Transcript: Social Impact Bonds Examined | Jan 22, 2019

Steve sits in the studio. He's slim, clean-shaven, in his fifties, with short curly brown hair. He's wearing a gray suit, white shirt, and gray plaid tie.

A caption on screen reads "Social impacts bond examined. @spaikin, @theagenda."

Steve says A FEW YEARS AGO
ONTARIO DEVELOPED SOCIAL IMPACT
BONDS, OR SIBS FOR SHORT.
WHAT ARE THEY, YOU MAY ASK?
AND WHAT DO THEY HAVE TO OFFER?
TONIGHT, RIGHT AFTER THIS
PROGRAM, TVO WILL AIR THE WORLD
BROADCAST PREMIER OF "THE
INVISIBLE HEART," A DOCUMENTARY
THAT LOOKS AT ALL OF THAT.
HERE TO HELP US UNDERSTAND IT
BETTER: ANDREA ROBERTSON, VICE
PRESIDENT, NOT-FOR-PROFIT
SERVICES AT TD WEALTH...

Andrea is in her early fifties, with long wavy auburn hair. She's wearing glasses, a black blazer over a blue sweater, and a long golden necklace.

Steve continues RICARDO TRANJAN, SENIOR
RESEARCHER AT THE CANADIAN
CENTRE FOR POLICY ALTERNATIVES...

Ricardo is in his late thirties, with short, curly brown hair and a boxed beard. He's wearing a gray blazer and a light gray shirt.

Steve continues BRIAN MILNER, FREELANCE BUSINESS
AND ECONOMICS WRITER AND
CONTRIBUTOR TO "THE GLOBE AND MAIL"...

Brian is in his seventies, clean-shaven, with short curly gray hair. He's wearing glasses, a gray suit, white shirt, and printed blue tie.

Steve continues AND NADINE PEQUENEZA, THE
FILMMAKER AND DIRECTOR OF THE
DOCUMENTARY, "THE INVISIBLE HEART."

Nadine is in her early forties, with long straight blond hair. She's wearing a brown printed shirt.

Steve continues WE ARE DELIGHTED TO WELCOME
EVERYBODY TO TVO, AND NADINE, I
WANT TO SPEND ACTUALLY THE FIRST
PART OF OUR CONVERSATION WITH
YOU.
JUST TO SET UP THE DOCUMENTARY.
WHY DON'T WE GIVE A
LITTLE SNEAK PREVIEW OF WHAT
YOU'VE GOT UP FOR US AT 9 AND
MIDNIGHT FOR US TONIGHT, OKAY?

Nadine says SURE.

Steve says MR. DIRECTOR, IF YOU WOULD.

A clip plays on screen with the caption "Chicago."
In the clip, images show skyscrapers in Chicago.
The caption changes to "J.B. Pritzker. Chicago SIB Investor."

JB, clean-shaven, in his fifties, says I REALLY THINK YOU'RE GOING
TO START TO SEE A BUILDING MOVEMENT.
COULD BE AS BIG AS THE NEW YORK
STOCK EXCHANGE, MEANING IT'S AS
IMPORTANT AS THE CREATION OF NEW
CAPITAL MARKETS.

A caption reads "The invisible heart."
Another caption reads "Pritzker Group Venture Capital. Heir to Hyatt Hotel fortune. Net worth 3.4 billion dollars."

Fast clips show the entrance to a skyscraper called Pritzker Park. It has a huge, bright red metal statue outside.

JB continues MY REAL INTEREST IN SOCIAL
IMPACT BONDS AS THEY APPLY TO
EARLY CHILDHOOD, BECAUSE OF ALL
THE ARENAS THAT YOU CAN APPLY
SOCIAL IMPACT BONDS TO, THERE IS
THE GREATEST POTENTIAL RETURN
FOR SOCIETY, AS WELL AS FOR
INVESTORS, IN EARLY CHILDHOOD.

The clip ends.

The caption changes to "The invisible heart. Tonight 9 PM. Also streaming at tvo.org/documentaries."

Steve says THAT GUY MUST LOVE YOU
NOW BECAUSE ON THE STRENGTH OF
YOU FEATURING HIM IN YOUR
DOCUMENTARY HE IS NOW THE
GOVERNOR OF ILLINOIS, RIGHT?

Nadine says I'M NOT SURE IF THE
DOCUMENTARY DID IT, BUT HE IS
THE GOVERNOR OF ILLINOIS, YES.

Steve says VERY GOOD.
LET'S PEEL AWAY THE LAYERS OF
THE ONION HERE.
SOCIAL IMPACT BONDS ARE
BASICALLY WHAT?

The caption changes to "Nadine Pequeneza. Filmmaker, 'The invisible heart.'"
Then, it changes again to "A filmmaker's take."

Nadine says IN THEIR SIMPLEST FORM,
SOCIAL IMPACT BONDS ARE A WAY
FOR PRIVATE INVESTORS TO FUND A
SOCIAL PROGRAM, AND THEY DELIVER
RESULTS AND THE GOVERNMENT
REPAYS THE INVESTOR PLUS A
RETURN ON THEIR INVESTMENT.
RETURNS HAVE RANGED FROM 8 TO
12 percent GLOBALLY AND IT CAN BE FOR
HOMELESSNESS, PRISON
RE-SITTIVISM, REDUCING THE
NUMBER OF KIDS GOING INTO FOSTER
CARE.
THOSE ARE THE AREAS THAT THEY
HAVE BEEN EXPERIMENTED WITH IN
27 COUNTRIES NOW.

Steve says WHY WOULD INVESTORS
WANT TO PUT MONEY INTO... WHAT
DID YOU SAY THE RETURNS WERE, 8
TO 12 OR SOMETHING LIKE THAT, IF
THEY THINK THEY CAN GET 20 OR 30
SOMEWHERE ELSE?

Nadine says WELL, 8 TO 12 IS A PRETTY
GOOD RETURN, ESPECIALLY WHEN YOU
START TO CONSIDER THE RISK THAT
IT'S ASSOCIATED WITH THESE
PROGRAMS.
SO A LOT OF THE PROGRAMS THAT
HAVE GONE FORWARD ARE PROVEN
PROGRAMS THAT HAVE BEEN TESTED
BY STUDIES, MULTI-GENERATIONAL
STUDIES SOMETIMES, PUBLICLY
FUNDED STUDIES, CONTROL GROUPS.
SO THERE'S A FAIRLY GOOD CHANCE
THEY'RE GOING TO GET THEIR MONEY
BACK WITH THE RETURN.
BUT ASIDE FROM WHETHER THEY GET
THE MONEY OR NOT, THE PEOPLE WHO
ARE ATTRACTED TO THESE KINDS OF
INVESTMENTS ARE SOCIALLY
RESPONSIBLE INVESTORS, SO PEOPLE
WHO WANT TO SEE BOTH A SOCIAL
AND FINANCIAL RETURN FROM THE
MONEY, THE CAPITAL THEY ARE
PUTTING FORWARD.

Steve says THESE ARE PEOPLE WHO
ARE NOT JUST INTERESTED IN
RAPACIOUS CAPITALISM.
THEY WANT TO INVEST IN SEEING
JOHNNY AND JAYNIE LEARNING HOW
TO READ BETTER, THAT KIND OF
THING?

Nadine says YES, THEY HAVE THAT INTEREST, YES.

Steve says AND YOU HAVING DONE
THE DOCUMENTARY ON THIS, YOU ARE
CONVINCED THAT THE PEOPLE WHO
ARE THE MONEY BEHIND THESE
SOCIAL IMPACT BONDS REALLY DO
CARE AT THE END OF THE DAY ABOUT
THOSE KIND OF THINGS?

Nadine says I THINK THE VAST MAJORITY DO,
YEAH.

Steve says WHERE DID YOU COME TO
THIS TOPIC IN THE FIRST PLACE?
THIS IS A RATHER ARCANE SUBJECT
TO MAKE A DOCUMENTARY ABOUT?

The caption changes to "For more, check out TVO's 'On docs' podcast: tvo.org/ondocs."

