What Happened?
The Harvard Kennedy School’s Social Impact Bond Technical Assistance Lab (SIB Lab) selected five state and local governments to receive aid in developing pay for success projects that align payment for community-based solutions with verified social outcomes.
The Competition
The Harvard Kennedy School, the Corporation for National and Community Service Social Innovation Fund and the Pritzker Children’s Initiative selected state and local governments that proposed new approaches to funding social services that address immediate problems within their communities through the use of social impact bonds. The winners are:
- Arkansas
- DC Water
- Nevada
- Pennsylvania
- San Francisco
The five winning governments will receive technical assistance from the sponsoring organizations, and successful projects will be used to create a pay for success model that can be replicated in other communities. Technical assistance will help the winning governments design, implement and evaluate policy initiatives targeting a wide range of social issues such as:
- Childhood education
- Prison recidivism
- Economic self-sufficiency
- Green infrastructure
In addition, the winning governments will have a full-time Government Innovation Fellow at their disposal to spearhead the initiative, as well as pro bono expert advising and access to flexible funding to ensure the projects are successfully launched.
Pay for Success
The pay for success model calls for public-private partnerships between government agencies and investors who provide funding for social services. Investors will be paid by the government if the services delivered are successful. The model is designed to help governments make better use of taxpayer dollars while increasing funding for programs focused on addressing social problems.
Social Impact Bonds
Richmond
Richmond, California, proposed a strategy to sell social impact bonds to raise money for the city’s community foundation in an effort to combat blight. As the city saw more abandoned homes become dilapidated, officials acknowledged the need to buy up properties and revitalize struggling neighborhoods. The social impact bonds would be used to help the foundation buy and rehabilitate homes before being sold to people through a first-time home buyer program, The New York Times reported.
Under the proposed strategy, $3 million in social impact bonds would be sold to help fund the rehabilitation of 20 properties over the next five years. A typical investor would want a 30 to 40 percent return on a real estate investment. A social impact bond, however, attracts a different type of investor interested in the success of the social service as well as the return on investment. The social impact bond would guarantee a 2 percent return on investor money as well as up to half of their original investment if the program proves successful, The New York Times reported.
Albermarle County
In Albermarle County, Virginia, is considering the sale of social impact bonds to support its pre-k program for at-risk youth. Currently, the county has a waiting list of families looking to gain access to early childhood development programs, and the list is expected to keep growing, Charlottesville Tomorrow reported.
The school districts and local governments in the county do not have enough funds to support expanding the pre-k services to accommodate the estimated 230 at-risk 4-year-olds in the community. Because a lack of early childhood education has been correlated to lower academic achievement later in life, the county wants to ensure families have access to services, as well as develop programs for students speaking a second language, Charlottesville Tomorrow reported.
Related Stories
Launch of Pay-For-Success Municipality Funding Program
Nonprofits Maintain Community Projects Amid Funding Struggles