The case for social investments in welfare/government

• The social contract of welfare is under strain and public confidence in the services provided by government is wavering.


• There is a need to drive more efficient use of public resources in order to more cheaply drive impact and outcomes as well as freeing up public resources to adequately cover critical needs.


• Social investments as a phenomenon are growing as a potential solution to evolving problems in welfare and public service delivery.


• Social investment can drive early interventions that save government resources downstream in the development life cycles of welfare problems.


• Government services are not proactive enough to catch welfare problems before they become complicated.


• Legislation requires public services to react when problems become visible but there are no direct incentives to stop problems from developing in the first place.


• Sweden is innovative in that many municipalities (80ish) that have allocated money into "social investment funds" to try to fund early interventions.


• Private investors participating in public social investments can share financial risks, provide support in governance and management of implementation and navigate markets of solutions and service providers.

Social impact bonds / social outcomes contracts

• Traditional procurement drives much to strong focus on activities rather than results and outcomes leading to the potential for public buyer and private/non-profit service provider incentives to diverge.


• A new trend in public procurement is contracting on outcomes to align incentives of public, non-profit and private actors around specific measurable outcomes.


• Social outcomes contracts / Social Impact Bonds are a new experimental type of contracts between public and private/non-profit service providers and private investors to try new operating models to solve social problems.


• Intermediaries are brokers of relationships and project management experts that help private, non-profit and government parties to align and find agreement on social investments.


• Public sector organizations are generally not capable of analyzing needs and potential solutions of complex welfare problems. Further they have a terrible track record of following through on projects that run for more than 1 year and especially get sloppy around evaluation and lessons learned from implemented projects.

Potential areas for social innovations and investment

• Labor market integration


• Social integration of migrants


• Prevention of health problems, mental health notably


• Any issue area where the responsibilities and specifications for functional solutions span across public sector silos or across public, private and non-profit sectors. This is the Achilles heel of the public sector, the inability to organize across silos or across sectors.