Nadine says IT IS A BIT OUTSIDE.
I SAW ACTUALLY A TED TALK IS HOW
I FIRST LEARNED ABOUT THEM, BUT
MY INTEREST CAME FROM HAVING
DONE MANY SOCIAL ISSUE
DOCUMENTARIES.
SO A LOT OF TIMES I'M FOLLOWING
PEOPLE WITH A CAMERA OVER
SEVERAL YEARS THAT ARE INVOLVED
WITH CHILD WELFARE SYSTEM OR
WITH THE PRISON SYSTEM, YOUTH
GETTING INTO TROUBLE, DROPPING
OUT OF SCHOOL, HOMELESSNESS, AND
I SAW THAT THE PEOPLE THAT I WAS
FILMING OFTEN THEY WERE GETTING
HELP SO LATE IN THE GAME AND SO
LITTLE THAT THE AMOUNT OF TRAUMA
THAT THEY'D ALREADY EXPERIENCED,
IT WAS SO DIFFICULT TO TRY AND
HELP THEM TO RECOVER.
AND DEALING WITH FRONT-LINE
WORKERS, YOU KNOW, THEY KNOW
VERY CLEARLY THAT THE HELP HAS
TO COME EARLIER ON.
AND SO SOCIAL IMPACT BONDS, THE
WAY THEY WERE ORIGINALLY
CONCEIVED IS THAT THEY WOULD BE
EARLY INTERVENTION PROGRAMS.
AND I THOUGHT THAT IF THEY COULD
BE USED TO DEMONSTRATE TO THE
PUBLIC THAT THERE WAS BOTH A
SOCIAL AND A FINANCIAL RETURN TO
GETTING INVOLVED EARLY, THAT IT
WOULD GIVE GOVERNMENT THE
AMMUNITION THEY NEEDED TO SHIFT
POLICY IN THAT WAY AND START TO
INVEST DIRECTLY IN THOSE TYPES
OF PROGRAMS.

Steve says I SUSPECT MANY PEOPLE
WATCHING THIS NOW WILL REMEMBER
ADAM SMITH'S INVISIBLE HAND.
YOUR DOCUMENTARY IS THE
"INVISIBLE HEART."
TELL US WHY YOU CALLED IT THAT?

Nadine says IT IS A PLAY ON ADAM SMITH,
AND THE IDEA IS THAT PEOPLE'S
CONSCIENCE IS SUPPOSED TO PLAY A
ROLE IN DETERMINING WHERE
CAPITAL IS INVESTED AND HOW THE
MARKETS OPERATE.

Steve says OKAY.
HAVING SET THE TABLE WITH THAT,
WE'RE NOW GOING TO BRING
EVERYBODY ELSE INTO THE
CONVERSATION HERE.
BUT ACTUALLY, JUST BEFORE WE GET
YOU IN, WE ALWAYS NEED TO SET
THINGS UP.
AND TO DO THAT WE WANT TO GET...
WELL, FRIENDLY VIEWERS, WE'RE
GOING TO SEND YOU ALL BACK TO
ECONOMICS 101 HERE.
READY TO GO BACK TO SCHOOL FOR A
SECOND?
HERE IS A LITTLE PRIMER ON WHAT
BONDS ARE.
NOT JAMES BOND BUT OTHER BONDS.
ROLL IT, PLEASE.

A clip plays.

In the clip, words and illustrations appear as Steve narrates
WHAT IS A BOND?
WELL, A BOND IS BASICALLY AN
AGREEMENT TO REPAY BORROWED
MONEY WITHIN A CERTAIN AMOUNT OF
TIME WITH INTEREST.
THERE ARE A FEW TYPES OF BONDS,
BUT FOR THE PURPOSE OF OUR
DISCUSSION, WE'RE GOING TO FOCUS
ON GOVERNMENT BONDS.
GOVERNMENTS ISSUE BONDS IN ORDER
TO RAISE MONEY.
LET'S SAY A GOVERNMENT WANTS TO
RAISE 500 MILLION dollars.
THEY COULD ISSUE 500,000 1,000 dollar
BONDS.
EACH BOND HAS A MATURITY DATE,
WHICH IS WHEN THE ISSUER OF THE
BOND HAS TO REPAY THE FULL
AMOUNT OF THE BOND PLUS
INTEREST.
THE MATURITY DATE OF A BOND CAN
RANGE FROM ONE TO 30 YEARS.
IF YOU BOUGHT A 1,000 dollars BOND FROM
THE GOVERNMENT OF ONTARIO TODAY
AND IT HAD A 10-YEAR MATURITY
DATE, IN 2029 YOU'D GET YOUR
INITIAL 1,000 dollars BACK PLUS
INTEREST.
THE INTEREST RATE TODAY IS 2.2 percent,
SO IN 10 YEARS YOU'D GET A TOTAL
OF 1,220 DOLLARS.
IS THIS A GOOD WAY TO INVEST
1,000 dollars?
WELL, THAT DEPENDS ON YOUR
APPETITE FOR RISK.
ONTARIO GOVERNMENT BONDS ARE
VERY LOW-RISK INVESTMENTS
BECAUSE YOUR PAYOUT IS VIRTUALLY
GUARANTEED.
THE GOVERNMENT OF ONTARIO IS
VERY UNLIKELY TO GO BANKRUPT AND
NOT PAY YOU BACK.
IF YOUR APPETITE FOR RISK IS
HIGHER, YOU CAN PUT YOUR MONEY
SOMEWHERE ELSE, WHERE THE RETURN
MIGHT BE MUCH BETTER.
LIKE IN THE STOCK MARKET, OR
CORPORATE BONDS OF VARIOUS RISK
LEVELS.

The clip ends.
The caption changes to "A bond by any other name."

Steve says OKAY, THERE'S OUR
ECONOMICS 101 ON BONDS.
BRIAN, LET ME GET YOU TO START
US OFF HERE.
WE'RE GOING TO TALK ABOUT SOCIAL
IMPACT BONDS, AND WE TALKED
THERE JUST ABOUT REGULAR
OLD-FASHIONED BONDS.
HOW DO THESE TWO THINGS DIFFER,
IN AT ALL?

The caption changes to "Brian Milner. The Globe and Mail."

Brian says WELL, THE CONCEPT IS IDENTICAL.
THE OUTCOMES ARE DIFFERENT IN
THE MEASUREMENT OF HOW THEY WORK
IS QUITE DIFFERENT.
NORMALLY PEOPLE WHO BUY BONDS
AND INSTITUTIONS LOVE BONDS
BECAUSE THEY ARE STABLE, THEY
ARE RELATIVELY SAFE, AND THEY
BALANCE OUT THE RISKS YOU MIGHT
HAVE IN OTHER INVESTMENTS, LIKE
EQUITIES OR REAL ESTATE OR
PRIVATE INVESTMENT.
SO BONDS PLAY A CRUCIAL ROLE IN
THE CAPITAL MARKETS.
THEY ARE FAR, FAR BIGGER THAN
THE EQUITY MARKETS, WAY, WAY
BIGGER.
THEY'RE THE MOST IMPORTANT WAY
OF RAISING MONEY AROUND THE
WORLD, AND THE FACT IS THAT MOST
PEOPLE WHO GET INTO BONDS ARE
NOT THERE TO TAKE A LOT OF RISK.
THEY ARE THERE TO PROTECT
THEMSELVES, AND THE MORE RISK
YOU TAKE ON, THE MORE THE ISSUE
IS GOING TO HAVE TO PAY...
ISSUER IS GOING TO HAVE TO PAY
YOU.
BUT YOU KNOW, I LOOKED AT QUITE
RISKY BONDS OVER THE LAST FEW
DAYS TO TRY TO COMPARE THEM TO
THE EXAMPLES IN THE DOCUMENTARY
WHERE PRITS KERR TALKS ABOUT HOW
8 percent IS A DECENT RETURN.
8 percent IS AN INCREDIBLE RETURN IN A
LOW-INTEREST RATE ENVIRONMENT
LIKE THIS ONE.
THE CITY OF DETROIT, WHICH WENT
COMPLETELY BANKRUPT IN 2014, HAS
JUST COME BACK TO THE MUNICIPAL
BOND MARKET, JUST A MONTH AGO,
AND IF YOU BUY A MUNICIPAL BOND
FROM THE CITY OF DETROIT, YOU'RE
ONLY GETTING ABOUT 4.1 percent
INTEREST.
AND THIS IS A CITY THAT HAS A
TERRIBLE CREDIT RATING.
THE CITY OF CHICAGO'S OWN
EDUCATION DEPARTMENT ISSUES
BONDS.
YOU CAN GET BONDS TO HELP THE
EDUCATION DEPARTMENT BUILD
SCHOOLS AND STILL GET LESS THAN
5 percent RETURN.
SO IF YOU'RE GETTING 8, THAT'S
EQUIVALENT TO INVESTING IN A
THIRD WORLD GOVERNMENT.

Steve says IN WHICH CASE LET ME
ASK YOU, ANDREA, THE MARKETS, DO
THEY LIKE SOCIAL IMPACT BONDS?

The caption changes to "Andrea Robertson. TD Wealth."

