Pat Quinn the Illinois Governor faces a tough reelection battle this November against private equity fund founder Bruce Rauner. We hope Rauner will also commit to SIBs as a funding mechanism.
Meanwhile another investment fund notable, Harvey McGrath, Chairman of Big Society Capital is extolling the merits of SIBs in the British Daily Telegraph. Interesting reading all round…
Governor Quinn Announces Illinois’ First Pay for Success Project
eNews Park Forest
Governor Pat Quinn today announced the state’s first Pay for Success (PFS) contract will increase support for at-risk youth who are involved in both the child welfare and juvenile justice systems in Illinois. Also known as Social Impact Bonds, the first contract awarded under this innovative initiative will go to One Hope United, in partnership with the Conscience Community Network (CCN). Today’s announcement is part of Governor Quinn’s agenda to ensure that all Illinois youth have the opportunity to follow their dreams and reach their full potential.
“The innovative Pay for Success model will generate major investments and improve outcomes for some of our most at-risk youth,” Governor Quinn said. “One Hope United and CCN’s evidence-based approach will help these youth successfully transition into adulthood.”
Governor Quinn launched the PFS program one year ago, aiming to provide critical resources to address community needs while decreasing long-term negative outcomes that are costly for taxpayers. The innovative program invests private dollars into proven social programs, which are then paid back by the state when results are achieved and long-term savings are realized. The state will then see continued savings as benefits accrue after the investments are paid off.
Social Investment Could Provide The Best Return Of All – Changing Society For The Better
Harvey McGrath – Daily Telegraph
Like many of us, I support good causes – willingly donating time, money and expertise to charities, expecting nothing back but the satisfaction that I am helping these organisations help society in some way or other.
Some ten years ago however I was introduced to the thought that in certain circumstances I could make an investment in social organisations that could deliver both a social benefit to society and potentially a financial return to me. As a businessman and philanthropist, I found this to be a really interesting idea.
If I give money to a charity as a gift or grant, it is gone, of course, in supporting the good work of the organisation. If however I can help a charity to grow by providing working capital funding, or funding for premises, or for the development of a trading arm to help them become self-sustaining, so they are able to repay my loan, we have a double win.
I have both helped the charity deliver on their mission, and I can recycle my money to assist other causes. Granted, some activities of charities can’t be funded on this basis, but some can and for those activities, social investment is a genuinely alternative and sustainable way of funding work that benefits society at large.
A good example of this is the oddly named ‘social impact bond’ or SIB. These investments fund the work of charities focused on social targets such as reducing re-offending by prisoners or improving adopted children’s chances of settling with their new families.