Graham Clyne is the Executive Director for Peel Children & Youth Initiative. In this blog post, he shares his thoughts on Social Finance and child and family services. 

I am not one of those people who is ideologically opposed to the notion of Social Finance and think it’s always better to see what can be done – and where the opportunities lie – with the public policy directions of the day. While I try not to confuse skepticism with intelligence (a very common problem) there are a number of significant issues that need to be addressed before the opportunities that Social Finance may actually present, can be realized.

Given the rather dismal quality of most program evaluations, there are a dearth of examples where cause and effect are clearly demonstrated and attribution possible. Even good quality evaluations seldom include an analysis of costs and benefits, or clarify the relationship between inputs and the kind of results that can be accurately monetized – essential to identify or calculate any “return on investment.” The ability of most non-profits to undertake quality evaluations, especially with an economic lens, is simply not there.

flickr: cuellar
flickr: cuellar

Benefits tend to spatter across systems.  By this, I simply mean that the impact of good interventions – even low intensity programs like recreation – can improve outcomes for a number of different systems and Ministries. For example, kids that are engaged in good quality recreational programs tend to do better at school (Ministry of Education), experience better mental and physical health (Ministry of Health and Long Term Care), are less involved in criminal or risky behaviors (Police/Solicitor General), and are less likely to require expensive, high cost, interventions (Ministry of Children and Youth Services). While recreation is and should be provided by local governments and communities, the actual benefits (e.g. potential cost savings) accrue almost entirely in areas of provincial jurisdiction. Given the reluctance to share information (much less unit costs) across systems, capturing and monetizing the “splatter of benefits” will remain particularly difficult.*

Part of the challenge – and perhaps the opportunity – is to identify interventions where the costs and benefits are contained (or at least sufficiently narrow) within a single spending envelope. It is wishful thinking and would take a “whole government philosophy” to imagine one Ministry supporting an intervention where many of the benefits will accrue to another.

In economic forms of evaluation the “perspective” of the analysis determines what costs and which benefits will count – regardless of other impacts. In the most likely of scenarios, one could imagine a large organization with a continuum of program interventions being able to track the costs and savings associated with moving people from more to less expensive forms of support (e.g. a youth from residential care to community placement/peer support). That said, this kind of significant change in a treatment plan are seldom managed without the coordinated and collaborative contributions of other organizations – all of which need to be monetized and included in the analysis – regardless of who pays for them.

Lack of receptivity within governments is, and will continue to be, a critical barrier. Risk averse by nature, line Ministries have very limited abilities to conduct, or even properly assess the quality of a cost benefit analysis, even within a narrow perspective. While the concept paying a ‘return’ to the investor might be ethically problematic for many, the ability of individual Ministries to budget and plan for a fiscal liability that may or may not occur is not part of the budgeting process. Frankly, I know very few senior bureaucrats who will bet their future budgets – and their reputation for prudence – on Social Finance projects.

flickr: ToGa Wanderings
flickr: ToGa Wanderings

It was interesting to see that over 150 ideas were shared with the federal government about using a Social Finance model and the list is an odd assortment of interventions and strategies from a variety of sectors. It will be fascinating to see which of these initial ideas has sufficient clarity around baseline data: an intervention where causality and attribution are clear; the skills and resources to undertake a quality economic evaluation; a “perspective” that reflects costs and benefits meaningful to one sponsor; and who in government will be willing to take the fiscal risk of a future payout (with profit) for success.

What I do expect to see, is the federal government stepping up to make it happen with the focus on “proof of concept,” overriding any genuine search for new and more effective methods that might be replicated by other publicly funded groups.  I will not be the least bit surprised to see quite a number of these early strategies succeed – regardless of how effectively it’s done.

* There is one notable exception: Dr. Gina Browne at McMaster has a tool called “System Service Utilization” that has detailed costs on the full range of public services a family might use.

Graham2 copyGraham Clyne is a national leader in the non-profit sector, published author in the areas of research and economic evaluation, well-respected public speaker and moderator, and Executive Director for Peel Children & Youth Initiative. He has also been awarded the Peter F. Drucker Award for Non-Profit Innovation. He became part of PCYI in 2010 after having worked with a number of other non-profit organizations across Canada, including The Calgary Children’s Initiative, The Prevention Dividend Project: Foundation for Learning, and United Way: London & Middlesex. Graham is a proud dad and grandpa and you can follow him on Twitter here!

Social Finance: Risks & Rewards for Publicly Funded Groups