New techniques for funding public-sector programs pose policy questions

In the context of ongoing austerity, Canadian municipal, provincial and federal governments are looking for new approaches for funding high social-impact projects.

Governments looking for alternative sources of funds are beginning to compete with charities for private-sector donations using crowd-funding and other individually targeted donation techniques and campaigns.

Increased government engagement with private-sector philanthropy is a problem for non-profit organizations and other agencies dependent on funding from cause-specific donors and the government. Given this “substitution” effect, is it possible to identify under which circumstances there are likely to be net social benefits to funding public projects using private sector philanthropy.

The Masters Certificate in Public Sector Leaderships program looks at this issue in Module 2, “Results Leadership”. Participants explore this trend and consider if it is most socially beneficial for governments to engage in private philanthropic funding or to rely on the collective public resources to finance needed projects and programs? The discussion also looks at which are the more effective techniques for engaging and mobilizing altruistic private support for public goods projects, and what can the government do to encourage corporate donations and private equity participation?

For large-scaled projects involving high public and social elements that can be funded by the government and private sector jointly, various public-private participation and project financing techniques have proven effective. For smaller-scaled high social-impact projects with more intangible outcomes, conventional or structured finance may not be appropriate funding models. Philanthropic funding and crowd funding of public sector initiatives may therefore offer viable alternatives. Governments may well look for such alternatives in the future to promote projects and programs which otherwise would have been postponed or eliminated; and if not directly funding such initiatives, the government may create an environment conducive for greater discretionary giving from corporations and foundations.

This session of the module covers the following topics critical to our understanding of the various ways in which government could tap and utilize non-traditional funding alternatives.

• What is impact investing and how can “impact” be defined and measured correctly
• Social financing instruments (e.g. Social Impact Bonds and Pay-for-Performance contracts) and how they work
• Social financial structures from various perspectives – government, social sector, non-profit, foundations, and private capital
• How government can work with charitable institutions, companies’ CSR functions, and new sources of financing to address social problems

For more information on the Masters Certificate in Public Sector Leadership, visit the program webpage. The next session for this 15-day program starts Feb. 3, 2020.