Andrea says SOCIAL IMPACT BONDS ARE NOT
PUBLICLY TRADED, SO THAT'S
ANOTHER DIFFERENCE BETWEEN THE
BONDS THAT BRIAN IS TALKING
ABOUT AND THESE BONDS THAT WE'RE
GOING TO TALK ABOUT TODAY.
THEY ARE A PRIVATE TRANSACTION.
THEY'RE A PRIVATE... I
PERSONALLY DON'T LIKE THAT
THEY'RE CALLED BONDS BECAUSE
IT'S CONFUSING BECAUSE MOST
PEOPLE THINK OF BONDS AS
SOMETHING THAT'S SAFE AND HAS A
GUARANTEED RETURN AND CAN BE
TRADED TYPICALLY PUBLICLY ON THE
MARKET AND ACTUALLY PROTECTS
YOUR PORTFOLIO.
THIS IS MORE OF A SOCIAL FINANCE
TRANSACTION, IN MY OPINION.

Steve says OKAY, AND THE PEOPLE
WHO... THE PEOPLE WHO PUT
FORWARD THE MONEY IN THE HOPES
OF GETTING THIS 8 percent RETURN, OR
WHATEVER, SO FAR... I MEAN, THIS
IS A RELATIVELY NEW FINANCIAL
INSTRUMENT, BUT SO FAR DO THEY
SEEM TO LIKE THEM?

Andrea says SO...

Steve says ARE THEY POPULAR?

Andrea says SO I WOULDN'T SAY THEY'RE
POPULAR BECAUSE THEY ARE NOT
WIDESPREAD, BUT THE PEOPLE WHO
INVEST IN IT ARE INTERESTED IN
SEVERAL THINGS.
THEY'RE INTERESTED IN PERHAPS
MAKING A FINANCIAL RETURN, BUT
THEY'RE INTERESTED PARTICULARLY
IN SOCIAL GOOD BECAUSE THIS IS A
RISKY TRANSACTION IN MANY WAYS.
THERE ARE SEVERAL ELEMENTS OF
RISK THAT YOU DON'T FIND IN
NORMAL BONDS.
TYPICALLY YOU HAVE TO BE WHAT WE
CALL AN ACCREDITED INVESTOR,
WHEN MEANS YOU HAVE TO HAVE AT
LEAST A MINIMUM OF 1 MILLION dollars IN
INVESTABLE ASSETS IN ORDER TO
INVEST IN THESE THINGS.
USUALLY THE TRANSACTION IS
PRETTY HIGH, A MINIMUM
TRANSACTION IS HIGH.
SO YOU HAVE TO HAVE A TON OF
MONEY TO BE ABLE TO DO THAT, SO
IT'S NOT FOR THE NORMAL
INVESTOR.

Steve says NOT FOR THE SMALL
INVESTOR, NOT FOR THE FEINT OF
HEART.

Andrea says NO, AND IT'S ALSO TYPICALLY
LONG-TERM.
IF YOU HAVE LIQUIDITY ISSUES,
YOU DON'T WANT THEM EITHER.

Steve says GOTCHA.
WHAT'S YOUR VIEW ON SIBS,
RICARDO?

The caption changes to "Ricardo Tranjan. Canadian Centre for Policy Alternatives."

Ricardo says ONE OF THE THINGS THAT I
REALLY APPRECIATE IN THE FILM IS
THAT IT BRINGS THE PERSPECTIVE
OF THE SOCIAL SERVICE, THE
FRONT-LINE WORKERS, RIGHT?
AND THAT'S A PERSPECTIVE THAT IS
REALLY IMPORTANT IN THIS
SUBJECT, AND ONE THAT DOESN'T
GET ENOUGH ATTENTION.
SO MY PREVIOUS ROLE I SPENT A
LOT OF TIME WITH PEOPLE WHO
MANAGE AND DELIVER SOCIAL
SERVICES.
AND THEY'RE TALKING ABOUT
WRAPAROUND SERVICES.
THEY'RE TALKING ABOUT HUMAN
SERVICE INTEGRATION.
THEY'RE TALKING ABOUT CONTINUITY
OF CARE AT A SYSTEMS LEVEL,
ESSENTIALLY THIS NOTION THAT A
COORDINATED, IF POSSIBLE
INTEGRATED, SUSTAINED
INTERVENTION.
THAT'S WHAT WE NEED.
THAT'S WHAT WE SHOULD ALL BE
COLLECTIVELY TRYING TO REACH.
AND IT STRIKES ME THE SOCIAL
IMPACT BONDS TAKES US IN THE
OPPOSITE DIRECTIONS.
IT'S JUST ONE-OFFS, IN AND OUT
INTERVENTION.
CHECK THE BOX, CASH THE MONEY
AND THEN OUT OF THE DOOR.
AND THEN WHAT HAPPENS TO THE
PEOPLE, TO THE FAMILIES, TO
THOSE COMMUNITIES?
SO MY IMPRESSION IS THAT IT'S
NOT A VERY ETHICAL, RESPONSIBLE
WAY OF GOING ABOUT DELIVERING
SOCIAL SERVICES.

The caption changes to "Connect with us: Twitter: @theagenda; Facebook, agendaconnect@tvo.org, Instagram."

Steve says NADINE, YOUR
DOCUMENTARY DIDN'T AT THE END...
I SHOULDN'T GIVE AWAY THE ENDING
HERE, BUT I WILL A LITTLE BIT
HERE.
THIS IS NOT A POLEMICAL
DOCUMENTARY.
YOU DON'T TAKE A POSITION ON
THESE THINGS.
YOU SHOW THE UPSIDE AND
DOWNSIDE.
AT THE END OF THE DAY, DID YOU
YOURSELF COME TO ANY CONCLUSION
ABOUT WHETHER THESE THINGS WERE
MORE POSITIVE THAN NEGATIVE OR
VICE VERSA?

Nadine says I THINK THEY'RE MOVING FROM
THEORY TO REALITY.
I DON'T THINK THEY'RE DELIVERING
ON A LOT OF THE PROMISES THAT
THEY SET OUT TO DO IN 2014.
SO WHEN I STARTED THE FILM.
SO THEY WERE SAYING THEY WERE
GOING TO INNOVATE SOCIAL
PROGRAMS, THEY WERE GOING TO
BRING NEW MONEY TO THE DELIVERY
OF SOCIAL PROGRAMS AND THEY WERE
GOING TO BE RESULTS FOCUSED SO
WE WOULD GET BETTER OUTCOMES FOR
PEOPLE.
AND I DON'T THINK THE BONDS I'VE
SEEN AND LOOKED AT, AND NOT JUST
THE ONES IN THE FILM, I DO A LOT
OF RESEARCH OUTSIDE OF THAT,
HAVE NOT DELIVERED ON THOSE
THINGS.
I THINK IT TENDS TO UNDERMINE
DEMOCRACY BECAUSE THE PEOPLE WHO
ARE MAKING DECISIONS ABOUT WHAT
GETS FUNDED AND HOW PROGRAMS ARE
DESIGNED TEND TO BE THE
INVESTORS.
THEY HAVE A LOT OF SAY IN THAT.
I KNOW PEOPLE WHO ARE PROPONENTS
OF SOCIAL IMPACT BONDS SAY THAT
IT'S GOVERNMENT THAT'S SETTING
THE AGENDA AND SETTING WHAT THE
METRICS, THE SUCCESS METRICS
ARE, BUT IN THE FILM IT WAS
QUITE CLEAR THAT THE INVESTORS
HAVE AN INFLUENCE IN THAT.

Steve says GIVE US AN EXAMPLE OF
A SOCIAL IMPACT BOND THAT YOU
THINK DID WELL.
EVERYBODY DID WELL.
THE INVESTORS GOT A PROFIT AND
THE PEOPLE WHO WERE AT THE
CENTRE OF THE BOND, THEY HAD
THEIR CIRCUMSTANCES IMPROVED.

