Exciting times: Detroit may yet become a fascinating development ground for SIBs as it recovers from generations of ghastly leadership.
Social Impact Bond Plan: Fund Programs, Save Cash
Crain’s Detroit Business
Social impact bonds, which bring private capital to help fund state programs that offer social benefits, are coming to Michigan.
Gov. Rick Snyder was to announce today that the state will have a full-time fellow for a year from the Harvard Kennedy School to help choose an investment-worthy program that will save the state money by doing good. The way the concept works is this:
• A program not already offered by the state that addresses a social need is identified, such as reducing juvenile recidivism or childhood obesity. The program could be one offered in another state or on a small scale by a community in Michigan. The idea is to choose a program that will save money in the long run, but hasn’t been started because of lack of funding.
• A company or a private investor would pay to start the program, typically in conjunction with nonprofit financial support.
• Metrics are put in place to define success for the program and the length of time it should take to achieve results. If it is successful, investors are repaid with interest from the savings. If the program isn’t successful, the investors lose their money. No state money is at risk.
Brookes Admits To Unease About Social Investment
Civil Society
Paul Hamlyn Foundation chief executive Martin Brookes has admitted to harbouring personal doubts about social investment, suggesting there are ethical issues around it that the sector has yet to confront.
The Foundation is one of the original funders of the Peterborough social impact bond, but has not dipped its toe into any social investment activity since. Brookes told civilsociety.co.ukit is conceivable that the Foundation will end up doing more in the social investment sphere after it has concluded its latest strategic review, because social investment is so high on the sector’s agenda currently. But he confessed to “some personal doubts” about it.