Employment and Social Development Canada has aptly summarized the complex topic of social finance as “an approach to managing money that delivers both a social benefit and an economic return for investors”. In recent years, significant attention has been paid by governments, organizations and citizens to the ways in which social finance may be used to address social development issues in Canada. As we have previously reported, Canada’s National Advisory Board released a report in Fall 2014 in which it made several recommendations as to how the Canadian regulatory environment could be reformed to facilitate the success of social finance initiatives. Now less than one year later, Canada’s Standing Committee on Public Safety and National Security (the “Committee”) has published its report entitled Social Finance As It Relates To Crime Prevention In Canada (the “Report”). The Report discusses how social finance initiatives might be implemented as a supplement to existing crime prevention programs in Canada. The result of a study commenced on April 29, 2014, the Report summarizes the positions of various witnesses who appeared before the Committee to provide evidence in relation to diverse aspects of the topic. Below is a summary of the Report.

The Costs of Crime and Criminal Justice Issues

It was presented to the Committee that programs that seek to intervene to prevent crime (rather than react to it) are particularly successful in containing the costs of the criminal justice system and reducing the pressure on other sectors, such as social services. Implementation of these programs, however, requires a significant level of financial resources and, as noted in the Report, governments have demonstrated they do not currently have the resources to fund many of these programs in the long term and in a sustainable way.

Considering the reality that government funding for crime prevention programs is often time-limited, social finance mechanisms were cited as feasible alternative sources of funding. Some witnesses, however, were not convinced. Citing the high upfront implementation costs as well as the costs associated with the evaluation of outcomes and providing a return to investors, some witnesses stated that any government costs to be saved through social finance mechanisms would not be immediate and would not be certain.

By contrast, others submitted the criminal justice system is one of the areas where preventative services could actually save the government money in the short term. A reduction in the amount of people in jail, for instance, was cited as a potential outcome of social finance initiatives that could actually save government dollars.

Role of the Government in Social Finance

One particular point on which many (if not all) witnesses appeared to agree was that in no way should social finance be viewed as a tool to replace government funding and intervention in crime prevention. In addition to the obvious contribution the government would need to make in the implementation of a policy framework within which social finance could flourish, witnesses stated that government oversight would still be required to “ensure that the entire social safety net is still adequately supported”. Additionally, criminal justice issues such as high-risk offenders and offender mental health were cited as areas where the government should remain involved.

The Application of Social Finance in Preventing Crime

The difficulty in demonstrating measurable results is often cited as the Achilles heel of various social finance models. The Report highlights, however, some examples where social finance mechanisms could successfully be utilized and where the results yielded could be easily measured. Lowering recidivism rates, rehabilitation and reducing incarceration were all noted as feasible objectives for which social finance mechanisms could serve as a tool to achieving success.

Interestingly, a variety of indirect social initiatives were also cited as areas where social finance models could be applied, leading to a subtle impact on crime prevention. Suggested initiatives included the integration of immigrant youth into the community, job-training that helps integrate ex-offenders into the labour force and the establishment of mental health facilities.

The Report notes the exact type of social finance mechanism used to achieve measurable crime prevention needs to be considered on a case by case basis. One witness in particular dispelled the notion that Canada could implement a social finance bond (“SIB”) to successfully reduce recidivism in the same way as the U.K. Specifically, the witness, who was noted as having spent two years analyzing SIBs in the context of public safety, cited the fact that compared to other jurisdictions (such as the U.K.), Canada has been relatively successful in reducing recidivism rates utilizing its current methods. The Report notes throughout that the results of social finance initiatives are more measurable when the room for success is high.

Recommendations

The Committee concluded the Report with a list of ten recommendations, most of which were addressed to the Department of Pubic Safety and Emergency Preparedness (“DPSEP”) – the governmental body responsible for public safety in Canada. Overall, its recommendations indicated the Committee’s acknowledgment of the applicability of social finance mechanisms to crime prevention in Canada and urged DPSEP to take a variety of steps to integrate models of social finance into its crime prevention programming.

It will be interesting to see how many of the Committee’s recommendations are implemented in the future. We will continue to keep our readers apprised of developments in the area of social finance generally and as applicable to crime prevention in Canada.