2Center for American Progress | Defining Terms in a Social Impact Bond Agreement
Setting the outcome, payment, and assessment method
Te conrac should clearly esablish he oucome he governmen agency wans achieved.One o he mos challenging aspecs o a Social Impac Bond is seting an oucome ha will no occur absen he exernal organizaion’s inervenion. Bu he oucome should no be so difcul o achieve ha he exernal organizaion has litle hope o success. Te con-rac should sae wha he oucome is, how i will be measured, and he paymen scheduleor successul oucomes. In some cases he governmen agency and he exernal organi-zaion may wan o appoin an independen assessor o deermine wheher he exernalorganizaion has achieved he oucome and received he level o paymen due.
I governmen ruly wans he designaed oucome achieved, i mus ully cooperae andcollaborae wih he exernal organizaion. And he erms and condiions o wha “coop-eraion” enails should be se ou in he Social Impac Bond agreemen. A he mos basic level, his means he conrac should require governmen o providehe exernal organizaion access o he beneciary populaion and any inormaion ordaa abou he populaion ha can help he exernal organizaion wih is work (provid-ing i can be legally shared).Governmen should also be open o making changes o is policy or pracices o help heexernal organizaion succeed. For insance, in a Social Impac Bond agreemen aimeda nding jobs or he long-erm unemployed, he exernal organizaion may ask hegovernmen or assisance in geting sae IDs issued o program paricipans o beterenable hem o apply or employmen.Te conrac should also place some resricions on he governmen. In mos SIB agree-mens his will include clauses prohibiing he governmen rom exering conrol overhe exernal organizaion’s sraegy or day-o-day operaions. Te conrac should alsopreven he governmen rom inervening in he exernal organizaion’s selecion o subconracors and invesors, hough subconracors will be held o he same sandardsas he exernal organizaion isel.
The external organization’s responsibilities
Te exernal organizaion shoulders one overriding responsibiliy: doing everyhingreasonable o achieve he oucome.