The razor’s edge: Social impact bonds and the financialization of early childhood services

Abstract

In a growing number of U.S. cities, social impact bonds (SIBs) introduce an experimental strategy into the politics of fiscal constraint. With limited political willpower and public funding, some have used SIBs to leverage new support for social programs. We argue that cities that engage in SIBs walk a razor’s edge between promoting public investment and the risk of deepening financialization in the social service sector. We explore efforts in 3 cities to expand early childhood services through SIBs: Salt Lake City, Utah; Chicago, Illinois; and Greenville, South Carolina. We test the balance between promise and risk through four foci: systemic change, performance metrics, cost structure, and social equity. We show that the context of political fiscal climate and strategic policy change matters in SIBs’ justification and impact; whereas Salt Lake City and Greenville scaled investment up to the state level, Chicago merely plugged short-term local budget gaps.