Shifali Baliga


American government officials are starting to experiment with a novel government-funding and privatization structure known as a social impact bond ("SIB"). An SIB is a contract between a government agency and a private entity in which the government agrees to pay the private entity an agreed-upon sum only if it can meet certain goals or outcomes. Currently, SIBs exist both globally and domestically, and are targeted to solve perpetual social ills such as the high homelessness and recidivism rates plaguing certain communities.

By analogizing the problems facing private prisons to the potential problems facing the use of SIBs, this Note details the privatization challenges that government officials will likely face as they implement SIBs. Most importantly, this Note is the first to propose how government officials implementing SIBs can overcome the traditional obstacles facing privatization schemes—both through the structure of SIBs and through additional contractual solutions. Finally, the Note concludes with a discussion about how elements of SIBs can be incorporated to improve existing privatization models such as private prisons, and how SIBs alter the existing debate about privatization in this country.

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