Nadine says OKAY.
SO ONE OF THE BONDS THAT I DID
LOOK AT, AND IT WAS REVIEWED
ACTUALLY BY MILDRED WARNER WHO'S
IN THE FILM, SHE DID A
COMPARISON ACTUALLY OF THE
CHICAGO BOND, THE UTAH ONE.
BOTH WERE EARLY CHILD
DEVELOPMENT.
AND THEN THE ONE IN SOUTH
CAROLINA, WHICH WAS A FAMILY
NURSE PARTNERSHIPS PROGRAM.
AND AGAIN, IT HAD BEEN RUNNING
FOR SEVERAL YEARS, BUT SOME
PHILANTHROPIC INVESTORS GOT IN.
THE GOVERNMENT ALSO INVESTED
THEMSELVES, AND THE IDEA... SO
WHAT HAPPENS, IT'S TO IMPROVE
MATERNAL AND EARLY CHILDHOOD
HEALTH.
SO YOU HAVE A NURSE THAT WILL GO
AROUND AND VISIT FAMILIES WHO
ARE IN LOW-INCOME AREAS TO GIVE
THEM ASSISTANCE TO MAKE SURE
THAT THEY IMPROVE THOSE
OUTCOMES.
AND THE IDEA AT THE START, AT
THE OUTSET, WAS THAT THEY WOULD
FUND THIS PROGRAM.
THEY WOULD SHOW THE GOOD
RESULTS, AND THEN THERE WAS EVEN
AN ADVOCACY BUDGET BUILT IN TO
GET THAT PROGRAM FUNDED THROUGH
MEDICAID.
SO THAT'S THE BEST DESIGN I'VE
SEEN.
I STILL DON'T KNOW WHAT THE
OUTCOME OF THAT IS BECAUSE
THEY'RE NOT FINISHED YET.
BUT... AND THAT WAS HOW I
ORIGINALLY SAW THESE POTENTIALLY
WORKING.
BUT I WOULD SAY THAT'S THE BEST
EXAMPLE I'VE SEEN.

Steve says OKAY.
DOES THAT WORK FOR YOU, THAT EXAMPLE?

Andrea says SO THAT SOUNDS LIKE A GOOD
EXAMPLE.
WE'VE SEEN EXAMPLES WHERE IT
DOESN'T WORK.
FOR EXAMPLE, THE REICHERS
VIOLENT ANTI-RECIDIVISM
PROGRAM, THAT DIDN'T WORK.
ACTUALLY, THE INTERVENTION
DIDN'T WORK AND SO...

Steve says DIDN'T WORK MEANING
THE INMATES REOFFENDED?

Andrea says THE INMATES DID REOFFEND.

Steve says PEOPLE LOST THEIR MONEY?

Andrea says YEAH, PEOPLE LOST THEIR
MONEY.
PEOPLE MEANING GOLD MAN SACHS
AND BLOOMBERG PHILANTHROPY.
I BELIEVE THEY FUNDED THE UTAH
SOCIAL IMPACT BOND AS WELL.
WHAT I THINK IF I LOOK AT IT
FROM A HIGH LEVEL PERSPECTIVE, I
THINK THAT WE HAVE MANY
CHALLENGES BOTH IN ONTARIO AND
GLOBALLY AND THAT PHILANTHROPY
AND GOVERNMENT CAN HOPE TO SOLVE
THEM ALL.
WE NEED PRIVATE CAPITAL WHICH IS
LARGER THAN... WHICH IS GOING TO
ADD A HUGE PIECE TO IT TO HELP
SOLVE MANY OF OUR PROBLEMS.
IF THIS IS ONE WAY TO ATTEMPT TO
DO IT, IT... YOU KNOW, I THINK
IT'S A GREAT WAY TO TRY TO
ENGAGE THE PRIVATE SECTOR, AND
IT IS THE PRIVATE SECTOR, SO WE
HAVE TO OFFER INCENTIVES.

Steve says RICARDO, I NEED YOU TO
SPEAK TO THAT, BECAUSE
GOVERNMENTS EVERYWHERE ARE
COMPLAINING THAT THEY DON'T HAVE
ENOUGH MONEY TO DO THE THINGS IN
SOCIAL PROGRAMS THAT THE
CITIZENS WANT THEM TO DO, AND
THIS IS OBVIOUSLY AN IDEA TO GET
SOME PRIVATE MONEY INTO HELPING
THAT HAPPEN.

Ricardo says SO THE FIRST QUESTION IS
THERE: IS IT REALLY PRIVATE
CAPITAL IF YOU'RE GETTING IT
BACK WITH A HIGH RETURN ON IT?
SO GOVERNMENTS, THEY HAVE A LOT
OF DIFFERENT INSTRUMENTS THEY
CAN USE TO RAISE THE REVENUES.
THE GOVERNMENTS THAT WE HAVE
TODAY ARE CHOOSING NOT TO DO
THAT.
SO THEY MIGHT CHOOSE TO FUND
SOCIAL INTERVENTIONS THROUGH
BORROWING, AND IF THEY DO SO,
THEY CAN GET MONEY AT A MUCH
LOWER INTEREST RATE, AS WE HAVE
BEEN EXPLAINED TO US, BONDS,
THROUGH ACTUAL BONDS.
IT'S ONE WAY FOR GOVERNMENTS TO
GO OUT AND FINANCE SOCIAL
PROGRAMS AND OTHER GOVERNMENT
PROGRAMS BELOW MARKET INTEREST RATES.

Steve says BUT THIS IS ONE WAY TO
GET THAT MONEY WITHOUT IT
SHOWING UP ON THE GOVERNMENT'S BOOKS.
THEY DON'T HAVE TO GO INTO DEFICIT.

Ricardo says BUT EVENTUALLY IT DOES SHOW
UP BECAUSE SOMEBODY HAS TO PAY
BACK THE INVESTORS.

Steve says THAT'S A PROBLEM FOR
SOMEBODY ELSE DOWN THE ROAD.

Ricardo says THEY'RE DEFERRING THE PAYMENT.

Steve says PRECISELY.
THAT'S THE POINT.
IT KEEPS THE MONEY OFF THE
GOVERNMENT'S BOOKS TODAY AND
GOVERNMENTS GET ELECTED TODAY.

Brian says THERE IS A TON OF INTEREST IN
SOCIAL AND ENVIRONMENTAL BONDS.
I CAN TELL YOU A NUMBER THAT'S
STAGGERING.
THERE ARE NOW 12 TRILLION
DOLLARS PARKED IN FUNDS THAT
INVEST IN SOCIALLY RESPONSIBLE
AND ENVIRONMENTALLY RESPONSIBLE
BOND ISSUES.
THAT'S AN ENORMOUS AMOUNT, AND
THAT'S ONLY IN THE LAST DECADE
IT'S GROWN TO 12 TRILLION dollars.
BUT MOST OF THAT INVESTMENT IS
NOT GOING INTO INNOVATIVE THINGS
BECAUSE INNOVATION IMPLIES HIGH
RISK.
IT'S GOING INTO THE SAFEST
POSSIBLE THINGS THE GOVERNMENTS
COULD EASILY FINANCE ON THEIR
OWN AND IT'S NOT GOING INTO THE
PARTS OF THE WORLD THAT NEED IT
THE MOST.
IT'S NOT GOING INTO AN AFRICAN
COUNTRY TO ERADICATE POVERTY
WITH THESE SOCIAL IMPACT BONDS.
YOU'RE JUST NOT GOING TO DO IT.
YOU'RE GOING TO PUT THEM IN
WEALTHY COUNTRIES THAT ALREADY
HAVE THE RIGHT INFRASTRUCTURE,
THE RIGHT GOVERNANCE, THE RIGHT
OVERSIGHT, AND THEN YOU'RE GOING
TO CHERRY PICK WHAT YOU THINK
YOU CAN MARKET TO YOUR
INVESTORS.
AND THAT'S HOW IT'S WORKING.

Nadine says I ALSO JUST WANTED TO SAY
THAT IT DOES STAY ON THE
GOVERNMENT BOOKS, ACTUALLY,
BECAUSE THEY DO POTENTIALLY HAVE
TO PAY IT.
SO THAT MONEY IS SET ASIDE.

Steve says SO THEY DO HAVE TO
BUDGET FOR IT TODAY?

Nadine says YES.

Steve says THE MONEY THAT THEY'RE
GOING TO HAVE TO PAY BACK TO
INVESTORS IN 10 OR 20 YEARS?

Nadine says AND IN FACT WHEN GOLDMAN
SACHS NEGOTIATED THESE DEALS,
BECAUSE APPROPRIATION IS USUALLY
DONE ON AN ANNUAL BASIS, THERE
IS A LOT OF DIFFERENT WAYS THAT
THEY'VE TRIED TO MITIGATE THAT
RISK, BUT MASSACHUSETTS, THE
OTHER SIBS THEY FUNDED WAS THE
MOST EXPENSIVE ONE AT THE TIME,
27 MILLION, AND THEY PASSED
LEGISLATION MAKING MASSACHUSETTS
THE STATE RESPONSIBLE FOR PAYING
THAT BACK.

Steve says BUT PRESUMABLY THE
WHOLE BIG NUT, LIKE THE ORIGINAL
NUT PLUS THE 8 percent, THAT'S
SOMETHING THAT DOESN'T HAVE TO
BE PAID OFF UNTIL THE BOND IS
DUE, RIGHT?

Nadine says UNTIL THE DATES WHERE THE
TRIGGERS ARE MET, BUT THAT MONEY
STILL HAS TO BE ACCOUNTED FOR.

Steve says OKAY.

