Kingdom, where preventive social policies have been successfully implemented. As a result, the distributive effect of SIB-type policies and initiatives in Colombia have the potential to be wide-ranging and impactful. PROJECT BACKGROUND This project is a contribution to the work of Fundación Corona, who along with the InterAmerican Development Bank, the Multilateral Investment Fund, the Swiss State Secretariat for Economic Affairs, and the Administrative Department of Social Prosperity, among others, is seeking to: Improve the employability results of vulnerable populations in urban areas in Colombia, and to develop the knowledge and capacities to do payment by results, Social Impact Bonds and social impact investment. This broader initiative has three components: 1.To develop at least three pilot SIBs; 2. To build the market for SIBs; and 3. Establish knowledge and learning for scalability and sustainability As such, the Columbia SIPA team’s researchintensive process will aim to generate publiclyavailable knowledge, learning and recommendations that can contribute to the market development of Social Impact Bonds in Colombia. ii. PROJECT CONTEXT INTRODUCING SOCIAL IMPACT BONDS IN COLOMBIA 3 Source: 1Perakis & Savedoff (2015), 1 Instiglio (2016); 2 Instiglio (2016 [2]) WHAT IS A SOCIAL IMPACT BOND (SIB)? Social Impact Bonds enable governments to work with the private sector to fund effective social services through a performance-based contract. By changing the focus of a social intervention towards its results, rather than on its specific activities, SIBs endow service providers with the flexibility and liberty to learn from and adapt to changing contexts. By emphasizing an intervention’s results, SIBs ensure that the interests and objectives of the government and providers are aligned with the wellbeing of the intervention’s beneficiaries1 . Governments partner with high-performing service providers by using private investment to develop, coordinate, or expand effective programs. All parties involved decide on outcomes and performance metrics ahead of program implementation. An independent evaluator then measures the results and determines whether the program has been successful. Upon success, the payer, in this case the government, repays the original investment. If the expected results are not achieved, the government is not obligated to pay for the unmet outcomes. The stakeholders involved in a SIB can comprise2 : • An outcome payer, (a government or foundation), which enters into a contract to pay for specific, measurable social outputs and outcomes • A (or multiple) service provider(s), which works to deliver these social outcomes in a flexible manner not mandated by the outcome payer • One or several investors, who can be individuals, foundations or investment firms, providing service providers with working capital • An independent evaluator, who assesses the outcomes of the program • An intermediary, who coordinates stakeholders and designs and/or manages the project figure iii.1: the typical SIB set-up2 iii. SOCIAL IMPACT BONDS: AN OVERVIEW figure iii.2: the government benefits of a SIB2 • SIBs promote flexibility, learning, innovation and proactivity in social policy • SIBs transfer an intervention’s financial risk to private investors • SIBs incentivize efficient social spending and instill programmatic accountability • SIBs allow for a strong focus on results 1. Outcome payer commits to pay in the future if results are met 2. Investors provide working capital to service providers 3. Service providers implement the intervention 4. Intervention’s results assessed by an independent evaluator 5. Outcome payer pays investors, plus a return, based on results COLUMBIA UNIVERSITY - SCHOOL OF INTERNATIONAL AND PUBLIC AFFAIRS 4 iv. RESEARCH APPROACH The Columbia SIPA team sought to provide Fundación Corona with a set of global learnings that could inform local application, as well as insights gained from on-the-ground research that could lead to a clear set of recommendations. RESEARCH METHODOLOGY We created a framework that seeks to understand three distinct, yet closely related, components of delivering a Social Impact Bond: the SIB Action Framework (see figure below) unpacks three typologies of action needed to get a SIB off the ground and ensure its success. These three ‘actions’ are not consequential; rather, all three need to be present and working together in order for a SIB ecosystem to fully function. With these three lenses in perspective, two questions guided the analysis: 1. At a global level, what are the key trends that have shaped the way SIBs are identified, engaged with, and measured? 