PLY: Three interesting stories to end the week, led by a student with a passion for SIBs… Have a great weekend.
(Oh and baseball fans may be interested in my sister newsletter Exchange Invest – in a special edition yesterday, I substituted my daily pithy comments for quotations from baseball legend Yogi Berra – may he rest in peace).
Grad Student: Social Impact Bonds Could Be A Win For Investors, Society
Katie McNally – UVA Today
There is an abundance of new ideas for improving social welfare; it’s the funding to support those ideas that always seems to be in short supply.
University of Virginia graduate student Joshua Ogburn is trying to change that.
Ogburn is a second-year master’s student in the Frank Batten School of Leadership and Public Policy and heads the Virginia Pay for Success Lab, a research team supported by the University’s Social Entrepreneurship at U.Va. initiative.
“Pay for success is a way to scale up social services that measurably improve people’s lives,” Ogburn said. “Historically, many local and state governments have been too risk-averse to expand many proven programs. One of the many benefits of pay for success is that it shifts some of that risk to private investors and philanthropies.”
With the pay-for-success model, local and state governments set a specific bar for measurable success. Private investors or philanthropies provide the upfront funding to provide the social service with the understanding that the government will only repay the investment if the bar for success is met, with the possibility of a return with greater success.
This type of funding as a concept only began five years ago, but it is already spreading across the United States. Seven localities are currently using it to improve the social welfare of their community, and nearly 50 more are conducting feasibility studies to begin their own programs.
Christine Mahoney, director of social entrepreneurship at U.Va. and associate professor of public policy and politics, has been advising Ogburn on bringing the pay-for-success model to Virginia.
Israel Accepted To G8 Panel On Social Investment
Jerusalem Post
Israel was accepted as a full member of the Global Steering Group on Impact Investments, a part of the Social Investments task force of the G8.
The task force, which Prime Minister David Cameron established while leading the G8 forum of leading industrial countries in 2013, was first limited to just the G8 member countries, but has since added Australia and, this week, Mexico, Brazil, India, Portugal and Israel.
Impact Investing refers to the use of financial tools and products to further social causes, such as advancing health objectives or reducing homelessness, while also generating some level of financial return.
“I’m very proud of Israel’s acceptance as member of the steering committee,” said Sir Ronald Cohen, the Egyptian-born British businessman and political figure who heads the task force.
As first reported in The Jerusalem Post, Israel made its first appearance before the G8 in December 2013, when a group called Social Finance Israel presented its outline for a diabetes prevention program using Social Impact Bonds. The idea was that investors who buy the bonds would sponsor a program to prevent diabetes, and if the program worked, they would get a higher payoff from the state.
Because the state generally spends a lot of money on treating diabetes, the prevention would save it money, while earning the investors a profit and helping to prevent diabetes in the high-risk people targeted by the program.
The Amazing Power Of Deflationary Economics For Health
Dave Chase – Forbes
In light of damaging over-spending in healthcare is (see graph below on how healthcare has “stolen” funds from schools—resulting in larger class sizes, after school program cuts, etc.), some communities and funders are getting creative and creating business models largely foreign to the legacy health ecosystem. Some examples include lifesaving water filters paid for by carbon credits or reducing asthma and improving child and maternal health via Pay for Success programs (some using Social Impact Bonds).