We need to move away from paying for outputs, such as number of students enrolled in college, to paying for outcomes, such as number of people employed and graduating from college. Social Impact Bonds work by bringing together government agencies, social service providers, and socially minded financiers to achieve better results for people receiving preventative social services and for the taxpayers funding those services. Living Cities is participating as a funder in initiatives towards development of a commercially viable market for SIBs, also known as Pay for Success.
Recently our CEO, Ben Hecht, wrote a blog for the Huffington Post about our vision for SIBs through the lens of our participation as a funder in a seven-year, $27 million initiative with the Commonwealth of Massachusetts, focused on reducing recidivism and improving employment outcomes for at-risk youth in the Boston, Chelsea and Springfield, Massachusetts areas. SIBs offer an enormous leap forward in terms of bringing private-sector discipline and resources to public-purpose activities.
$27 Million Total investment in the Massachusetts Juvenile Justice Pay for Success Initiative.
And, our Director of Capital Innovation, Eileen Neely, wrote in Institutional Investor about the deep potential of SIBs to unlock private capital to invest in human capital. “What if”, she asked, “investing in early childhood education or programs that aim to reduce recidivism carried the same opportunity for financial returns as building an airport or a municipal sewage system?”
This work is very much in the experimental phase, and we are excited to be at the forefront of building this market. We look forward to sharing what we are learning along the way, and to engaging with others around what they are learning.