Webseries Finance for Good | Social Impact Contract

The sixth episode of the #FinançasdoBem web series is on air: “Social Impact Contracts”!

“The public sector typically hires in a very prescriptive and activity-focused way. Do they tell you exactly what you should do and what they will pay you for? the impact is a mere consequence. This generates some problems: first, the focus becomes on the process, not on the result; second, you stifle this process, there is not much room for innovation, or even for efficiency”, explains Leonardo Letelier, CEO of Sitawi.

Social Impact Contracts are tools that subvert this logic, allowing the payment for social results, through public contracting of private investments for the execution of social services. An innovative tool, the CIS links financial return to the achievement of positive social results: the government undertakes to pay investors only if the targets set for a defined population are met. Thus, the financial risk is assumed by the investor, removing the burden of ineffective solutions from the public sector. 

“The Social Impact Contract is a very peculiar tool that has two particular characteristics: they are purely focused on results. In this point of view, they differ from the contracts that a government usually signs, since the focus is on the beneficiary. This allows for a much more flexible approach, tailored to the needs of that individual or group of individuals,” says Marta Garcia of Social Finance UK.

In addition to Letelier and Garcia, the episode features Rafael Ribeiro, from Sitawi, and Marcos Vinícius de Souza, from Ministry of Industry, Foreign Trade and Services.

To assist subnational governments in the structuring of a Social Impact Contract, Sitawi is accepting applications for the 1st Sitawi Call for Social Impact Contracts. The initiative has two categories, one nationwide and the other focused on the state of Rio de Janeiro. For more information, access the call website.

The first five chapters of the series can be watched here. Subscribe to our channel to receive notification and watch first hand. If you want to comment on this content, share suggestions and questions, feel free to write to comunicacao@sitawi.net

About the webseries

With the aim of disseminating knowledge about Finance for Good, Sitawi launches a webseries with testimonials from 22 specialists in the fields of Social and Sustainable Finance. The eight chapters of the online series will be released periodically and present the themes of: Green Bonds, Impact Investing, Socio-environmental Risk, Social Impact Contracts, ESG Integration, Impact Measurement and Innovative Financial Mechanisms. Subscribe to our channel.

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