Since Andrew Carnegie penned his famous Gospel of Wealth in 1889, corporate philanthropists have championed considerable public good around the world, investing in a wide range of social programs addressing a diversity of public issues, from poverty to healthcare to criminal justice. Nevertheless, the problem of “the Rich and the Poor,” as termed by Andrew Carnegie in his famous essay, remains unsolved. Socially conscious investors have recently called for America to reimagine a new “gospel of wealth”, one that not only grapples with the what of social injustice, but also explores the how and the why of systemic social and economic inequality. An emerging social finance tool, the social impact bond (“SIB”), has been praised as a promising platform that can help solve many of our social challenges by targeting impact investments toward traditionally underfunded social welfare programs.
This Article sets forth a critical examination of the new SIB model, highlighting some of the opportunities for the social finance tool to promote social impact, while also revealing several of its challenges that may hinder its broader adoption in communities across America. In the process, this Article exposes key flaws inherent in the design of the SIB model, including its neoliberal emphasis on market-based economic development strategies and its disregard for the primary role of government in the protection and advancement of the public good. It concludes by calling for a more progressive economic development framework to guide the implementation of the SIB model, one that can help development practitioners, philanthropists, and impact investors wrestle with the deficiencies of our global capitalist economic system and overcome the entrenched systemic barriers to economic justice in America.
Etienne C. Toussaint, The New Gospel of Wealth: On Social Impact Bonds and the Privatization of Public Good, 56 Hous. L. REV. 153 (2018).