2. As the SIB ecosystem takes shape, what attributes does the Colombian context exhibit in order to embrace or react to these trends? To answer the first research question, we undertook a series of comprehensive structured, semi-formal interviews with selected experts, from key practitioners in the field of social financial figure iv.1: the SIB Action Framework INTRODUCING SOCIAL IMPACT BONDS IN COLOMBIA 5 innovation to leading scholars in adjacent fields like the more established school of impact investment academics. Our interviewees represented the majority of countries in which SIBs have been undertaken and/or planned for, both successfully and unsuccessfully – from the United Kingdom to the United States, the Netherlands, Australia, Germany and Canada. More recent entrants with nascent ‘market-making’ experiences, notably Israel, were also key to our analysis. These global insights were complemented by more in-depth local understanding, the output of two weeks of fieldwork in Colombia in March 2017. In contrast, our interviewees included stakeholders with varying exposure to the SIB concept – this allowed us to generate a set of raw hypotheses about market-building potential. The following pages bring these learnings to light – the document will go through each component of the SIB Action Framework in more detail, highlighting a select set of global trends and indicating their specific implications for Colombia. 4 1 2 6 2 3 2 2 3 1 2 2 2 Academics Investors Technical advisors Evaluators Institutional actors COLUMBIA UNIVERSITY - SCHOOL OF INTERNATIONAL AND PUBLIC AFFAIRS 6 1. ‘IDENTIFYING’ SIB SCOPE & FEASIBILITY INTRODUCING SOCIAL IMPACT BONDS IN COLOMBIA 7 The pace and quality of future developments within the SIB ecosystem are closely tied to four elements: i) driving policy innovation ii) assessing intervention feasibility, iii) aligning to a policy framework and iv) setting the stage for success. A robust SIB market is dependent on accurately identifying contextual factors and constructing a strong ecosystem to fit its needs. DRIVING POLICY INNOVATION TREND: SIB PARTNERSHIPS SPUR INNOVATION BY GROUPING KEY STAKEHOLDERS AROUND A CONSISTENT SET OF CORE VALUES Governments around the world are starting to recognize the need for a new approach to social service delivery. One that places emphasis on identifying innovative ideas, testing their effectiveness, and scaling up the interventions that prove successful. The main hurdles to embarking on this new approach are lack of up-front funding, inability to sustain focus on performance, and a reluctance to take on the risk of failure. Social Impact Bonds (SIBs) are designed to overcome these hurdles. SIBs take advantage of private assessing intervention feasibility aligning to a policy framework setting the stage for success driving policy innovation Amass knowledge and build the case for government proactivity and prevention Determine market capacity, intentions and expectations Target issues, populations & approaches with potential buy-i n Adapt to (and transform) the rules of the game sector efficiency and capital to achieve public sector goals while shifting up-front financial burden and risk to private parties in case the intervention fails to achieve the intended outcomes. When investment is tied to outcomes, rather than activities, service providers gain greater flexibility to innovate and improve their programs. Governments and taxpayers transfer the risks of program performance to the private sector, and enhance the value for money of a given intervention by clearly specifying the cost of the measurable outcomes of any program ex-ante3 . shift towards payment by results and channeling taxpayer money toward programs that work make SIBs attractive for stakeholders in Colombia. The value drivers behind SIBs in Colombia have been identified as: greater efficiency, costeffectiveness, innovation, and risk transfer to the private sector. Going forward, all actors within the SIB system will need to define what ‘value’ and ‘innovation’ means to them in terms of how interventions are delivered and structured between governments, private investors and service providers. SIB models should act as proofs of concept of spurring further innovation, shifting focus onto outcomes, partnership models and delivery of services. ASSESSING INTERVENTION FEASIBILITY TREND: IN EARLY-STAGE MARKET DEVELOPMENT, THE READINESS OF THE SIB MARKET DEPENDS ON THE PRESENCE OF DEMAND AND SUPPLY SIDE FACTORS A key element present in both literature and expert experience is having favorable market readiness in both demand and supply side factors. A capable and proactive demand; i.e., a public sector that is willing and able to identify key issue areas for SIBs, accommodate the procurement process, and build a strong business case for attracting government and investor attention. Such readiness is encapsulated by Figure 1.1. Identification of social issue areas that SIBs can address will be discussed in detail in trend 3 below, target population setting and policy framework will be discussed in trend 4 below. Government COLUMBIA UNIVERSITY - SCHOOL OF INTERNATIONAL AND PUBLIC AFFAIRS 8 Source: 3Technical Advisor, United States DRIVING POLICY INNOVATION: IMPLICATIONS & RECOMMENDATIONS FOR COLOMBIA In Colombia, social impact and performance