Today marks an exciting day for the Rockefeller Foundation and the Social Impact Bond Technical Assistance Lab (SIB Lab) at the Harvard Kennedy School (HKS), as they have announced the six winners of a national competition to provide state and local governments with technical assistance to develop pay-for-success contracts using social impact bonds (SIBs).
The SIB Lab Competition, run with support from The Rockefeller Foundation, received 28 state and local government applications, demonstrating the growing demand for new ways to fund and scale effective social services in a time of economic constraint. This high demand is particularly refreshing as it came from a range of states and localities representing a broad political and geographic spread across the United States. The competition is an important leap forward for SIBs in the U.S. because it not only tests an exciting new form of innovative finance, but also exemplifies the power of public-private partnerships to shift funding to crucial preventative social services across a wide spectrum of issues, from homelessness to prisoner recidivism to early childhood education to employment and work force development programs.
In the SIB model, investors, rather than taxpayers, back critical social programs that have a proven record of success. Non-profits then deliver measurable social benefits, governments pay for results that work and investors are repaid with interest if the programs are successful based upon previously agreed metrics. If the programs are not successful, however, investors are not repaid and taxpayers don’t pay for those failed programs. SIBs can fund a range of social services, where outcomes are measurable and quantifiable, and can be rigorously evaluated over a relatively short time frame – say 4-8 years.
The SIB Lab, which was established with support from The Rockefeller Foundation, has helped Massachusetts and New York become the first states to develop pay-for-success projects over the past year. The six winning state and local governments of the SIB Lab Competition are Colorado/Denver, Connecticut, Illinois, New York, Ohio, and South Carolina. The SIB Lab will supply them with pro bono technical assistance to help design, procure, and implement these policy initiatives as well as a full-time Government Innovation Fellow to be based for one year in each receiving government agency.
The Washington Post today published an article that looks at the competition announcement and winners in more detail, and what this could mean for the way state and local governments deliver and pay for social services going forward.
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