Nadine says I THINK IT'S MORE OF A
POLITICAL ADVANTAGE FOR
GOVERNMENTS TO LOOK AT SIBS.
I THINK THAT'S WHY THEY'RE
INTERESTED IN SOCIAL IMPACT
BONDS.
IT'S A GOOD-NEWS STORY.
WE'RE DOING SOMETHING ABOUT THIS
PROBLEM.
LOOK, WE'RE INVOLVING THE
PRIVATE SECTOR.
WE'RE ALL WORKING TOGETHER.
I THINK IT'S MORE THAT THAN A
FINANCIAL GAIN.

Steve says HOW DO, IN YOUR
EXPERIENCE, WITH YOUR CLIENTS,
HOW DO THEY MEASURE THE RISK
VERSUS REWARD AND THE ETHICAL
CONSIDERATIONS AND WHETHER THE
MONEY OUGHT NOT TO BE PUT
SOMEWHERE ELSE?
YOU KNOW, HOW DO THEY MAKE THEIR
DECISIONS AT THE END OF THE DAY?

The caption changes to "tvo.org/theagenda; agendaconnect@tvo.org."

Andrea says SO CLEARLY IT VARIES ACROSS
INDIVIDUALS.
THAT KIND OF DECISION IS HIGHLY
INDIVIDUALIZED, BUT THERE ARE
MORE AND MORE, TO YOUR POINT,
INVESTORS WHO ARE INTERESTED IN
MAKING AN IMPACT WITH THEIR
INVESTMENTS.
NOW I MAINLY DEAL WITH THE
NON-PROFIT SECTOR.
SO THINK ABOUT A NON-PROFIT THAT
IS REQUIRED TO GRANT OUT... A
CHARITY THAT'S REQUIRED TO GRANT
OUT 3.5 percent OF THE YEAR.
WELL, WHAT HAPPENS TO THE REST
OF IT?
IS THAT JUST SITTING THERE IN
THE PUBLIC MARKETS?
MAYBE IN COMPANIES THAT DON'T...
AREN'T THE GREATEST IN TERMS OF
THEIR ENVIRONMENTAL, SOCIAL AND
GOVERNANCE RECORD.
OR DO CHARITIES START TO LOOK AT
THEIR PORTFOLIOS AS WELL AND
THINK ABOUT, WELL, HOW COULD I
HAVE AN IMPACT?
SOMETIMES... ADMISSIONS,
SOMETIMES NOT.
THAT ACTUALLY WILL BENEFIT OUR
SOCIETY AND OUR WORLD.
SO IT DEPENDS ON YOUR
ORGANIZATION, JUST AS IT DEPENDS
ON THE INDIVIDUAL, BUT THERE'S
MORE AND MORE MOVEMENT TOWARDS
THINKING ABOUT INVESTMENTS IN AN
IMPACT FRAMEWORK.

Steve says IF, RICARDO, THE MONEY
HAS TO BE BUDGETED AND SET ASIDE
YEAR BY YEAR AS THEY GO ALONG,
AND IF GOVERNMENTS CAN BORROW
THE MONEY FOR LESS EXPENDITURE
THAN THEY WILL HAVE TO PAY OFF
TO INVESTORS AT THE END OF THE
DAY, WHY ARE THEY DOING IT?

The caption changes to "Risk, riskier, riskiest."

Ricardo says I THINK GOVERNMENTS THAT ARE
NOT INTERESTED IN FUNDING
LONG-TERM PROGRAMS, WHO ARE NOT
INTERESTED IN BUILDING THE
SOCIAL INFRASTRUCTURE THAT
COMMUNITIES NEED TO THRIVE, THEY
MIGHT FIND SOCIAL IMPACT BONDS
VERY INTERESTING BECAUSE IT'S A
SMALL, VERY SORT OF DIRECT
ONE-OFF INTERVENTION.
IT'S NOT GREAT USE OF MONEY, BUT
THEY ARE RELATIVELY CHEAP
BECAUSE THEY ARE SO NARROWLY
SCOPED.
AND THEN AT THE END OF THE DAY
THEY GET SOME NICE STATISTICS
THROUGH ANALYSTS.
YOU KNOW, WE DROPPED THIS BY
10 percent.
WE INCREASED THAT BY 30 percent.
SO IT HAS SOME POLITICAL
EXPEDIENCY IN SOME WAY.
NOW A GOVERNMENT HAS COMMITTED
TO EXPAND EARLY CHILDHOOD FOR
ALL CHILDREN... PUT IN PLACE A
UNIVERSAL PHARMACARE PROGRAM.
THESE GOVERNMENTS I DOUBT IT
WILL BE INTERESTING TO.
THEY WILL SEE IT AS A RIP-OFF.
IT'S MORE COSTLY THAN IT NEEDS
TO BE.
A LOT OF THE MONEY GETS SPENT ON
MANAGEMENT FIRMS AND CONSULTING
FEES OF ALL KINDS, AND DOESN'T
HAVE ANY LASTING IMPACT.
I THINK THEY WILL PROBABLY FIND
THE INVESTMENT IN THE
CONVENTIONAL PUBLIC SERVICE IS A
MUCH BETTER USE OF MONEY.

Steve says NADINE, YOU GOT TO
EXPLAIN SOMETHING TO ME HERE.
THE PREVIOUS LIBERAL GOVERNMENT
WHICH MANY PEOPLE ACCUSED OF
RUNNING UP BIG DEFICITS AND
SPENDING TOO MUCH MONEY WENT FOR
A COUPLE OF SOCIAL IMPACT BONDS,
RIGHT?
THEY GOT INVOLVED IN A COUPLE OF
SOCIAL IMPACT BONDS.
THE NEW PROGRESSIVE CONSERVATIVE
GOVERNMENT, WHICH IS SUPPOSED TO
BE FRIENDLIER TO THE PRIVATE
SECTOR, WHICH IS TRYING TO
TIGHTEN GOVERNMENT EXPENDITURES,
JUST CANCELLED THEM.
CAN YOU EXPLAIN THAT TO ME?

Nadine says WELL, I THINK OUR CURRENT
PREMIER IS CANCELLING
EVERYTHING, CUTTING COSTS
WHEREVER HE POSSIBLY CAN, SO I
DON'T THINK IT'S NECESSARILY AN
IDEOLOGICAL VIEW ON SOCIAL
IMPACT BONDS OR NOT.
I THINK HE JUST SAW IT AS
SOMETHING HE COULD CUT.
IT WAS A NEW PROGRAM THAT HADN'T
BEEN IMPLEMENTED YET.

Steve says OKAY.
SO IT STARTED UNDER THE LIBERALS
AND THE CONSERVATIVES JUST
PULLED THE PLUG ON IT BEFORE IT
GOT TOO FAR DOWN THE ROAD?

Nadine says YEAH, IN CANADA BOTH LIBERAL
AND CONSERVATIVE GOVERNMENTS
HAVE EXPERIMENTED WITH SOCIAL
IMPACT BONDS.
THE NDP HAS NOT TOUCHED THEM TO
DATE.
AND YOU'LL SEE THAT IN THE
STATES TOO.
IT'S REPUBLICANS AND DEMOCRATS.
IT REALLY CUTS ACROSS
IDEOLOGICAL LINES BECAUSE I
THINK PEOPLE SEE THEM AS
DIFFERENT THINGS AND HAVE
DIFFERENT HOPES FOR THEM.
AND THE WAY THEY ARE DESIGNED
AND IMPLEMENTED CAN CREATE VERY
DIFFERENT OUTCOMES, BUT TO WHAT
RICARDO IS SAYING, IT'S TRUE,
134 IMPACT BONDS NOW.

Steve says WHERE?

Nadine says AROUND THE WORLD IN 27 COUNTRIES.
AND THE MAJORITY SERVE LESS THAN 522 PEOPLE.
AND THE BONDS THAT COMPLETE, AND
THERE ARE A NUMBER OF THEM NOW,
INCLUDING ONE IN CANADA, THEY
ARE NOT TAKING... WHEN THEY HAVE
SUCCESSFUL RESULTS, GOVERNMENT
DOESN'T TAKE THEM OVER AND
IMPLEMENT THEM AS A
PROVINCE-WIDE OR COUNTRY-WIDE
PROGRAM, EVEN THOUGH THEY'VE
BEEN PROVEN SUCCESSFUL.
AND TO THE POINT THAT WE STARTED
SPEAKING ABOUT THESE PROGRAMS
ARE NOT INNOVATIVE.
EARLY CHILDHOOD EDUCATION IS NOT
INNOVATIVE.
THE PROGRAM IN CHICAGO HAS BEEN
STUDIED BY THE UNIVERSITY OF
MINNESOTA SINCE 1985.
YOU KNOW, THE PROGRAM THAT WAS
BEING DEVELOPED HERE BY MAINSTAY
HOUSING WAS BASED ON AT-HOME...
STUDY WHICH WAS COMPLETED IN
2014 IN CANADA.
FIVE DIFFERENT CITIES, 2,000
PARTICIPANTS AND PROVED QUITE
CLEARLY THAT GIVING PEOPLE
ACCESS TO AFFORDABLE HOUSING AND
ACCESS TO COMMUNITY SUPPORTS
ENDS HOMELESSNESS.
SO WE ALREADY KNOW WHAT TO DO.
SO IT'S... THE IDEA OF PILOTING
INNOVATIVE PROGRAMS AND PAYING
8 percent RETURN FOR A RISKY
INVESTMENT, IT'S NOT BORNE OUT
IN WHAT WE'VE SEEN.

