The missing link? Finance, public services, and co-production: the case of social impact bonds (SIBs)

The authors explain why social impact bonds (SIBs) are an excellent—and probably the only—example of the finance–social services–co-production link. They show how SIBs can provide a functional linking mechanism in social service systems. Furthermore, they can help boost the innovation and sustainability of this system. The co-production concept is related to practice by studying two prison SIBs (HMP Peterborough in the UK and Rikers Island in the USA). They explain why co-production is relevant and how it works in SIBs. In the ongoing debate regarding how to design sustainable public services, finance seems primarily considered as a mere instrument to be used to achieve the desired goals. This paper shows how social impact bonds can facilitate the creation of sustainable public service systems by increasing innovation and co-production. To investigate how the link between SIBs and co-production works in practice, the authors investigate two cases involving prisons (Peterborough and Rikers Island). They demonstrate why co-production is relevant and how it works in SIBs. The findings reported here have implications for the future of SIBs design and of ‘non-conventional’ social service delivery systems.