of publicly funded programs are not rigorously measured or assessed. Lack of credible and current data makes it challenging for government departments to make informed, evidence-based choices about their investments and spending. Social Impact Bonds introduce and demand new levels of rigor in social programs. Furthermore, beyond partnership and coordination between governments and non-governmental actors, SIBs in Colombia have been seen as a means of facilitating greater collaboration across government silos, as well as local and national authorities. A. “Successful SIBs create a ‘public policy trifecta’: benefitting taxpayers, social service recipients, and private investors” -Technical Advisor, United States support in terms of creating a conducive policy environment will be tackled in “Engage”. affects a large number of voters? 2. Government willingness – Does the issue fit with a specific party’s platform? Is the issue aligned with the party’s promises and objectives? 3. Government capacity – Does the government perceive this as a risky undertaking with a possibility of backfire? Is it feasible from a legal and operational standpoint? Similarly, an active and capable supply side; i.e., knowing that every key stakeholder is able to deliver what is reasonably expected from them, is a key SIB driver. A service provider must be able to deliver the intervention, investors must be willing and able to invest and intermediaries should be capable of building the market and supporting the other players. A case from the UK: Source: 4Finance For Good (2013) INTRODUCING SOCIAL IMPACT BONDS IN COLOMBIA 9 DEMAND: ALIGNMENT OF AGENDAS Example: SOCIAL FINANCE ISRAEL SOCIAL ISSUE Needs & service gaps Need for early prevention programs for Diabetes POLICY FRAMEWORK Target population setting Addresses at-risk populations (2250 youth) GOVERNMENT WILL Collective leadership, legal & budgetary conditions Two Israeli public health organizations and the National Insurance Institute SIB mechanisms create opportunities for the public sector at all levels of government to reward “what works” or expand access to evidence-based preventive social interventions without requiring taxpayers to shoulder all the financial risk upfront. In order for these new mechanisms to work, governments must retain a central and important position. As this process requires particular efforts and time in terms of learning, coordinating with multiple stakeholders, and implementing in the span of multiple years, dedicated leadership is needed to galvanize and sustain these efforts. The following evaluation criteria are helpful in identifying demand side factors for SIB feasibility4 . 1. Government wide support – Does the electorate knowingly support it? Is it a priority issue that SUPPLY: PRESENCE OF KEY STAKEHOLDERS Example: FAIR CHANCE FUND UK INVESTORS Investor appetite Northstar Ventures, £0.498 million INTERMEDIARIES Ability to assemble and engage Numbers4Good (shaped bid, deal & fundraising) SOCIAL SERVICE PROVIDERS Delivery of outcomebased services Home Group TECHNICAL ADVISERS Support entities None - provided by Intermediary EVALUATOR Reliable data testing and collection Department for Communities & Local Government figure . : Demand factors figure 1.2: Supply factors ASSESSING INTERVENTION FEASIBILITY: IMPLICATIONS & RECOMMENDATIONS FOR COLOMBIA In Colombia, various actors expressed interest in tying intervention success to past scientific research (either in different locations or similar contexts). Knowledge and research sharing depends greatly academic validity and authorship. Buy-in from influential academics or respected policymakers is a key lynchpin in determining SIB feasibility. Furthermore, SIBs must cover social areas that are on the policy agenda and of policy priority for government departments. SIBs that address key social issues such as employability or social inclusion will have a higher success rate than issues not seen as government priorities. The institutionalization of SIBS within CONPES could solidify and government support for SIBs in Colombia. CONPES is the highest national planning authority and serves as an advisory body to the Government in all aspects related to the economic and social development of the country. From the supply side, philanthropic organizations have started building momentum towards the development of a SIB market in Colombia. These players are not just philosophically inclined towards social provision but also have the capacity to participate in SIB projects. While the first wave of SIBs tap into the policy priority areas of employability and vulnerable populations, technical success will determine future rate of development. If government actors can see value in SIB-funded programs being one way of achieving a broader policy priority, a shift from reactive to preventative services can be COLUMBIA UNIVERSITY - SCHOOL OF INTERNATIONAL AND PUBLIC AFFAIRS 10 Source: 5OECD achieved. SIB issues need to address (a) Policy priorities (as institutionalized within CONPES across Government departments in Colombia). For example - in areas of broad public policies – employment generation, poverty reduction – there lie huge potentials for SIBs. These policies have large cross-departmental coverages at the national level. While initial SIBs in Colombia will be underwritten by philanthropic and socially motivated investors, over time, the SIB market may grow to include more commercially oriented financial institutions. ALIGNING TO A POLICY FRAMEWORK TREND: THE PRACTICE OF ‘IDENTIFYING’ A SUITABLE SIB ISSUE AREA HAS MOVED BEYOND SIMPLY ADDRESSING TRADITIONAL GAPS IN PUBLIC SECTOR PROVISION Target areas that are feasible for SIBs should be a middle point between areas that are served by traditional philanthropy, such as culture or the arts; and “mainstream” public areas such as agriculture, environment, water and sanitation, and financial services. SIBs have attempted to prevent or reduce people’s need for expensive services down the line, and have been used to test new services that reduce the need for existing services. In this view SIBs can be seen as operating at the intersection of public versus private provision of services. A SIB should seek to provide either 1) goods that address the social needs of an individual or society INTRODUCING SOCIAL IMPACT BONDS IN COLOMBIA to improve life outcomes (social impacts); or 2) goods that result in savings in the costs or improvements in the effectiveness of providing for social needs (efficiency gains)5 . Consider for example, the following chart: In the chart above we can see that when the provision of a service has not only individual efficiency gains, but has social returns to the economy and society as a whole, there may be space for a SIB. In such a space, it is important that any social impact spillovers are correctly factored into SIB instruments. The provision of affordable social services with broad social impacts is clearly desirable, but becomes challenging especially in multi-stakeholder models like SIBs because the incorporation of externalities and monetization of outcomes into objective functions may not always be straightforward. Social Impact Bonds designers have largely identified four key social issue areas: education, employment, criminal justice and social welfare. In particular, social welfare and employability have come to represent the largest issue areas in the SIB market. Social welfare delineates a range of issues including adoption or long-term foster care “A SIB’s issue area should be closely aligned to what makes a SIB feasible: whether it is monetizable, and whether its outcomes are measurable” -Academic Expert, United States placement, homelessness and support of disadvantaged young people. Additionally, the area of policing, safety and crime started off as an important SIB issue area, most likely because of its close alignment with SIB feasibility criteria. For instance, recidivism has clearly defined, quantifiable outcomes, and is paired with high political commitment due to the large number of negative intended and unintended consequences6 . The potential for SIB implementation in an issue area is increased where the consumption of a good creates social impact primarily at the individual level but also results in systemic efficiency gains (e.g. lowering recidivism rates, to reintegrate offenders and lower costly prison budgets.) Below we present some examples of the current trends in SIBs in different policy areas (see Appendix for details): • Health & care needs of the elderly • Employability & school dropouts • Affordable housing • Policing, safety and crime • Family care and gender TREND: POPULATION SETTING HAS SEEN FEW METHODOLOGICAL CHANGES – RISK EXPOSURE AND STATISTICAL SIGNIFICANCE REMAIN KEY FACTORS Source: 6The Brookings Institution (2015) Degree of publicness Individuals efficiency gains Systemic efficiency gains Social impact on individual PRIVATE Possible SIB Social impact on society Possible SIB PUBLIC figure .3: Publicness & efficiency gains (OECD) Once the social issue is stated, the SIB designer defines the rest of the social policy framework. This begins with defining the target population; i.e., the age, geographical area and sample size of those receiving the intervention. Moreover, the treatment population must be defined in such a way that avoids “cream-skimming, i.e., selecting only the easiest-to-serve people” 7 . In this sense, the literature clearly defines that, in order to meet with the social investment criteria, the target populations should be population at risks: i.e., those living in underserved or developing areas, regions or countries. Populations at risk can be defined either by social demographics (such as family type, age and others factors), by location (such as underserved or developing regions), or by income8 Finally, the target population of a SIB should be of sufficient size to be able to measure impacts in a statistically significant way, but