Steve says YOU WANT TO RESPOND TO
THAT, ANDREA?

Andrea says YEAH, WHEN WE WERE SPEAKING
BEFORE WE CAME ON YOU SAID WHAT
ATTRACTED YOU TO IT WAS THE
FIRST SOCIAL IMPACT BOND IN
ENGLAND REALLY ADDRESSED AN
UNSERVED GROUP.
SO I COULD SEE... YOU KNOW, AND
THAT WAS VERY CONVINCING.
AND YOU KNOW, IT IS TRUE THAT WE
HAVE A LOT OF RESEARCH ON EARLY
EDUCATION.
THE PROBLEM IS A LOT OF THESE
THINGS AREN'T FUNDED.
BEST-CASE SCENARIO, THE
GOVERNMENT WILL FUND IT, BUT IF
THEY'RE NOT, IF THEY DON'T HAVE
THE MONEY TO FUND IT, THIS IS
PRIVATE CAPITAL FUNDING THESE
THINGS.
AND I JUST WANTED TO POINT OUT
THAT PEOPLE DON'T GET PAID IF
IT'S NOT SUCCESSFUL.
AND HOW DO WE MEASURE SUCCESS?
I AGREE IT'S COMPLEX, NOT
SIMPLE.
SIMPLY SPOKEN, YOU MEASURE
SUCCESS BY EVERY TIME SOMEBODY
WHO STARTS IN THE PRESCHOOL
PROGRAM GRADUATES AND GOES TO
UNIVERSITY WE'VE SAVED ALL SORTS
OF COSTS IN SPECIAL EDUCATION,
MAYBE, YOU KNOW... ET CETERA,
THINGS LIKE THAT.
SO THERE ARE VERY INTELLIGENT
STATISTICIANS OUT THERE WHO
ACTUALLY COMPILE THAT
INFORMATION TO FIGURE OUT HOW
MUCH GOVERNMENT WOULD BE SAVING,
AND IT'S PREDICATED ON THAT.
WHETHER THOSE ARE LEGITIMATE
NUMBERS OR NOT I CAN'T REALLY
SPEAK TO.
BUT THE POINT IS THAT WE DO SEE
EXAMPLES.
YOU WOULD PROBABLY KNOW MORE
THAN I DO.
I THINK OF THAT REICHERS
EXAMPLE, WHERE ACTUALLY IT MUST
HAVE BEEN RISKY BECAUSE THEY
LOST ALL THEIR MONEY.
SO I DON'T SEE IT AS WE'RE
PAYING, YOU KNOW, FAT CAT
INVESTORS BIG MONEY TO DO
SOMETHING THAT'S A SLAM DUNK.
IT'S NOT A SLAM DUNK.
IT'S EXTREMELY RISKY, WHICH IS
WHY IT'S 8 percent AND NOT 2.2 percent, WHICH
IS MORE OF THE RISKLESS RATE.

Nadine says THE REICHERS ONE WAS ACTUALLY
UP TO 22 percent, AND THEY DIDN'T LOSE
THEIR MONEY.
THEY SHUT DOWN THE PROGRAM
BECAUSE THEY WEREN'T GETTING THE RESULTS.
SO THE PERSON... THE
ORGANIZATION, THE INVESTOR THAT
LOST MOST OF THE MONEY WAS
BLOOMBERG PHILANTHROPY.

Andrea says RIGHT.

Nadine says AND GOLDMAN SACHS LOST OUT
BEFORE THEY LOST MUCH MONEY AT ALL.

Andrea says YEAH, YEAH.

Nadine says AND I THINK THE PROBLEM
WITH... FIRST OF ALL, THERE'S
EASIER WAYS FOR GOVERNMENT TO
GET THEIR HAND ON CAPITAL TO
FUND THESE PROGRAMS IF THEY
DON'T HAVE THE MONEY CURRENTLY.
AND THE SUCCESS METRICS ARE A
PROBLEM BECAUSE I THINK SIBS
WERE SUPPOSED TO BRING BETTER
OUTCOMES ORIENTED PROGRAMS.
YOU KNOW, WE WANT RESULTS FOR
THE MONEY WE'RE INVESTING.
BUT THE PROBLEM IS WHEN YOU'RE
TYING A FINANCIAL RETURN TO A
SUCCESS METRIC, IT
DE-INCENTIVIZES COMPREHENSIVE
EVALUATION BECAUSE THE MORE
ANALYTICS, THE MORE METRICS YOU
BRING INTO IT, THE RISKIER IT
BECOMES FOR THE INVESTOR, AND
THEY SHY AWAY FROM THAT.

Brian says WELL, THE FACT IS IF ENOUGH
OF THESE BONDS FAILED, INVESTORS
WOULD SAY 8 percent ISN'T ENOUGH, I
NEED 30 percent.
SO THE RISK IS DETERMINED BY THE
SUCCESS RATE OF THE ONES THAT
ARE OUT THERE, SO THAT'S WHY THE
ONES THAT ARE BEING FINANCED ARE
PRETTY MUCH THE SAFEST YOU CAN
IMAGINE.
SO IN THAT EARLY CHILDHOOD ONE
THAT'S FEATURED SO WELL IN THE
DOCUMENTARY, THEY BASICALLY GET
A PAYOUT OVER 18 YEARS, BUT
NOBODY KNOWS WHAT'S HAPPENING TO
OTHER KIDS WHO AREN'T IN THAT
PROGRAM.
DO THEY GET SIMILAR RESULTS?
WHAT HAPPENS AFTER THIS PROGRAM
ENDS?
DO THEY CONTINUE THESE PROGRAMS?
I MEAN... IS NOW THE GOVERNOR.
HE COULD IMPLEMENT THESE
POLICIES STATE-WIDE IF HE WANTED
TO.
HE COULD HAVE ACCESS, AS I
POINTED OUT, TO THE KIND OF
FINANCING THE BOARD OF EDUCATION
IN CHICAGO GETS.
IT'S A LOT CHEAPER, AND YOU CAN
DESIGN COMPREHENSIVE PROGRAMS
WITHOUT WORRYING ABOUT THE
RETURN TO INVESTORS WHO REALLY
ONLY WANT THE RETURN.
YES, THEY ARE SOCIALLY
RESPONSIBLE, BUT IF YOU TELL
THEM YOU'LL LOSE MONEY WITH THIS
SOCIAL RESPONSIBILITY, THEY'LL
SAY, WELL, I'M NOT THAT SOCIALLY
RESPONSIBLE.

Steve says YOU INTERVIEWED THE
GOVERNOR?

Nadine says I DID, YES.

Steve says DO YOU HAVE ANY SENSE
ABOUT WHETHER OR NOT HE WOULD
LIKE TO SEE THIS BLOOM --?

Nadine says WELL, IT'S VERY INTERESTING
BECAUSE THEY RAN ON A PLATFORM
OF A PROGRESSIVE TAX AND ALSO
UNIVERSAL CHILD CARE... SORRY,
UNIVERSAL DAYCARE, SO PRESCHOOL.
HE DID RUN ON THAT PLATFORM.
WHETHER HE ACTUALLY IMPLEMENTS
IT WE'LL SEE AND ALSO HOW HE
FUNDS IT.
HE DIDN'T SPEAK ABOUT.
SO AT THE MOMENT HE'S DELAYED
INTRODUCING HIS NEW TAX PROGRAM,
BUT APPARENTLY IT'S IN
DEVELOPMENT.
AND DEFINITELY THE MAYOR OF
CHICAGO, PROBABLY UNTIL THE
FALL, HE SAID HE'S NOT GOING TO
RUN AGAIN, HE'S PUSHING HARD TO
TRY AND GET THAT FUNDING FOR
SCHOOL.
SO WE'LL SEE IF IT HAPPENS.

Steve says INDEED.
CAN WE SHOW ANOTHER EXCERPT OF
THE DOCUMENTARY?

