There’s a first time for everything, and today there’s a first-of-its-kind competition involving Social Impact Bonds (SIBs).
The Rockefeller Foundation announced that it is launching a national competition for state and local governments in the United States to test the SIB approach.
The Foundation helped establish the Harvard Kennedy School’s (HKS) SIB Lab which conducts research on how governments can foster social innovation and achieve better results from their social spending. Part of that research is to provide pro bono support for governments to implement the kind of pay-for-success contracts that characterize the SIBs.
Widely known as a breakthrough idea to reduce recidivism in the UK through preventive programs, SIBs have made their way across the Atlantic to interest governments in the United States and Canada. They are a method of financing social projects in which investors are repaid only if and when there are improved social outcomes.
SIBs are typically arranged as a contract between three parties: a government who pays for improved social outcomes, a service provider, and a financial intermediary who funds the service.
Up until February 8, 2013, U.S. state, county, and city governments who are considering pay-for-success approaches are eligible to apply for assistance from the HKS SIB Lab. Four applicants will be selected to receive this support and they will be announced in early March.
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