Social Impact Investing

SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE
5.2.2.3 Limitations of the data and appropriate interpretation of the data by sector
5.42 Social expenditure figures are taken from the OECD Social Expenditure Database (SOCX),
education spending figures are taken from OECD Education Database. In theory all government
expenditure should be in the Social Expenditure Database; however it is easier to collect federal spending
than regional or local spending because state governments or devolved authorities do not always report to
national governments how the money they managed is being spent (that which is raised, or devolved
through block grants or other mechanisms). In practise this may mean social expenditure data may not
fully represent all spending in countries where money is managed independently at local or regional levels.
5.43 Correct interpretation of the spending figures is important for accurate estimation of the need,
and the potential boundaries, for SII – and so some caution is required. In some cases, missing spending is
more likely to be found in some benefit types and sectors rather than others. For instance the Swiss and
U.S federal systems allow for parental and maternity leave benefits to be provided by cantons or states, and
as such are examples of where family spending can be missed, and cash-based interventions under stated.
Yet, issues to do with missing expenditure are not restricted to federal countries or cash benefits. In the
Netherlands for example, block grant expenditure from central to local government can hide additional
spending on children as municipalities provide the childcare support, and they may finance this service out
of the general block-grant made to municipalities.
5.44 Finally, social expenditure figures do not cover administrative costs (particularly in cash) or
spread the value of large one-off costs (buildings for instance), which in both cases mean that annual
estimates represent an underestimation of the total public cash or service intervention.
5.3 Models of Social Service Provision: Who does what and how?
5.45 Having looked at the broadly at the potential market space for SII, this section looks in more
detail at how governments are presently meeting the demand for social services.
5.3.1 Practices in public social service delivery
5.46 In practice, the process of public social service delivery is not too different from providing
services in the private sector. Simply put, the delivery cycle of a social service includes a planning stage,
delivery process and review. In more detail: planning covers when service decisions are made (the ‘gap in
the market’ or ‘social need’ is indicated), and the services are planned and designed; the delivery process
involves commissioning services or service delivery by public employees; and, the review process involves
service evaluation and service re-design (OECD, 2011b).
5.47 In the majority of cases the process of delivery is a cycle; unless a new need is identified or
system innovation is undertaken (this can be driven by effectiveness or efficiency reasons). Recently, two
factors have driven the need for innovation in social services delivery, the first being increased demand for
multiple services in the most vulnerable populations, and the second being reductions in available
resources driven following the onset of the financial crisis and global recession (OECD, 2014f).
5.48 Innovation in social services, increases in demand, and pressures to lower public budgets all point
towards a potential role for new models in delivering social services, including a potential role for social
enterprises. However, the nature of public service delivery can create specific challenges to social
enterprise involvement, and so are salient to the SII discussion, such as:
72 © OECD 2015