Challenges to implementing social finance policy in Canada

Aggressive spending-reduction policies at the federal level beg for new types of financing such as social finance and social impact bonds to fund socially beneficial projects. But the implementation of social finance tools, in particular social impact bonds, could significantly change or even increase accountability requirements by, for example, bringing third-party private sector investors into the traditional government/nonprofit relationship, or demanding stricter accountability and reporting in order to determine whether a payout is warranted at the end of the project. Social finance tools could also run afoul of the Income Tax Act or create inter-governmental tensions. Without a larger federal policy framework that considers and resolves these challenges, the expansion of social finance in Canada may be slow-moving or languish