At Living Cities, Pay for Success (PFS) is a key part of our approach to blend public, private and philanthropic capital in new ways to better meet the needs of low-income people. It is one of the areas that we are excited about exploring through our impact investing vehicle, the Living Cities Blended Catalyst Fund. We believe that PFS (also called Social Impact Bonds) can help cities better address pervasive social challenges like chronic homelessness, juvenile recidivism and unemployment, among others.
Social Impact Bonds are a unique type of performance-based contract where private and/or philanthropic lenders loan funds to service providers to achieve measurably better social outcomes and are repaid based on whether the program accomplishes its goals.
That’s why we’re excited about the launch of Denver’s new Social Impact Bond initiative to provide supportive housing for chronically homeless individuals. With investments from Living Cities Blended Catalyst Fund and other local and national partner organizations, Denver aims to provide wraparound services to 250 chronically homeless individuals over the next five years.
According to the Denver Crime Control and Prevention Commission (DCCPC), Denver’s chronically homeless population costs the city upwards of $7.3 million each year, putting a financial burden on taxpayers, while failing to break the cycle of jail, detox, and homelessness for vulnerable individuals. Denver’s initiative will ensure that the City is paying for services that are effective and shifting its spending from short-term Band-Aids to long-term, sustainable solutions. To learn more about Denver’s Social Impact Bond, check out the press release.
Living Cities’ new Blended Catalyst Fund is a $29 million pool of philanthropic and commercial debt. Through our other impact investing vehicle, the Catalyst Fund, we are proud to have invested in some of the nation’s first PFS deals and continue to support PFS as a viable model for social impact. Our Blended Catalyst Fund will help scale PFS to more cities and achieve better outcomes for low-income people.
PFS represents an opportunity to drive more private capital to preventative social programs. By investing in Denver’s Social Impact Bond, we ultimately hope to expand the impact investing field and show that PFS and other innovative financing structures can measurably improve the lives of low-income people.
Photo: Denver’s Union Station via Wikimedia Commons.