Nadine says PLEASE.

Steve says YOU DON'T MIND THAT, DO YOU?

Nadine says NO.

Steve says THIS IS THE SOCIAL
WORKER FROM MAINSTAY?
IS THAT RIGHT, MEREDITH?
WHO WILL... WELL, WHY DON'T WE
LET HER SPEAK FOR HERSELF.
IF YOU WOULD, THE CLIP, PLEASE.

Another clip from Nadine's documentary plays.
In the clip, a woman sits in a room talking. She's in her fifties, with white-blond hair in a short bob and glasses.

She says I THINK THE PRIVATE SECTOR
HAS THINGS TO TEACH SOCIAL
SERVICES.
WE NEED TO BE ABLE TO
DEMONSTRATE CONCRETELY THROUGH
RIGOUR AND MEASUREMENT AND
INDICATORS WHAT THE IMPACT OF
THE SERVICE IS SO THAT
GOVERNMENT WILL CONTINUE TO
INVEST IN IT.
GOVERNMENT IS LOOKING TO SOCIAL
IMPACT BONDS TO VALIDATE FOR
THEM THEIR INVESTMENT IN THESE
BIG SOCIAL PROBLEMS.

The clip ends.

Steve says NOW RICARDO, THAT'S
INTERESTING.
THAT'S A WOMAN WHO'S A SOCIAL
WORKER IN TORONTO IN THE SOCIAL
HOUSING SPACE WHO SAYS THAT WE
IN THE PUBLIC SECTOR HAVE
SOMETHING TO LEARN FROM THOSE
PEOPLE IN THE PRIVATE SECTOR WHO
WANT TO BRING THESE NEW
INSTRUMENTS TO BEAR.
DOES THAT MAKE YOU PAUSE IN YOUR
OPINION OF ALL THIS?

Ricardo says ONE THING THAT GOVERNMENTS
CAN LEARN ABOUT... FROM THE
PRIVATE SECTOR IS MEASUREMENT.
IT'S OUTCOME-BASED DELIVERY OF
PROGRAMS, BUT THE GOVERNMENT IS
ALREADY LEARNING ABOUT THIS, AND
THEY ARE DOING THIS INTERNALLY
ALREADY.
ONE THING THAT I FIND
INTERESTING IN THIS DEBATE ABOUT
SOCIAL IMPACT BONDS IS THAT IT
SORT OF ASSUMES THAT THERE'S NO
CAPACITY IN THE PUBLIC SECTOR TO
DELIVER THESE THINGS ON THEIR
OWN.
AND I DON'T KNOW WHERE THAT
ASSUMPTION COMES FROM.

The caption changes to "Economic versus political risk."

Steve says WELL, IT COMES FROM
POLITICIANS NOT WANTING TO RAISE
TAXES OR GO FURTHER INTO DEBT.
IT'S PRETTY SIMPLE.

Ricardo says AND ALSO DOESN'T IT COME FROM
LOOKING AROUND?
BECAUSE IF YOU TAKE A STEP BACK,
WE HAVE PUBLIC HEALTH CARE.
WE HAVE CCP.
WE HAVE YOUTH AND CHILD
PHARMACARE.
RIGHT?
IN TORONTO WE HAVE AN AMAZING
NETWORK OF PARKS AND RECREATION
CENTRES, SOME OF WHICH ARE FREE
IN NEIGHBOURHOODS FOR LOW-INCOME
RESIDENTS.
SO WHAT TELLS FOLKS THAT THE
PUBLIC SECTOR CANNOT DELIVER
THIS GIVEN THE REVENUES, GIVEN
THE INSTRUMENTS TO DO IT?
GOVERNMENTS DO VALUATION TOO.
THEY ROLL OUT PROGRAMS
GRADUALLY, PILOT PROGRAMS, LEARN
FROM THEM, IMPROVE, GO BACK AND
THEN DELIVER BETTER SERVICES.
I DON'T KNOW WHERE THAT NOTION
THAT WE CAN'T DELIVER WITHIN THE
PUBLIC SECTOR.

Steve says BRIAN, WHERE DOES THE
NOTION IN THE POLITICAL WORLD
COME FROM THAT GIVEN EVERYTHING
THAT IS HAPPENING ALREADY ON THE
PUBLIC DIME WE CAN'T DO MORE?

Brian says WELL, CERTAINLY THERE'S AN
IDEOLOGICAL ELEMENT TO THIS
THAT'S VERY STRONG, AND ALTHOUGH
IT WOULD SEEM TO COME FROM THE
RIGHT, IT COMES FROM THE MIDDLE
AS WELL.
AND AGAIN IT'S THE WE CAN'T TELL
TAXPAYERS WE'RE GOING TO BE
DOING X AMOUNT OF THINGS BECAUSE
THEY'RE GOING TO SAY IT'S GOING
TO COME OUT OF MY POCKET AND I
CAN'T AFFORD IT.
BUT IF YOU DO THIS BOND THING,
THEN THE PAYMENTS ARE DOWN THE
ROAD.
THIS TAXPAYER'S NOT GOING TO
WORRY ABOUT IT.
MAYBE THEIR CHILDREN WILL HAVE
TO WORRY ABOUT IT.
IN OTHER WORDS, THEY PUT OFF
MAKING HUGE INVESTMENTS BY
MAKING THESE SMALL INVESTMENTS
BECAUSE ALL OF THESE THINGS, AS
WE'VE HEARD, ARE PRETTY SMALL.
AND THEY'RE PRETTY NARROW.
SO IN THE FIRST ONE EVER
DEVELOPED, WHICH WAS A PRISON IN
PETERBOROUGH, ENGLAND, AND THE
WHOLE THING WAS ABOUT REDUCING
RECIDIVISM.
WELL, THE LOWEST RATES IN THE
WORLD ARE IN NORWAY WHERE THEY
HAVE GOVERNMENT PROGRAMS AND
THEY ARE INSTITUTED VERY
CAREFULLY.
THIS ONE PRISON IN PETERBOROUGH
HAD LOWER RECIDIVISM FOR A
WHILE, BUT AFTER THREE YEARS THE
BONDS BASICALLY DISAPPEARED
BECAUSE THE NATIONAL GOVERNMENT
CHANGED POLICY.
THAT CAN HAPPEN AT ANY TIME WITH
THESE THINGS.
SO I GUESS MY SENSE IS THAT IT
STARTED IN ENGLAND ON AN
IDEOLOGICAL BASIS.
PEOPLE WHO LOVE THE CAPITAL
MARKETS, PEOPLE WHO BELIEVE IN
THE INVISIBLE HAND, WHICH IS
BEEN TOTALLY DISPROVEN OVER MANY
YEARS, SAY, WELL, LET'S DEVELOP
THIS, LET'S GET ACCESS TO THIS
TONS OF... AS I SAID, THERE'S
TRILLIONS AND TRILLIONS OF
DOLLARS AVAILABLE.
LET'S TAP THAT.
LET'S DO IT IN A WAY THAT, SAY,
THE BILLIONAIRES, LIKE BILL
GATES, ARE NOT DOING IT.
BILL GATES SAYS WE NEED TO
ERADICATE THIS, I WILL DEVOTE X
AMOUNT OF MY FORTUNE TO DOING
THAT.
THESE ARE INVESTORS WHO REALLY
WANT A RETURN ON THEIR MONEY AND
WANT TO FEEL GOOD ABOUT GETTING
THAT RETURN.

Steve says CAN YOU BLAME THE
SOCIAL IMPACT BOND FOR THE
PETERBOROUGH, ENGLAND EXAMPLE IF
THE GOVERNMENT CHANGES, IF
POLICY CHANGES, IF THE ENSUING
GOVERNMENT IS LESS ENAMOURED
WITH THIS INSTRUMENT THAN THE
PREVIOUS GOVERNMENT?
IS THAT A FAILURE OF THE BOND OR
IS THAT JUST SOMETHING ELSE?

Brian says IT'S NOT A FAILURE OF THE
BOND, BUT AS I SAID, MOST OF
THESE BONDS ARE DESIGNED FOR
WEALTHY COUNTRIES TO DO THINGS
THAT GOVERNMENTS DON'T WANT TO
DO IN THOSE COUNTRIES.
YOU'RE JUST NOT GOING TO SEE
THIS BOND IN THE CONGO.
IT'S JUST NOT GOING TO HAPPEN.
NOBODY'S GOING TO SAY, WELL, IF
WE BRING DOWN RECIDIVISM IN
THESE PRISONS BY 6 OR 8 percent THAT'S
A BIG DEAL.
IN A DEVELOPED ECONOMY, IF YOU
HAVE A HIGH PRISON POPULATION,
YOU WANT TO REDUCE THEIR COSTS,
SO THEN THE GOVERNMENT SAYS,
WELL, IF I CAN REDUCE THE COST
OF KEEPING PEOPLE IN PRISON,
THAT MAKES THIS A VALUABLE
INSTRUMENT.
BUT IF THE INVESTORS, AS... IN
THE EXAMPLE, DON'T GET THEIR
MONEY BACK, AND MOST OF THEM DO,
AT LEAST GET THEM BACK.
THEY MAY NOT MAKE ANY MONEY, BUT
THEY'LL GET THEIR MONEY BACK,
THEN IT'S NOT GOING TO WORK.

