PLY: Two interesting articles to move the week forward on a positive note for those not enjoying Labor Day in the USA today.
Development Impact Bonds Could Be Part Of The Solution To Financing Child Survival
Andrew Wainer – Devex
One of the world’s great development achievements in the past 25 years has been the reduction in preventable child deaths. In 1990, 12.7 million children under age 5 died of preventable causes. By 2013 the number was reduced to less than half of that — 6.3 million. By some measures, 100 million children survived over the past 20 years due to the global focus on reducing child mortality.
The vision of an end to preventable child deaths by 2030 is now inscribed in the sustainable development goals to be ratified at the United Nations later this month. But in spite of this momentum, without new sources of financing, it will be difficult to achieve this goal as the United States and other nations have pledged. The private sector is one of the largest potential sources of additional funding that will need to be tapped to achieve this goal.
This summer, the U.S. Senate took an initial step toward tapping into new development funding through the introduction of the Reach Every Mother and Child Act of 2015. The bill — introduced by Sens. Susan Collins, Republican from Maine, and Chris Coons, Democrat from Delaware — requires the administration to develop an innovative financing framework that leverages financing from the private sector, among other sources.
Innovative finance is a broad category that includes an array of tools, including development credit authorities and advance market commitments. One of the most widely discussed emerging innovative finance tools is impact bonds.
Impact bonds are divided into two major categories, depending on where they are implemented:
- In developed nations they are known as social impact bonds or SIBs.
- In developing nations they are known as development impact bonds or DIBs.
Both types of bonds use similar models and are complex. Essentially, they are program financing models that ensure that public funds are not spent on unsuccessful programs. Public funds are only spent if programs are proven to be effective by independent evaluators. If they are not, the cost is picked up by a predetermined guarantor, such as a foundation, corporation, private equity fund or a high-net-worth individual.
‘Pay for Success’ Model Can Help Improve Lives
Indystar
Our nation has an unprecedented opportunity to unleash innovation where we need it the most: improving the lives of children and families struggling to make ends meet.
After 40 years at the helm of Emmis Communications, I’m proud to say that innovation has become our hallmark. Our ability to transform in response to radical shifts in the marketplace over the last four decades is one reason I credit for our longevity and success. This spirit of innovation is the result of a variety of factors, including the quality of our amazing Emmis employees. My own leadership was made possible by the education I received and the mentors who have guided me along the way.
Millions of people are far less fortunate, whether they’re born into poverty, afflicted with health or educational challenges, or living in communities where it’s difficult to get a hand up. While some of them may get support from faith-based and nonprofit organizations, most will continue to depend to some degree on government programs that must meet increasing demands at a time of unprecedented fiscal challenges.
That’s why I’m so passionate about legislation that will pave the way for new programs that are required to meet tangible outcomes, and that are funded in an innovative way designed to respond to changes in the marketplace.
Commonly referred to as “Pay for Success,” this bipartisan approach uses funding from the private sector, foundations and nonprofit organizations for programs designed to improve lives. Unlike most programs currently funded solely by the government, Pay for Success initiatives are required to meet measurable outcomes. If they do, the funders receive a return on their investment. The approach is innovative because it responds to an undisputed shift in the public sector, where the need for promising programs far exceeds the availability of government resources to pay for them.