PLY: It’s Monday and the sight of headlines such as “Making Government Better” and referring to SIBs as “a deal we can’t refuse” certainly brighten my day. Happy reading (and enjoy the UK bank holiday for those in the traditional rain & traffic jams).
Social Impact Bonds In Criminal Justice: A Deal We Can’t Refuse?
Jennifer R. Zelnick – Prison Legal News
Over the past several years there has been a lot of buzz about Social Impact Bonds (SIBs). More recently criticisms have emerged, along with early results of SIB projects. This article will examine existing SIBs in the criminal justice context, and raise some concerns.
What are SIBs? SIBs – known also as “pay for success” – are not bonds but complex, multi-stakeholder loans between government agencies, investors, intermediaries, service providers and evaluators in which an investor provides up-front funding for a specific project chosen to produce a specific, cost-saving outcome. If certain benchmarks are met, up-front loan money is re-paid with interest; if outcomes exceed pre-determined levels of success, pay for success payments are triggered that increase investor rewards. The “cashable” cost savings are key, because they are presumably the source of revenue used to pay back the investors. SIBs have been touted as useful in areas where government funds are tied up in remediation to the exclusion of funding prevention programs. (This describes the general model of SIBs in the United States, though there are variations).
Advocates of SIBs speak of their ability to transform government services, but their goals aren’t very idealistic.
Sunday Sitdown With Marc J. Lane: Use Business To Fix Social Problems
Sandra Guy – Chicago Sun-Times
Amid the minute-to-minute drumbeat of war and scandal and stock market upheaval no farther away than your phone or desktop, Chicago lawyer, financial adviser and author Marc J. Lane stands apart for his optimism.
The Lincolnwood native’s latest book — his 35th — is titled “The Mission-Driven Venture”. But it’s the book’s subtitle that says more about Lane: “Business Solutions to the World’s Most Vexing Social Problems.”
Lane spoke with reporter Sandra Guy about what keeps him believing that the world’s problems might yet still be tackled. An edited transcript follows.
Question: You’ve written a book of advice for anyone from starry-eyed startup founder to veteran entrepreneur to fill a humanitarian vacuum by setting up and running a mission-driven business. How does that work?
Answer: We’re seeing significant interest by foundations, millennials, entrepreneurs and the kinds of high-income, high-net-worth individuals I’ve always represented as they seek to diversify and to make investments that work to increase societal good.
Q: What’s driving this?
A: I have been deeply involved for my entire career in accountability and transparency issues, and wrote Illinois’ “low-profit limited liability company law. The L3C is a business form that lets for-profits and non-profits obtain all the advantages of a traditional limited liability company with a non-profit’s aim to place mission over profits. There are 1,200 L3Cs now throughout the United States.
Too many people — 50 million in the United States — are living in poverty, and philanthropy and downsized government agencies aren’t up to the task of tackling all the problems poverty brings with it. Many social entrepreneurs and non-profits have decided to create businesses that create jobs and catalyze private-sector “impact” investors. JP Morgan Chase predicts that impact investing will total $1 trillion by 2020.
Q: What can ordinary people with savings in IRAs and 401(k)s do?
A: Demand that your investment adviser ensures that a company’s behavior is compatible with your personal values. Are the companies in which your advisers invest sourcing products from sweatshops? Polluting the air and water? Turn your portfolio into an active asset that drives positive social change.
Q: What’s next?
A: We’re just now seeing Social Impact Bonds, futures contracts on social impact. Illinois’ first Social Impact Bond — which was incubated in the Governor’s Task Force on Social Innovation, Entrepreneurship, and Enterprise I chaired — will generate $30 million in private investments for programs targeting at-risk youth, reducing their dependence on the state’s welfare and criminal justice systems. It will also lead to long-term savings for taxpayers.
Making Government Better
John Roman, Ph.D. – Huffington Post
Adopting a performance management system doesn’t improve performance by default, as underscored in a research paper published earlier this month by Ed Gerrish of the University of South Dakota.
Performance management is most effective when organizations stick to best practices in program implementation, identify rigorous outcomes, and make those outcomes the focus of the intervention. These principles may seem obvious, but the reality is that they rarely guide actual performance.
What will it take to change government culture to adhere to these guidelines? We need a disruptive tool to change the status quo and shift performance management from a box-checking exercise to a meaningful way of thinking about how governments can have greater impact. Pay for success (PFS) financing could be that solution.
Pay for Success is a new innovation in public sector financing, PFS facilitates private investment in evidence-based social programs. The investors’ principal is returned with a profit only if rigorous evaluation finds that predetermined performance goals are met. Thus, PFS is a potential catalyst to improve government performance.
Socially minded investors see their investments leveraged, governments pay only for outcomes, and social service providers receive capital to create new infrastructure to better serve their clients.