Steve says GO AHEAD, NADINE.

Nadine says I WANT TO ADD THAT THERE IS A
LOT OF INVESTMENT NOW GOING INTO
DEVELOPING COUNTRIES, AND THEY
ARE BASING THEM ALL AROUND BASIC
NEEDS.
SO ESSENTIAL NEEDS: EDUCATION,
HEALTH, FOOD, HOUSING.
AND THEY ARE BASING IT ON THE UN
SUSTAINABLE DEVELOPMENT GOALS.
BUT A LOT OF THAT MONEY IS BEING
FUNDED BY GOVERNMENTS AND
DEVELOPMENT PROGRAMS IN THE
DEVELOPING WORLD.

Steve says A OPPOSED TO...

Brian says AND RUN BY INTERNATIONAL
AGENCIES MORE THAN BY LOCAL
GOVERNMENTS.

Nadine says YES, SOCIAL IMPACT BONDS.

Steve says THOSE TOO?

Nadine says YES.

Steve says ONE OF THE THINGS I
WANTED TO FOLLOW...

Nadine says THEY CALL THEM DEVELOPMENT
IMPACT BONDS.

Steve says HAVING WATCHED YOUR
DOCUMENTARY AND LEARNED A LOT,
AND REALLY ENJOYED IT, SO THANK
YOU FOR DOING IT, ONE OF THE
THINGS I WANTED TO FOLLOW UP ON
WAS THE TARGET... THE TARGET IN
SOCIETY FOR MANY OF THESE SOCIAL
IMPACT BONDS, I GUESS THE
ORIGINAL THOUGHT WAS WE CAN HELP
THE HARDEST TO HELP.
ARE THEY IN FACT THE TARGET FOR
MANY OF THESE SOCIAL IMPACT BONDS?
OR IS IT NOT QUITE THE HARDEST
TO HELP BECAUSE YOU WANT TO HAVE
A POSITIVE OUTCOME AT THE END OF
THE DAY AND YOU'LL MORE LIKELY
HAVE A POSITIVE OUTCOME IF
YOU'RE DEALING WITH THE NOT
QUITE AS HARD AS TO HELP AS
OPPOSED TO THE MOST DIFFICULT CASES?

Nadine says YEAH, SO THE IDEA OF CREAMING
AND PARKING, THEY CALL IT.

Steve says CREAMING AND PARKING.
THERE WE GO.
THAT WAS THE TECHNOLOGY.

Nadine says THE PEOPLE THAT ARE MOST
LIKELY TO SUCCEED.
I MEAN, THAT'S ONE OF THE
BIGGEST CRITICISMS OF SOCIAL
IMPACT BONDS, AND YOU DO SEE
THAT.
IT WAS IN THE PETERBOROUGH SIBS
BECAUSE IN ORDER TO GET INTO
THAT PROGRAM, WHICH WAS MEANT TO
STOP REPEAT OFFENDERS, SO MEN
WHO WERE GOING TO PRISON FOUR OR
FIVE TIMES A YEAR ON SHORT-TERM
SENTENCES.
BUT IN ORDER TO GET INTO THE
PROGRAM YOU HAD TO REALLY WANT
TO HAVE ACCESS TO THE PROGRAM.
YOU HAD TO EXPRESS THAT
INTEREST.
WHEREAS GOVERNMENT, WHEN THEY
ARE DEALING WITH THESE
POPULATIONS, YOU DON'T ALWAYS
HAVE PEOPLE WHO WANT TO CHANGE.
BUT AS GOVERNMENT, YOU HAVE TO
HELP THEM REGARDLESS.
SO I DON'T THINK THE IDEA OF
SOCIAL IMPACT BONDS WAS TO HELP
THE HARDEST TO SERVE.
BUT ULTIMATELY THAT'S WHAT
GOVERNMENT HAS TO DO.

Steve says HERE'S AN IRONY, RICARDO.
THE NEW ONTARIO GOVERNMENT HAS
SHUT DOWN THE SOCIAL IMPACT
BONDS OF THE PREVIOUS LIBERAL
GOVERNMENT WAS DEVELOPING.
YOU AGREE WITH THAT DECISION, I
BET, DON'T YOU?

Ricardo says I AGREE WITH THE DECISION OF
INVESTING IN SOCIAL SERVICES IN
A WAY THAT MAKES MORE FINANCIAL
SENSE.
SO IF THEY WERE TO SHUT DOWN THE
PROGRAM AND FUND THE PROGRAMS
THROUGH THE PUBLIC SECTOR IN A
DIFFERENT WAY, USING EITHER NEW
REVENUES OR, IF NEED BE,
BORROWED MONEY AT A LOWER COST,
THEN MAYBE IT COULD BE A GOOD
IDEA.
UNFORTUNATELY I DON'T THINK
THAT'S WHAT'S GOING TO HAPPEN.

Steve says IN YOUR VIEW, BRIAN,
IS THE VERDICT IN ON THESE THINGS YET?

Brian says NO, I DON'T THINK IT IS.
I THINK WE'RE GOING TO SEE A LOT
MORE OF THESE BONDS AND WE NEED
TO SEE HOW THEY PLAY OUT OVER
TIME.
AS WE MENTIONED, SOME OF THESE
ARE 10, 18, 20-YEAR PROJECTS.
AND WE NEED TO SEE WHETHER IT
MAKES A DIFFERENCE IN ATTITUDES
OF GOVERNMENTS.
IF GOVERNMENT LOOKS AT A
SUCCESSFUL PROGRAM AND SAYS WE
SHOULD TRY THIS ELSEWHERE, THEN
THAT CAN BE SUCCESSFUL, BUT IF
THEY JUST SAY, OH, THAT'S MY
SOCIAL COMMITMENT AND MY TERM OF
OFFICE, I DON'T HAVE TO WORRY
ABOUT IT ANYMORE, THEN IT IS A
PROBLEM.

Steve says ANDREA, DO YOU THINK
THE VERDICT IS IN YET?

Andrea says I DON'T THINK IT IS IN YET.
I THINK WE SHOULD TAKE A
DIVERSIFIED APPROACH TO BOTH
FINANCIAL INSTRUMENTS AND TO HOW
WE SOLVE OUR SOCIAL PROGRAMS,
AND THIS IS ONE EXAMPLE.
I AGREE WITH YOU.
IT PROBABLY DOESN'T HELP THE
MOST MARGINALIZED.
GOVERNMENT IS BETTER AT THAT.
BUT I THINK IT'S EVOLVING.
I MEAN, HOW MANY YEARS, HOW MANY
THOUSANDS... OR SEVERAL THOUSAND
YEARS OR THOUSAND YEARS HAVE WE
HAD BONDS, OR SOME EQUIVALENT OF
BONDS?
THIS IS A NEW INSTRUMENT, AND
IT'S BEING REFINED, AND I DON'T
THINK THE VERDICT'S IN YET.

The caption changes to "Producer: Meredith Martin, @MeredithMartin."

Steve says OKAY.
SHALL WE GO... THAT'S WHAT I WAS
LOOKING FOR, A NICE WIDE SHOT SO
I CAN THANK EVERYBODY FOR COMING
ON THE PROGRAM TONIGHT.
AND JUST BEFORE WE GO, WE WANT
TO REMIND EVERYBODY WHAT YOU
WANT US ALL TO KNOW, RIGHT?
YEAH, A REMINDER.
RIGHT AFTER THIS PROGRAM YOU CAN
CATCH THE WORLD BROADCAST
PREMIERE OF NADINE'S
DOCUMENTARY, "THE INVISIBLE
HEART..."
YOU CAN ALSO WATCH IT AT YOUR
LEISURE ON OUR WEBSITE AT
TVO.ORG. AND, YOU CAN HEAR AN
INTERVIEW WITH NADINE ON TVO'S
ONDOCS PODCAST ALL ABOUT
DOCUMENTARIES, AND YOU CAN FIND
THAT AT TVO.ORG/ONDOCS.

A slate shows a screencap from the documentary, next to the captions "Next on TVO, world broadcast premiere, The invisible heart. And then streaming at tvo.org/documentaries."

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