Public value and social impact bonds: controversies and insights from an Italian social innovation programme

This article offers valuable insights for policy-makers, public administrators, social innovators, and scholars engaged in the global discourse on welfare state innovation. It examines the complexities of integrating social impact bonds (SIBs) into welfare systems, highlighting the challenges and opportunities that stem from balancing central and local interests in public value creation. The article emphasizes the importance of incorporating contextual flexibility and adopting adaptable metrics to measure social impact, particularly within diverse governance structures. The findings suggest that SIBs can serve as powerful tools for public value generation if they are designed to accommodate the unique needs of local ecosystems. This study's findings are particularly relevant for practitioners and scholars at the intersection of public policy, social finance, and governance reform, as they offer lessons that can be applied across cultural and institutional contexts to enhance the effectiveness and sustainability of social investment initiatives.This article investigates the potential role of social impact investment schemes, particularly social impact bonds (SIBs), in creating or destroying public value. The authors present their qualitative ethnographic investigation which employed multiple data sources to identify the public value concept within SIB schemes and its role in redesigning the welfare state from a multi-level governance perspective. They analyse the functioning of an SIB-enabling programme in Italy, Fondo Innovazione Sociale, which aims to develop the capacity of public administrations to build publicly-led impact finance models through outcome-based projects. The programme has created 21 local Italian ecosystems that include various actors. Each local ecosystem has published a feasibility report on the potential advantages and drawbacks of using SIBs to tackle social problems. Based on the findings, the authors discuss the use of social impact as a signal of public value and its future policy implications.