Win win win?

On measuring our success and an innovative way of fundraising.

Last week's Economist has a must-read briefing on Social Innovation. Early on it pinpoints one of our key problems in social organisations that I've also covered here before:

[The] purpose is to find social innovations that have succeeded on a small scale and to help them have a far bigger impact. Officials call this "investing in what works". But how do you know that an innovation works? Businesses have profit; the social sector lacks a similarly simple yardstick. Often the things that are easiest to measure--say the number of people coming through the door of a community centre--tell you nothing about an activity's effects.

I really think one of next strategic priorities should be to try and find ways to measure our success. It's not enough to talk about the number of kids we send to camps, we need to see what kind of impact we are having. However, the article goes on to talk about innovative ways to pay NGOs for their efforts:

A potentially even more important British innovation appeared recently: the social-impact bond. This is a derivative tied to the performance of a non-profit organisation that is trying to tackle a difficult social problem--in the first instance, reducing the rate of reoffending by young prisoners. Private investors hand money to the selected organisation (including, in this case, a charity, St Giles) which then has the long-term capital to scale up its model without having to spend a lot of time raising funds. Depending on the recidivism rate, the government will pay investors in the first bond a return of 7.5-13%--or nothing, if the promised improvement is not achieved. In many ways the social-impact bond epitomises the new approach to social ills. It provides long-term funds for promising ideas; it transfers risk to private capital markets; and it costs public money only if the scheme provides specific social benefits.

Wouldn't that be fantastic? Imagine this: A donor or better "investor" gives CISV money up front and a government programme pays the donor an interest fee, according to our success (which, by then we should be able to measure). The "social investor" takes the risk, the goverment pays and we do the work. Or the other way around: The investor makes money, we get money, and the government only pays if there's any success. A real win-win-win I'd say.