PLY: Suggestions for Indiana to use more SIBs while in New South Wales, Australia, musings on the arrival of “win win” to replace the tired, and frankly, broadly discredited, old-fashioned NGO/charity model.*
*I apologise for applying that broad brush statement to a sector where many work entirely selflessly to diligently derive a better world but having spent a weekend in the British countryside, I was struck once again by just how disillusioned the locals in that country are about the charity sector (which in many ways they broadly pioneered). The model is going to have to change beyond recognition of where it was only recently. However, the apathy / denial complex of many incumbent charity/NGOs is simply breathtaking. – Said attitude is only annoying the UK donor community all the more… Interesting times: I firmly believe SIBs can be a force to improve all aspects of this creaking, if not outright broken down, relationship.
Could Charity Muggers Become A Thing Of The Past As The Focus Turns To Win-Win Transactions?
News
The NSW state government has recognised the potential in the sector, establishing an Office of Social Impact Investment to encourage its growth.
It was the first government in Australia to offer a social benefit bond, which raised money from private investors to support a parenting skills program for at-risk families. In the first two years, 66 children have been returned to their families, exceeding expectations, and investors received a 8.9 per cent return on their investment in the second year.
These bonds were first developed in the UK in 2010 and have since been used across North America and Europe. Cost savings to government are used to repay the upfront investment plus a financial return.
Flashpoint: Could Indiana Use SIBs To Fight Heroin, Expand Pre-K?
Brent Kent – Tribune Star
The Department of Child Services made a desperate plea for new foster parents. 2,500 more foster families are needed today than the same time last year to house children who have been removed from the homes of drug-addicted parents. In August it was announced that the DCS caseload was up 26 percent over last year due to heroin addiction, which required the state to hire an additional 113 caseworkers. One Marion County Juvenile Court Judge remarked that our children are “drowning in a sea of heroin.”
Perhaps not surprisingly, there are over 7,000 taxpayer-funded beds for drug offenders in Indiana prisons, but only a handful across the entire state for drug treatment. Drug users seeking residential substance abuse care currently face an 8-10 week backlog. Meanwhile Hoosiers are witnessing a heroin epidemic that has resulted in a 500 percent increase in overdose deaths in just two decades and an HIV outbreak that is an official “public health disaster.”
The state’s strategy to focus on drug enforcement at the expense of treatment has proven disastrous, and despite $30 million from the legislature and a newly minted task force to combat the catastrophe, critics say the state’s response has been languid. Since it doesn’t appear we are anywhere closer to a resolution than we were at last sine day, maybe in the 2016 legislative session the state should consider the use of social impact bonds (SIBs) to rapidly scale a statewide response.
SIBs, or “results-based financing” contracts, are already being employed around the country to address homelessness, recidivism, and prepare low-income children for school. SIBs are public-private contracts that allow investors, instead of taxpayers, to fund programs or services for pre-defined social outcomes. Investors are repaid a portion of the cost-savings realized by the public, and only if the program is successful. For example, Goldman Sachs committed $4.6 million to finance the expansion of an early education program administered by the United Way of Salt Lake City. If the program successfully prepares students for kindergarten, the state will repay investors using the $2,600 per-student Utah spends annually on remedial education.