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The Financialization of Welfare

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In this chapter, Golka provides a much-needed analysis of how social impact investing in the UK can be seen as a case of financialization. To that end, Golka shows how those interventions that proponents deem as creating “social impact” entail severe constraints to nonfinancial actors’ possibilities to act. Investors, on the other hand, gain an increasingly central governance position as they are ascribed the authority to define what counts and does not count as social impact, while they are enabled to redefine profit-maximizing activity as impactful through new labels such as “finance-first impact investor.” Analyzing financial data, Golka shows how this social impact economy allows investors to extract revenues from public and charitable organizations, and redistribute resources from labor to capital.

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  1. 1.

    From a critical perspective, one might add that the process described here follows a pattern of gentrification, in which low asset prices in some geographic areas are used as an opportunity for real estate speculation resulting in a highly unequal distribution of the accrued profits. Inequality can also be observed in pay, where the salary for those living in poor neighborhoods was 92% of the company’s average salary, while those living outside of poor areas were receiving 125%. Thus, whether this type of impact investment may result in a reduction of poverty may be questioned.

  2. 2.

    Source: Cabinet Office SIB Knowledge Box:,last updated September 26th 2017, accessed January 18th 2017.

  3. 3.

    What these outcomes are is dependent upon the specific contract. In most cases, outcomes are some form of disciplinary intervention for groups of individuals who require expensive public services. This is because the main legitimation for SIBs is the hope for future public budget reductions that gained resonance in policy with the increasing dominance of the “Treasury view” (see Chaps. 6 and 7).

  4. 4.

    Source: Cabinet Office SIB Knowledge Box:, last updated September 26th 2017, accessed September 12th 2017.

  5. 5.

    Source: Bridges Ventures press release, 2015:, November 9th 2015, accessed February 7th 2017.

  6. 6.


  7. 7.

    Source: Bridges Ventures website:, accessed February 7th 2017.

  8. 8.


  9. 9.

    Source: Bridges Ventures website:, accessed February 7th 2017.

  10. 10.

    Exact figures of the Bridges Ventures equity investment are not available. However, as the company has, as cited above, indicated that the £250 million stock market valuation represents six times the cumulative investment, it seems reasonable to assume £42 million as an upper limit of the equity investment. It seems equally reasonable to assume that The Gym has repaid parts of its debt prior to 2014, which is why £70 million are a lower limit of the firm’s indebtedness.

  11. 11.

    Note that in the case of investments into the French “social and solidarity economy”, investment returns are legally capped at 2% p.a. (Chiapello and Godefroy 2017), but this is not the case in the UK.

  12. 12.

    Source: Cabinet Office, SIFI Report, July 2016, p. 11:, accessed February 8th 2017.

  13. 13.

    Not adjusted for inflation.

  14. 14.

    As of December 31st 2015, £357 million of the pledged £400 million had been transferred to BSC as share capital (15_BSC_Financial, p. 14).

  15. 15.

    Source: Cabinet Office, Guidance: Community Investment Tax Relief (CITR), 2014:, last updated April 16th 2018, accessed February 10th 2017.

  16. 16.

    Source: Cabinet Office, Guidance: Social investment tax relief, 2014:, last updated November 23rd 2016, accessed February 10th 2017.

  17. 17.

    Source: Cabinet Office, Guidance: Social Impact Bonds, 2016:, last updated September 26th 2017, accessed February 10th 2017.

  18. 18.

    Source: Department of Business, Innovation, and Skills, Consultation outcome: Consultation on the dividend and interest caps, 2013:, last updated December 10th 2013, accessed February 10th 2017.

  19. 19.

    This is not unknown to actors in the field. A former civil servant noted: “What is that SOCIAL investment, if it’s dominated by the hand of government? […] [P]ouring hundreds of millions of pounds into this market, that’s government-backed money, but then giving it a label of Social Investment, […] that’s kind of lying really, that’s not really social investment, that’s public investment“(E: 39:46).

  20. 20.

    I do not make any claims regarding SII proponents’ motivation: the argument is solely that non-repayable grants pose a threat to impact investors’ organizational survival. Inasmuch this direct competition between grants and investment is mitigated, this threat is reduced.

  21. 21.

    For example, the Greater London Authority SIB aimed at reducing numbers of homelessness. Here, outcome payments to investors are made if, among other criteria, a homeless person participating in the SIB program has sustained a “volunteering” position. The other criteria include, for example, the homeless person leaving the UK, in case of alien citizenship. Source: Cabinet Office, Guidance: Social Impact Bonds, 2012:, last updated: September 26th 2017, accessed February 16th 2017.

  22. 22.

    Source: Impact Ventures UK,, accessed February 17th 2017.

  23. 23.


  24. 24.

    Source: K 10,, accessed June 1st 2016.

  25. 25.

    Source: Living Wage Foundation,, accessed June 1st 2016.

  26. 26.

    Source: Cabinet Office, Guidance: Social Impact Bounds,, last updated September 26th 2017, accessed February 17th 2017.

  27. 27.

    Indeed, SIB providers such as Social Finance have developed tool-kits to ensure the actual “cashability” of the SIB’s hypothetical savings (14_SF_Prevention).


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Golka, P. (2019). The Financialization of Welfare. In: Financialization as Welfare. Springer, Cham.

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