A crunchy day’s SIB News, happy reading:
Can Social Impact Bonds Help Schools?
Walt Gardner – Education Week
Social impact bonds are the latest vehicle for corporate involvement in public schools (“Success Metrics Questioned in School Program Funded by Goldman,” The New York Times, Nov. 3). Goldman Sachs claimed that 109 at-risk children in a Utah preschool program were able to avoid special education because of its investment.
This new kind of public-private partnership is billed as a symbiotic relationship. If the education program achieves its stipulated goals, Goldman gets back its money and a guarantee of at least five percent interest. The school district then avoids having to ask the federal government and the state for money to provide special education services for these children when they enter kindergarten.
What I don’t understand is why Utah would agree to pay five percent minimum when it could borrow money through the bond market at a lower rate. Then there is the question of the methodology used to measure success. The goal was to determine whether the investment helped young children avoid special education. Past studies have reported a typical reduction rate between 10 and 20 percent. At most, they have reported reductions of 50 percent. Goldman and the district reported that almost 99 percent avoided special education.
Global Social Innovation Round-Up #22
Ellie Ward – Pioneers Post
The first social impact bond (SIB) in Israel has been launched to “reduce the drop-out rate and extend the studies” of higher education students. The payment by results contract is being managed by Social Finance Israel in collaboration with the Tel Aviv-Jaffa Academic College and University of Haifa.
Impact Investing Cleared for Take-off
BUSINESS WIRE
In a new whitepaper published today, “Impact Investing: The Performance Realities,”Merrill Lynch analyzes these structural changes and the growing body of evidence showing that investors can do well financially by investing in organizations that are doing what’s right for the environment and society. The paper tracks key developments in the impact investing arena, pointing to rapid growth and innovation that are due largely to growing client demand over the past decade, as well as the improving quantity and quality of ESG data.