The Rockefeller Foundation Grants Social Finance, Inc. $500,000 to Develop Social Impact Bond Market in the United States
Innovative Instrument Aims to Provide Critical Financing Solution to Some of the Most Persistent Social Problems in the U.S.
NEW YORK and BOSTON, MA—The Rockefeller Foundation announced today a $500,000, two-year grant to support Social Finance Inc.’s innovative work in developing the Social Impact Bond (SIB) market in the United States.
“In this economy, as most major American cities and states are facing staggering budget deficits, the Social Impact Bond represents an innovative financing structure that could revolutionize the manner in which persistent social problems are funded and addressed - while linking the government and the private sector in a partnership to save taxpayer dollars,” said Dr. Judith Rodin, President of the Rockefeller Foundation. “As such, we are excited to support Social Finance in testing and developing the Social Impact Bond model here in the United States.”
Social Finance is a Boston-based nonprofit founded in January 2011 to develop, finance, launch, and manage high-quality SIBs throughout the United States. “We are excited to work with the Rockefeller Foundation, who is a leader in both nurturing innovation and advancing the field of impact investing,” said Tracy Palandjian, CEO of Social Finance. “We are looking forward to adding social impact bonds to Rockefeller’s long legacy of pioneering new fields and leveraging investment capital to improve the lives of the poor and vulnerable and drive social change.”
The Social Impact Bond is a financial instrument that aims to align the interests of private investors, entrepreneurial nonprofit service organizations, and governments in an effort to impact poor and vulnerable communities. Investors provide capital to nonprofit organizations to complement existing tools and implement preventive programs aimed at achieving improved social outcomes and reducing governmental expenditure. If an independent evaluator determines that the improved outcomes have been achieved, the government repays investors their principal and a rate of return; otherwise, investors lose their capital.
Social Finance is currently working with policy makers in a number of states who are considering launching Social Impact Bonds. In May, Massachusetts became the first state in the nation to formally explore implementing this new financing tool for effective nonprofit organizations. In its work in Massachusetts, Social Finance has highlighted a number of proven nonprofit preventive programs that could be considered for a SIB, including permanent supportive housing for chronically homeless individuals; housing-based support for homeless families; home- and community-based aging-in-place programs for elders; community-based alternatives to juvenile detention; and alternative community corrections for adult offenders.
With their generous grant, the Rockefeller Foundation joins The Pershing Square Foundation and the Boston Foundation in supporting the work of Social Finance.
Social Finance is a Boston-based non-profit organization working to connect the social sector with the capital markets and finance effective nonprofit organizations driving social change. Social Finance is independently funded and managed, and leverages the innovative work of its UK-based sister firm, Social Finance, Ltd., which, along with others, pioneered the concept of the social impact bond and offered the first SIB in September of 2010 with the goal of reducing prison recidivism. By structuring and managing innovative investment instruments that align the interest of private investors, entrepreneurial nonprofit service organizations, and governments, Social Finance works to improve the lives of individuals, families and communities in need. For more information about Social Finance, visit www.socialfinanceus.org.
The Rockefeller Foundation mission to promote the well-being of people throughout the world has remained unchanged since its founding in 1913. Today, that mission is applied to an era of rapid globalization. Our vision is that this century will be one in which globalization’s benefits are more widely shared and its challenges are more easily weathered. To realize this vision, the Foundation seeks to achieve two fundamental goals in our work. First, we seek to build resilience that enhances individual, community and institutional capacity to survive, adapt, and grow in the face of acute crises and chronic stresses. Second, we seek to promote growth with equity in which the poor and vulnerable have more access to opportunities that improve their lives. In order to achieve these goals, the Foundation constructs its work into time-bound initiatives that have defined objectives and strategies for impact. These initiatives address challenges that lie either within or at the intersections of five issue areas: basic survival safeguards, global health, environment and climate change, urbanization, and social and economic security. For more information, please visit www.rockefellerfoundation.org.
Laura Gordon, The Rockefeller Foundation, 212-852-8216
Lara Cote, Social Finance, 617-791-4829