The Rockefeller Foundation and the Harvard Kennedy School of Government recently announced six winners of a national competition to help state and local governments develop pay-for-success contracts using social impact bonds (SIBs). Social Impact Bonds, also known as “pay for success” bonds, provide a means to fund and expand effective social services during economic challenges. The Rockefeller Foundation supports SIBs to “substantially transform the social sector, support poor and vulnerable communities, and create new financial flows for human service delivery by offering an innovative way to scale what works and break the cyclical need for crisis-driven services.”
This model establishes a public-private partnership. Private capital raised through SIBs funds prevention and early intervention programs, reducing reliance on costly crisis responses and safety-net services. SIBs can lower taxpayer expenses by addressing issues such as homelessness and recidivism. Investors are repaid only if improved social outcomes are achieved, transferring the financial risk to the private sector and ensuring accountability for public funds.
The Social Impact Bond Technical Assistance Lab (SIB Lab) at Harvard studies how governments can promote social innovation and improve the effectiveness of social spending. Over the past year, the SIB Lab supported Massachusetts and New York in launching pay-for-success projects. The competition winners—Colorado/Denver, Connecticut, Illinois, and New York—will receive pro bono technical assistance to design, procure, and implement these initiatives, addressing issues from early childhood education to helping seniors remain in their homes.
A selection committee, including former Indianapolis Mayor Stephen Goldsmith, former Massachusetts Secretary of Administration and Finance Jay Gonzalez, and Harvard Kennedy School Professor Jeffrey Liebman, chose the projects. Proposals were evaluated on government commitment, project feasibility, and interest in applying the SIB model to new policy areas. Each winning government will receive a full-time fellow, pro bono advising from Harvard and other experts, programming and data support, and flexible funding.
“We’re constantly looking for new ways to innovate to provide better value for taxpayers, and the social impact bond model can help us do that. Not only does this approach help pursue solutions to tough problems, but it does so in an accountable, results-oriented way.” – Governor John Kasich of Ohio.
Transform Consulting Group assists organizations in aligning their services with proven strategies to achieve measurable outcomes. To learn more about innovative funding opportunities or developing program outcomes, contact Transform Consulting Group for a complimentary consultation.
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