Anne Field Contributor
Seems there is something at least some House Democrats and Republicans can agree on.
They like Social Impact Bonds.
Also known as Pay for Success, Social Impact Bonds are all about public-private partnerships and measurable outcomes. They’re a way for investors to work with governments and nongovernmental organizations or other service providers to address seemingly intractable problems, from child abuse to maternal health, among low-income or vulnerable populations. Whatever the problem, the outcomes must be measurable. I recently wrote about one in Massachusetts aimed at curbing recidivism among young inmates and a new effort targeting Latin America and the Caribbean.
If the project reaches its goal as determined by a third-party evaluator, the government pays back donors with a small profit. If those objectives aren’t reached, there’s no return.
This is a definition I often point to from Center for American Progress: Social Impact Bonds are “an arrangement between one or more government agencies and an external organization where the government specifies an outcome (or outcomes) and promises to pay the external organization a pre-agreed sum (or sums) if it is able to accomplish the outcome(s).”
House of Representatives Building and the East Portico of the U.S. Capitol — Washington (DC) January 2013 (Photo credit: Ron Cogswell)
So what happened in the House? Recently, Reps. Todd Young (R-IN-9) and John Delaney (D-MD-6) joined hands to introduce the Social Impact Bond Act, a bill aimed at fostering the growth of these programs. They were joined by seven other Congressmen.
Yes, that’s right, a real-live bipartisan effort.
According to the bill, to receive federal funding state or local governments would need to identify a social problem they hope to address that would have positive social outcomes and federal savings. Then they would submit a Social Impact Bond feasibility study to the Department of the Treasury, which would consult with a new entity called the Federal Interagency Council on Social Impact Bonds and the head of any pertinent federal agencies. Treasury would only pay those local governments if a third-party evaluator determined the project had achieved previously agreed upon outcomes. (State and local governments would be able to apply for funding from Treasury to help in developing their feasibility study).
The bill also calls for a one-time appropriation of $300 million, used to pay for the positive outcomes of Social Impact Bond projects, to fund feasibility studies and to pay for evaluations of Social Impact Bond projects. Treasury would be allowed to spend up to $1 million each year for technical assistance.
Also, and this part is likely to appeal to banks. Treasury would permit a bank’s investment in Social Impact Bond projects to be considered as part of the institution’s requirement under the Community Reinvestment Act (CRA).
“(This program) moves our government to be more evidence-focused, so we can pay for achieving desired outcomes rather than paying for services regardless of the outcome,” said Rep. Delaney in a press release.
Said Rep. Young in the same release, “Whether you think government ought to do more to help our fellow Americans in need, or you think government needs to save money wherever possible, social impact bonds provide a solution on both counts.”
Meaning: There’s something for everyone.