not too large as to add complexity to the already complex SIB model9 . For example, in a Brookings Institute survey more than 60% of the deals served equal to or smaller than 1,000 individuals, and only UK, US and Australia have implemented SIBs with a cohort bigger than 1,000. TREND: THE DEFINITION OF A ROBUST ATTRIBUTION MODEL THAT CONSIDERS TIME CONSTRAINTS REMAINS THE KEY TURNING POINT IN ACHIEVING UP-FRONT STAKEHOLDER BUY-IN Key stakeholder buy-in within the SIB ecosystem means understanding that payment, contract and service provision must be achieved within a reasonable time horizon. Keeping in mind these COLUMBIA UNIVERSITY - SCHOOL OF INTERNATIONAL AND PUBLIC AFFAIRS 2 key criteria, a time horizon for achieving outcomes is considered suitable for a SIB if there is substantial evidence from previous evaluations or scientifically commissioned research that the specified outcomes will occur within this time frame. For example, in the US, Government (Federal, state or local) can review evidence from places such as the Coalition for Evidence-Based Policies “Social Programs that Work” list (2015), the Washington State Institute for Public Policy cost effectiveness studies (2016), and recent research results from professional evaluation firms to see if there are proven programs in priority policy areas that could be replicated using a SIB model, and evaluate how much time the project endured. Furthermore, it is important to put a reasonable time horizon into place, one in which investors and outcome funders are able and willing to make and receive payments given the, legal and political conditions in a country. Additionally, the need to consider the demands of multiple groups means that some outcomes or projects may be less suitable for SIBs. For example, in a number of SIBs being developed, the time lag between the intervention and outcomes being achieved may be seen as too long if it exceeds five years. It also emerged from our research and interviews that many interventions usually produce short-term benefits but may also yield rewards over the longer-term10 For example, investments in prenatal health care produce short-term benefits such as improved infant and maternal health and lower health care costs, but they may also produce longer-term benefits such as reduced special education spending, reduced crime during teenage years, and increased adult earnings. Source: 7Liebman & Sellman (2013); 8OECD (2015); 9The Brookings Institution (2015); 10Azemati, Belinsky, Gillette, Liebman, Sellman and Wyse (2013) ALIGNING TO A POLICY FRAMEWORK: IMPLICATIONS & RECOMMENDATIONS FOR COLOMBIA The real lynchpin in Colombia for SIB success, requires an understanding at the government level of the value being created by prevention - reducing people’s need for expensive existing services down the line. Such a perspective provides a strong economic justification for the SIB: spend earlier to save later and help participants avoid worsening outcomes. Social Impact Bonds will face fewer barriers in Colombia if they are used to expand funding in areas where the government wishes to improve the quality of existing services, and/or reduce the inequality of access. Political economy makes Social Impact Bonds difficult to implement in areas that are traditionally provided by the public sector. For example, in Colombia there are lots of government programs that focus on training, in entrepreneurship , in these case the gains from implementing a Social Impact Bond may not be relevant. Other policy areas than can already be identified as shifting from reactive to proactive programs, are more suitable for SIBs. Examples of these areas in Colombia are: social inclusion (Departamento de Prosperidad Social), employability and education (DPS, Mintrabajo, Education), and human capital formation towards productivity (Min. of Education). SETTING THE STAGE FOR SUCCESS TREND: INSTITUTIONAL INCENTIVES HAVE PROVEN TO BE MAKE/BREAK PRECONDITIONS FOR A SUCCESSFUL SIB ECOSYSTEM Another important element in determining the feasibility of a SIB is the existence of a national legal framework that enables all the necessary stakeholders in the SIB model to perform properly. In this sense, the literature11 list several considerations that each stakeholder should be legally able to take onboard: Outcome Payers (esp. Governments) • Continuity can be ensured even with future administrations • Capacity and autonomy for contracting social services • Public procurement authorization for SIB schemes Investors • Legal capacity to fund SIB schemes by providing funds to intermediaries • No prohibitions or restrictions to invest in social services • Legal framework for debt and equity or hybrid investments • No limitations or excessive procedures for foreign investment • No quantitative or qualitative limitations on the repatriation of profits • Mechanisms ensuring that the government will accept the evaluator report as valid Intermediaries • No requirements for permanent residency