I would start by clarifying that social finance is not one tool. Rather, it's a range of tools. It can include debt and equity investments and those can look like traditional investments or they could be at below market rate where there's a willingness on the part of the investor, for example a foundation, to take some loss or a lower rate of return. Outcomes-based funding models like the social impact bond open up access to investment capital to non-profits that may not have a revenue-generating model that allows them to repay a more traditional type of investment, just to put that clarification on the table up front.
In terms of the risks to community organizations, I would say there are no more risks than there would typically be in implementing any form of intervention in the social sector. There are implementation risks, execution risks. It can be challenging to get things right. I think what is hopeful and interesting about a lot of these impact investment tools is that they really put an emphasis on the importance of measuring impact, so we get a better sense of what works and what doesn't.
A lot of thought needs to be put in up front with those community organizations and with governments or other partners into identifying appropriate outcome metrics. You want to make sure that you're targeting the right thing. A lot of funding currently is more short term. For instance, you're asking service providers to report on how many people come through their door, as opposed to asking them, in the case of an organization that's targeting improved employment outcomes, to report five years from now on how many people who formerly walked through their door have sustainable employment.
What's encouraging to me about these tools is that we're looking longer term. We're looking at outcomes as opposed to outputs, and we're being more creative and thoughtful about the metrics that we're putting in place. But all of that requires a collaborative effort with the community organizations.