Germany looking at first SIB, US grants for social impact, recidivism rife amongst non profit advocates who don’t realise the spendthrift 1960’s and 1970’s are as ancient history as the analogue age. Welcome to another fascinating SIB News, happy reading.
Germany Experiments With First Social Impact Bond
EVPA
EVPA members Bonventure and the BMW Foundation have been involved in Germany’s first Social Impact Bond experiment. The Juvat pilot project “Eleven Augsburg” in Germany represents the first Social Impact Bond (SIB) in continental Europe. It is based on a ‘pay for success’ -financing principle of social services. Its pilot education project is called “JuMP – Jugendliche mit Perspektive” (meaning ‘youth with perspective‘).
Four foundations have pre-financed the implementation of the project that works with young people who have disengaged from education and employment, to help them enter training or employment. Apart from EVPA members BonVenture gGmbH and BMW Foundation Herbert Quandt, the BHF-Bank foundation and Eberhard von Kuenheim Foundation of the BMW AG are involved.
If social impact is achieved, the investments will be repaid with a small interest added.
U.’s Sorenson Center For Global Impact Investing Awarded $1.15 Million ‘Pay For Success’ Grant
Marjorie Cortez – Deseret News
“Pay for success” is a concept well understood in the private sector, says Salt Lake County Mayor Ben McAdams.
If a homeowner pays a contractor to remodel his house, he isn’t paying someone to simply work in his home for year. “I’m paying for him to provide me a new kitchen,” he explains.
Under a “pay for success” model gaining traction in the government sector nationwide, direct service nonprofit agencies that contract with state and local governments must likewise deliver results.
“It’s bringing better accountability with taxpayer dollars. We will pay for an outcome, not a service,” McAdams said.
Creating such agreements — and encouraging private investment to support or expand proven programs — requires technical support. Government and investors need assistance to evaluate programs and approaches before they fund them or invest in them. They also need proof that their money was well spent.
Service providers need to be aligned to deliver the desired outcomes. The James Lee Sorenson Center for Global Impact Investing at the University of Utah was awarded a $1.15 million Pay for Success grant Wednesday by the Corporation for National and Community Service to help provide that technical assistance in the Intermountain West.
“It’s really a new day dawning for nonprofits, for governments that are major funders for social services, as well as a growing number of investors that are interested in investing in something that has a positive benefit to society,” said James L. Sorenson, the center’s founder and benefactor.
The Pay for Success grant will enable the Sorenson Center to “advance and evaluate emerging models that align payment for social services with verified social outcomes,” according to a news release.
Irrational Exuberance For Social Impact Bonds And Social Enterprise
Rick Cohen – NPQ
The well-respected New York Times columnist Nicholas Kristof penned a compelling analysis about the failure of the response to the Ebola epidemic. He argues that “it’s imperative to stop infectious diseases early,” emphasizing the importance of childhood vaccines and other early interventions, and he worries that efforts to finance responses to Ebola will come at the cost of diverting funding from providing vaccines or fighting hunger.
Clearly a major need in the countries facing the Ebola epidemic is investment in order to build modern health systems and to remedy shortages in human resources such as trained doctors and nurses. For example, prior to the outbreak of the Ebola epidemic, there were fewer than 200 doctors available for Liberia’s nearly 4 million people; since the outbreak, the number of doctors has dropped to about 50 as doctors have fled the country. Kristof argues that tons could be done if the U.S. invested in health rather than our ever-expanding military.
However, Kristof’s argument includes an odd diversion to suggest the “market failure” that explains dysfunctional government efforts, whether fighting Ebola or reducing prison recidivism, could be addressed by “new financial instruments—social impact bonds…[that] pay for job training or early education programs and then earn a financial return for investors when the government saves money.” Is Kristof hinting that social impact bonds could be used as a tool for dealing with the health issues facing countries in West Africa, or even confronting Ebola?